Income Taxes (Tables)

12 Months Ended

Dec. 31, 2018

Income Taxes

Schedule of components of income tax expense (benefit)

Income tax expense (benefit) consisted of the following components (dollars in thousands):

	2018		2017		2016
Current:
Federal	$	(1,711)	$	(423)	$	(9,918)
State		249		1,072		(624)
Foreign		10,300		11,490		8,975
		8,838		12,139		(1,567)
Deferred:
Federal		736		25,797		(12,687)
State		57		7,694		(2,217)
Foreign		(223)		335		(851)
		570		33,826		(15,755)
Total	$	9,408	$	45,965	$	(17,322)

Summary of income before income taxes

Income (loss) before income taxes consisted of the following (dollars in thousands):

	2018		2017 (1)		2016 (1)
U.S.	$	(57,502)	$	(56,465)	$	(81,579)
Foreign		67,601		62,990		38,339
Total	$	10,099	$	6,525	$	(43,240)

(1) Pre-tax amounts for 2017 and 2016 noted above do not include the restatement recorded for segment reporting for U.S. expenses now being allocated to the international segments as such amounts were not adjusted for income tax purposes (see Note 24, Segment Reporting).

Components of deferred income tax assets and liabilities

The components of the Company’s net deferred tax asset are as follows (dollars in thousands):

	2018		2017
Deferred tax assets:
Compensation and benefits	$	6,427	$	5,912
Net operating loss and capital loss carryover		17,555		18,974
Share-based compensation		5,548		5,092
Research and development credits		8,215		7,438
Foreign tax credits		10,240		11,117
Tax benefits on uncertain tax positions		697		831
Goodwill and other intangibles		4,007		6,363
Depreciation		3,969		3,527
Capitalized software		3,132		383
Rent		2,844		3,013
Other		1,297		700
Total deferred tax assets		63,931		63,350
Less: valuation allowance		(58,879)		(58,448)
Total deferred tax assets, net of valuation allowance		5,052		4,902
Deferred tax liabilities:
Indefinite life intangible		(1,859)		(1,695)
Other		(328)		(55)
Total deferred tax liabilities		(2,187)		(1,750)
Net deferred tax assets	$	2,865	$	3,152

Summary of net operating loss carry forwards and respective expiration period

Net operating loss carryforwards expire as follows (dollars in thousands):

	Amount		Years remaining
Hong Kong and Australia	$	68,878	Indefinite
State and local (United States)		41,037	12 - 20 years

Reconciliation of the U.S. federal statutory income tax rate and actual effective tax rate on earnings

	2018		2017		2016
U.S. federal statutory income tax rate	21.0	%	35.0	%	35.0	%
State and local income taxes, net of U.S. federal income tax effect	(0.64)		0.6		5.2
Foreign tax impact, net	(32.4)		(81.8)		6.2
Valuation allowance	86.1		585.8		—
Tax impact of Tax Cuts and Jobs Act	—		149.2		—
Stock windfall/shortfall	(3.8)		(13.5)		—
Reserves released upon tax settlement	(16.8)		—		18.6
Non-deductible costs (1)	43.0		21.3		(22.8)
Other, net	(3.3)		7.9		(2.1)
Effective income tax rate	93.2	%	704.5	%	40.1	%

(1) Includes the impact of the non-deductible payments in 2018 and 2016 to the Securities and Exchange Commission (the “SEC”). Additionally, 2018, 2017 and 2016 includes non-deductible officer’s compensation.

Reconciliation of the beginning and ending balances of unrecognized tax benefits

A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows (dollars in thousands):

Uncertain Tax Benefits	2018		2017		2016
Balance, January 1	$	7,693	$	7,356	$	15,553
Additions based on tax positions related to the current year		322		591		66
Additions based on tax positions of prior years		38		4		406
Reductions for tax positions of prior years		—		(13)		—
Reductions due to settlements with taxing authorities		(987)		(64)		(2,153)
Reductions due to expiration of statute of limitations		(1,209)		(181)		(6,516)
Balance, December 31	$	5,857	$	7,693	$	7,356