Income Taxes

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Income Taxes

NOTE 19 — Income Taxes

(Loss) earnings before income taxes consist of the following:

	Years Ended December 31,
	2021			2020			2019
U.S.	$	(128,699	)	$	(7,101	)	$	15,103
Non-U.S.		67,819			52,580			35,163
Total	$	(60,880	)	$	45,479		$	50,266

Significant components of income tax provision/(benefit) are as follows:

	Years Ended December 31,
	2021			2020			2019
Current:
U.S.	$	36		$	211		$	(391	)
Non-U.S.		11,932			11,275			10,666
Total Current		11,968			11,486			10,275
Deferred:
U.S.		(35,979	)		(2,815	)		558
Non-U.S.		4,997			2,122			3,287
Total Deferred		(30,982	)		(693	)		3,845
Total provision for income taxes	$	(19,014	)	$	10,793		$	14,120

Significant components of our deferred tax assets and liabilities are as follows:

	As of December 31,
	2021			2020
Post-retirement benefits	$	1,226		$	1,259
Inventory reserves		69			477
Loss carry-forwards		5,070			5,128
Credit carry-forwards		19,665			17,401
Accrued expenses		4,917			5,693
Research expenditures		19,226			18,893
Operating lease liabilities		5,643			6,012
Stock compensation		1,970			1,969
Foreign exchange loss		2,052			2,166
Other		769			872
Gross deferred tax assets		60,607			59,870
Depreciation and amortization		13,386			13,004
Pensions		10,958			12,557
Operating lease assets		5,307			5,703
Subsidiaries' unremitted earnings		1,947			3,046
Gross deferred tax liabilities		31,598			34,310
Net deferred tax assets		29,009			25,560
Deferred tax asset valuation allowance		(9,489	)		(8,320	)
Total net deferred tax assets	$	19,520		$	17,240

The deferred tax assets and deferred tax liabilities, classified as non-current, are as follows below:

	As of December 31,
	2021			2020
Non-current deferred tax assets	$	25,414		$	24,250
Non-current deferred tax liabilities	$	(5,894	)	$	(7,010	)
Total net deferred tax assets	$	19,520		$	17,240

At each reporting date, we weigh all available positive and negative evidence to assess whether it is more-likely-than-not that the Company's deferred tax assets, including deferred tax assets associated with accumulated loss carryforwards and tax credits in the various jurisdictions in which it operates, will be realized. As of December 31, 2021, and 2020, we recorded deferred tax assets related to certain U.S. state and non-U.S. income tax loss carryforwards of $5,070 and $5,128, respectively, and U.S. and non-U.S. tax credits of $19,665 and $17,401, respectively. The deferred tax assets expire in various years primarily between 2022 and 2041.

Generally, we assess if it is more-likely-than-not that our net deferred tax assets will be realized during the available carry-forward periods. As a result, we have determined that valuation allowances of $9,489 and $8,320 should be provided for certain deferred tax assets at December 31, 2021, and 2020, respectively. As of December 31, 2021, the valuation allowances relate to certain U.S. state and non-U.S. loss carry-forwards and certain U.S. state tax credits that management does not anticipate will be utilized.

A valuation allowance of $1,286 was recorded in 2021 against the U.S. federal foreign tax credit carryforwards of $9,229. These credits begin to expire in varying amounts between 2028 and 2031. No valuation allowance was recorded in 2021 against the U.S. federal research and development tax credits of $8,024. These credits begin to expire in varying amounts between 2022 and 2041. We assessed the anticipated realization of those tax credits utilizing future taxable income projections. Based on those projections, management believes it is more-likely-than-not that we will realize the benefits of these credit carryforwards.

The following table reconciles taxes at the U.S. federal statutory rate to the effective income tax rate:

	Years Ended December 31,
	2021	2020	2019
Taxes at the U.S. statutory rate	21.0%	21.0%	21.0%
State income taxes, net of federal income tax benefit	4.3%	(0.1)%	0.4%
Non-U.S. earnings taxed at rates different than the    U.S. statutory rate	3.1%	(0.9)%	1.3%
Foreign source earnings, net of associated foreign    tax credits	0.1%	(0.7)%	0.3%
Benefit of tax credits	0.8%	(0.7)%	(1.5)%
Non-deductible expenses	(1.6)%	(0.5)%	4.1%
Stock compensation - excess tax benefits	0.7%	(0.1)%	(1.1)%
Adjustment to valuation allowances	(3.1)%	1.6%	(0.4)%
Other changes in tax laws and rates	—	—	0.1%
Change in unrecognized tax benefits	0.4%	(0.7)%	3.3%
Impacts of unremitted foreign earnings	(4.5)%	5.2%	1.3%
Release of disproportionate tax effects of OCI	8.8%	—	—
Other	1.2%	(0.4)%	(0.7)%
Effective income tax rate	31.2%	23.7%	28.1%

  In 2020, the Company began the termination of the U.S.-based pension plan. As a result of the final settlement of the pension liability in 2021, we reclassified the disproportionate tax effect related to the pension plan of $5,375 that were previously recorded in accumulated other comprehensive loss to income tax expense.  Further information related to our pension terminations is included in Note 7 – Retirement Plans.

Following the enactment of the 2017 Tax Cut and Jobs Act and the associated one-time transition tax, in general, repatriation of foreign earnings to the U.S. can be completed with no incremental U.S. Tax. However, there are limited other taxes that continue to apply such as foreign withholding and certain state taxes. The company records a deferred tax liability for the estimated foreign earnings and state tax cost associated with the undistributed foreign earnings that are not permanently reinvested. In 2020 the Company made the decision to no longer permanently reinvest the earnings of its Taiwan subsidiary. 

The Tax Act also includes provisions for Global Intangible Low-Taxed Income (“GILTI”) wherein taxes on foreign income are imposed in excess of a deemed return on tangible assets of foreign corporations. We elected to recognize the tax on GILTI as an expense in the period the tax is incurred.

We recognize the financial statement benefit of a tax position when it is more-likely-than-not, based on its technical merits, that the position will be sustained upon examination. A tax position that meets the more-likely-than-not threshold is then measured to determine the amount of benefit to be recognized in the financial statements. As of December 31, 2021, we have approximately $2,196 of unrecognized tax benefits, which if recognized, would impact the effective tax rate. We do not anticipate significant changes in our unrecognized tax benefit within the next 12 months.

A reconciliation of the beginning and ending unrecognized tax benefits is provided below:

	As of December 31,
	2021			2020
Balance at January 1	$	3,128		$	5,016
Increase related to current year tax positions		70			880
Decrease related to prior year tax positions		(237	)		(1,156	)
Decrease related to lapse in statute of limitation		(125	)		—
Decrease related to settlements with taxing authorities		(640	)		(1,612	)
Balance at December 31	$	2,196		$	3,128

Our continuing practice is to recognize interest and/or penalties related to unrecognized tax benefits as income tax expense. As of December 31, 2021, and 2020, $39 and $301, respectively, of interest and penalties were accrued.

We are subject to taxation in the U.S., various states, and in non-U.S. jurisdictions. Our U.S. income tax returns are primarily subject to examination from 2018 through 2020; however, U.S. tax authorities also have the ability to review prior tax years to the extent loss

carryforwards and tax credit carryforwards are utilized. The open years for the non-U.S. tax returns range from 2010 through 2020 based on local statutes.