XML 32 R16.htm IDEA: XBRL DOCUMENT v3.24.0.1
INCOME TAXES
 12 Months Ended
Dec. 31, 2023
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
Income before income taxes consisted of the following:
(In millions)202320222021
Domestic$163.9 $157.6 $113.1 
Foreign78.3 77.6 76.6 
$242.2 $235.2 $189.7 

The income tax provision/(benefit) consisted of the following:
(In millions)202320222021
Current:   
Federal$27.0 $25.3 $15.9 
Foreign14.9 15.3 15.7 
State7.2 7.0 3.0 
Total current49.1 47.6 34.6 
Deferred:   
Federal(1.1)(0.1)(0.7)
Foreign(0.3)(2.6)(0.1)
State(0.2)1.5 0.9 
Total deferred$(1.6)$(1.2)$0.1 
 $47.5 $46.4 $34.7 
A reconciliation of the tax provision at the U.S. statutory rate to the effective income tax expense rate as reported is as follows:
 202320222021
U.S. Federal statutory rate21.0 %21.0 %21.0 %
State income taxes, net of federal benefit2.3 2.9 1.7 
Foreign operations(0.7)(0.5)0.2 
R&D tax credits(0.4)(0.4)(0.5)
Uncertain tax position adjustments(0.1)0.1 0.2 
Valuation allowance on state and foreign deferred tax(0.2)(0.6)(0.6)
Share-based compensation(1.0)(0.7)(2.3)
Other items(0.1)(0.5)(0.6)
Foreign Derived Intangible Income(2.4)(2.6)(1.9)
Nondeductible officers compensation1.2 1.0 1.1 
Effective tax rate19.6 %19.7 %18.3 %

The effective tax rate continues to be lower than the statutory rate of 21 percent primarily due to the recognition of the U.S. foreign-derived intangible income (FDII) provisions, foreign earnings taxed at rates below the U.S. statutory rate, certain incentives, and discrete events partially offset by state taxes.

The Company recorded discrete excess tax benefits from share-based compensation of $3.2 million in the year ended December 31, 2023.

Significant components of the Company’s deferred tax assets and liabilities were as follows:
(In millions)20232022
Deferred tax assets:  
Accrued expenses and reserves$15.1 $14.9 
Compensation and employee benefits17.4 15.6 
Net operating losses, tax credit carryforwards, and other13.2 14.0 
Lease liability 14.7 12.6 
Research and development expenditures7.0 3.3 
Valuation allowance on state and foreign deferred tax(4.1)(4.9)
Other items0.1 — 
Total deferred tax assets63.4 55.5 
Deferred tax liabilities:  
Accelerated depreciation on fixed assets17.7 14.5 
Amortization of intangibles51.3 51.1 
Lease right-of-use asset, net14.7 12.6 
Other items0.4 0.3 
Total deferred tax liabilities84.1 78.5 
Net deferred tax liabilities$(20.7)$(23.0)

The Company assesses the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of the existing deferred tax assets. A significant piece of objective negative evidence evaluated was the cumulative loss for certain state and foreign income tax purposes incurred over the 3-year period ended December 31, 2023. Such objective evidence limits the ability to consider other subjective evidence, such as the Company's projections for future growth.
On the basis of this evaluation, as of December 31, 2023, a valuation allowance of $4.1 million has been recorded to recognize only the portion of the deferred tax assets that are more likely than not to be realized. The Company has foreign income tax net operating loss (“NOL”) and credit carryforwards of $8.6 million and state income tax NOL and credit carryforwards of $4.6 million, which will expire on various dates as follows:
(In millions)
2024$0.5 
2025-20293.7 
2030-20340.3 
2035-20390.7 
Unlimited8.0 
$13.2 

The Company believes that it is more likely than not that the benefit from certain foreign NOL carryforwards as well as certain state credit carryforwards will not be realized. In recognition of this risk, the Company has provided a valuation allowance of $2.7 million on the deferred tax assets related to these foreign NOL carryforwards and a valuation allowance of $1.4 million on the deferred tax assets related to these state credit carryforwards.

As of December 31, 2023, the Company has estimated accumulated undistributed earnings generated by the Company's foreign subsidiaries of approximately $315.8 million. Any taxes due with respect to such earnings or the excess of the amount for financial reporting over the tax basis of its foreign investments would generally be limited to foreign and state taxes. The Company intends, however, to indefinitely reinvest these earnings and expects future U.S. cash generation to be sufficient to meet future U.S. cash needs. The Company, therefore, has not recorded a deferred tax liability of approximately $6.1 million.

As of the beginning of 2023, the Company had gross unrecognized tax benefits of $0.9 million, excluding accrued interest and penalties. The unrecognized tax benefits decreased due to statute expirations, which were offset by uncertain tax positions identified in the current year based on evaluations made during 2023. The Company had gross unrecognized tax benefits, excluding accrued interest and penalties, of $0.8 million as of December 31, 2023.

A reconciliation of the beginning and ending amount of gross unrecognized tax benefits for 2023, 2022, and 2021 (excluding interest and penalties) is as follows:
(In millions)202320222021
Beginning balance$0.9 $0.9 $0.6 
Additions for tax positions of the current year0.3 0.1 0.3 
Additions for tax positions of prior years— — — 
Reductions for tax positions of prior years— — — 
Statute expirations(0.4)(0.1)— 
Settlements— — — 
Ending balance$0.8 $0.9 $0.9 

If recognized, each annual effective tax rate would be affected by the net unrecognized tax benefits of $0.8 million, $0.9 million, and $0.9 million as of year-end 2023, 2022, and 2021, respectively.

The Company recognizes interest and penalties related to unrecognized tax benefits as a component of income tax expense. The Company has accrued interest and penalties as of December 31, 2023, December 31, 2022, and December 31, 2021 of approximately $0.1 million, $0.2 million, and $0.1 million, respectively.

The Company is subject to taxation in the United States and various state and foreign jurisdictions. With few exceptions, as of December 31, 2023, the Company is no longer subject to U.S. federal income tax examinations by tax authorities for years before 2020 and is no longer subject to foreign or state income tax examinations by tax authorities for years before 2018.
It is reasonably possible that the amounts of unrecognized tax benefits could change in the next twelve months as a result of an audit or due to the expiration of a statute of limitation. Based on the current audits in process and pending statute expirations, the payment of taxes as a result could be up to $0.4 million.