Income Taxes

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

	Years ended December 31,
	2021		2020		2019
	(in thousands)
Income (loss) before taxes:
United States operations	$	60,806	$	(117,819)	$	42,833
Foreign operations	26,856		183,946		109,577
Income before taxes	$	87,662	$	66,127	$	152,410
Income tax expense (benefit):
Currently payable
United States federal	$	4,375	$	273	$	21,893
United States state and local	3,108		91		3,090
Foreign	13,634		11,511		13,859
	21,117		11,875		38,842
Deferred
United States federal	13,204		(1,754)		7,567
United States state and local	5,205		(2,310)		(1,205)
Foreign	(14,321)		3,913		(2,685)
	4,088		(151)		3,677
Income tax expense	$	25,205	$	11,724	$	42,519

In addition to the above income tax expense associated with continuing operations, we also recorded an income tax benefit associated with discontinued operations of $1.9 million, $22.6 million, and $27.2 million, in 2021, 2020, and 2019, respectively.

	Years Ended December 31,
	2021	2020	2019
Effective income tax rate reconciliation from continuing operations:
United States federal statutory rate	21.0%	21.0%	21.0%
State and local income taxes	8.5%	(2.6)%	1.2%
Impact of change in tax contingencies	(1.3)%	2.3%	—%
Foreign income tax rate differences	1.9%	(38.2)%	(8.6)%
Impact of change in deferred tax asset valuation allowance	(49.4)%	2.3%	9.5%
Domestic permanent differences and tax credits	45.6%	33.3%	4.7%
Impact of share-based compensation	2.5%	1.4%	0.1%
Impact of CARES act	—%	(1.8)%	—%
	28.8%	17.7%	27.9%

In 2021, the most significant difference between the U.S. federal statutory tax rate and our effective tax rate was the impact of a change in the deferred tax asset valuation allowance, primarily due to the release of a valuation allowance against the foreign tax credits in the U.S. and a pension deferred tax asset in a foreign jurisdiction.

An additional significant difference between the U.S. federal statutory tax rate and our effective tax rate was the impact of domestic permanent differences and tax credits. We recognized a total income tax expense from domestic permanent differences and tax credits of $39.8 million in 2021, primarily associated with a goodwill impairment in the U.S., and our foreign income inclusions.

Foreign tax rate differences resulted in an income tax expense (benefit) of $1.7 million, $(25.3) million, and $(13.1) million in 2021, 2020, and 2019, respectively. Additionally, in 2021, 2020, and 2019, our income tax expense was reduced by $3.1 million, $4.0 million, and $3.9 million, respectively, due to a tax holiday for our operations in St. Kitts. The tax holiday in St. Kitts is scheduled to expire in 2023.

If we were to repatriate foreign cash to the U.S., we may be required to accrue and pay U.S. taxes in accordance with applicable U.S. tax rules and regulations as a result of the repatriation. However, it is our intent to permanently reinvest the earnings of our non-U.S. subsidiaries in those operations and for continued non-U.S. growth opportunities.

The components of deferred income were as follows:

	December 31,
	2021		2020
	(In thousands)
Components of deferred income tax balances:
Deferred income tax liabilities:
Plant, equipment, and intangibles	$	(105,986)	$	(92,271)
Right of use asset	(19,139)		(17,610)
	(125,125)		(109,881)
Deferred income tax assets:
Postretirement, pensions, and stock compensation	32,139		35,394
Reserves and accruals	19,617		24,388
Net operating loss, capital loss, and tax credit carryforwards	94,537		107,028
Lease liability	19,881		18,515
Valuation allowances	(68,719)		(84,308)
	97,455		101,017
Net deferred income tax liability	$	(27,670)	$	(8,864)

The net decrease in deferred tax assets related to net operating loss, capital loss, and tax credit carryforwards is primarily due to the utilization of foreign tax credits during the year.

The net decrease in deferred tax valuation allowances is primarily due to the release of the valuation allowance against the foreign tax credit as we expect we will have sufficient foreign source income to utilize the foreign tax credits as a result of tax planning strategies. The remaining valuation allowances are primarily related to the capital losses in the U.S. and net operating losses in foreign jurisdictions.

As of December 31, 2021, we had $163.9 million of gross net operating loss carryforwards and $17.2 million of tax credit carryforwards. Unless otherwise utilized, net operating loss carryforwards will expire upon the filing of the tax returns for the following respective years: $1.4 million in 2021, $12.9 million between 2022 and 2024, and $99.8 million between 2025 and 2041. Net operating loss with an indefinite carryforward period total $49.8 million. Of the $163.9 million in net operating loss carryforwards, we have determined, based on the weight of all available evidence, both positive and negative, that we will utilize $102.2 million of these net operating loss carryforwards within their respective expiration periods. A valuation allowance has been recorded on the remaining portion of the net operating loss carryforwards.

Unless otherwise utilized, tax credit carryforwards of $17.2 million will expire as follows: $0.6 million in 2021, $1.1 million between 2022 and 2024, and $11.1 million between 2025 and 2041. Tax credit carryforwards with an indefinite carryforward period total $4.4 million. We have determined, based on the weight of all available evidence, both positive and negative, that we will utilize $12.0 million of these tax credit carryforwards within their respective expiration periods. A valuation allowance has been recorded on the remaining portion of the tax credit carryforwards.

As of December 31, 2021, we had $227.1 million of gross capital loss carryforwards in the U.S. with a full valuation allowance as we do not expect to be able to utilize the capital loss prior to expiration.

The following tables summarize our net operating losses carryforwards and tax credit carryforwards as of December 31, 2021 by jurisdiction:

	Net Operating Loss Carryforwards
	(In thousands)
Australia	$	10,134
Belgium	5,069
Germany	14,718
Netherlands	3,975
Other	16,547
United Kingdom	11,737
United States - Federal and various states	101,670
Total	$	163,850

	Tax Credit Carryforwards
	(In thousands)
Belgium	$	1,088
Canada	663
United States	15,416
Total	$	17,167

In 2021, we recognized a net $2.8 million decrease to reserves for uncertain tax positions. A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows:

	2021		2020
	(In thousands)
Balance at beginning of year	$	8,573	$	6,779
Additions based on tax positions related to the current year	422		548
Additions for tax positions of prior years	168		1,574
Reductions for tax positions of prior years - Settlement	(3,264)		(328)
Reduction for tax positions of prior years - Statute of limitations	(78)		—
Balance at end of year	$	5,821	$	8,573

The balance of $5.8 million at December 31, 2021 reflects tax positions that, if recognized, would impact our effective tax rate.

Our practice is to recognize interest and penalties related to uncertain tax positions in interest expense and operating expenses, respectively. We have approximately $0.0 million and $0.2 million accrued for the payment of interest and penalties as of December 31, 2021 and 2020, respectively.

Our federal tax return for the tax years 2017 and later remain subject to examination by the Internal Revenue Service. Our state and foreign income tax returns for the tax years 2011 and later remain subject to examination by various state and foreign tax authorities.