XML 29 R13.htm IDEA: XBRL DOCUMENT
v3.22.0.1

Note 5 - Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2021
Notes to Financial Statements |
Income Tax Disclosure [Text Block] |
(5) | INCOME TAXES
Losses before income taxes derived from United States and non-U.S. operations are as follows:
(In Thousands) |  | Year Ended December 31, |
|  | 2021 |  |  | 2020 |  |  | 2019 |
Non-U.S. |  | $ | (58,476 | ) |  | $ | (137,225 | ) |  | $ | (44,205 | )
United States |  |  | (65,309 | ) |  |  | (60,436 | ) |  |  | (69,290 | )
|  | $ | (123,785 | ) |  | $ | (197,661 | ) |  | $ | (113,495 | )
Income tax expense (benefit) consists of the following:
(In Thousands) |  | U.S. |  |  |  |  |  |  |
|  | Federal |  |  | State |  |  | Non-U.S. |  |  | Total |
Year Ended December 31, 2019 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current |  | $ | 649 |  |  | $ | — |  |  | $ | 26,403 |  |  | $ | 27,052 |
Deferred |  |  | 672 |  |  |  | — |  |  |  | — |  |  |  | 672 |
|  | $ | 1,321 |  |  | $ | — |  |  | $ | 26,403 |  |  | $ | 27,724 |
Year Ended December 31, 2020 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current |  | $ | (21,005 | ) |  | $ | — |  |  | $ | 18,816 |  |  | $ | (2,189 | )
Deferred |  |  | (30 | ) |  |  | — |  |  |  | 1,254 |  |  |  | 1,224 |
|  | $ | (21,035 | ) |  | $ | — |  |  | $ | 20,070 |  |  | $ | (965 | )
Year Ended December 31, 2021 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current |  | $ | 682 |  |  | $ | — |  |  | $ | 6,480 |  |  | $ | 7,162 |
Deferred |  |  | (1,418 | ) |  |  | — |  |  |  | 131 |  |  |  | (1,287 | )
|  | $ | (736 | ) |  | $ | — |  |  | $ | 6,611 |  |  | $ | 5,875 |
The actual income tax expense above differs from the amounts computed by applying the U.S. federal statutory tax rate of 21% to pre-tax loss as a result of the following:
(In Thousands) |  | Year Ended December 31, |
|  | 2021 |  |  | 2020 |  |  | 2019 |
Computed “expected” tax benefit |  | $ | (25,995 | ) |  | $ | (41,509 | ) |  | $ | (23,834 | )
Increase (reduction) resulting from: |  |  |  |  |  |  |  |  |  |  |  |
Foreign income taxed at different rates |  |  | 10,984 |  |  |  | 27,639 |  |  |  | 9,283 |
Uncertain tax positions |  |  | (25,417 | ) |  |  | (62,833 | ) |  |  | 5,145 |
Valuation allowance - deferred tax assets |  |  | 34,566 |  |  |  | 43,455 |  |  |  | 15,707 |
Valuation allowance - deferred tax true-up |  |  | 29,711 |  |  |  | (6,523 | ) |  |  | — |
Deferred tax true-up |  |  | (29,789 | ) |  |  | 6,523 |  |  |  | — |
Foreign taxes |  |  | 15,220 |  |  |  | 12,520 |  |  |  | 20,778 |
Return to accrual |  |  | (7,691 | ) |  |  | 11,401 |  |  |  | (2,247 | )
162(m) - Executive compensation |  |  | 125 |  |  |  | 286 |  |  |  | 28 |
Subpart F income |  |  | 484 |  |  |  | 5,631 |  |  |  | 1,227 |
Other, net |  |  | 3,677 |  |  |  | 2,445 |  |  |  | 1,637 |
|  | $ | 5,875 |  |  | $ | (965 | ) |  | $ | 27,724 |
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are as follows:
(In Thousands) |  | December 31, |  |  | December 31, |
|  | 2021 |  |  | 2020 |
Deferred tax assets: |  |  |  |  |  |  |  |
Accrued employee benefit plan costs |  | $ | 7,275 |  |  | $ | 8,815 |
Stock based compensation |  |  | 649 |  |  |  | 407 |
Net operating loss and tax credit carryforwards |  |  | 215,797 |  |  |  | 148,699 |
Restructuring fees not currently deductible for tax purposes |  |  | 566 |  |  |  | 1,415 |
Disallowed business interest expense carryforward |  |  | 10,386 |  |  |  | 5,546 |
Other |  |  | 3,152 |  |  |  | 2,518 |
Gross deferred tax assets |  |  | 237,825 |  |  |  | 167,400 |
Less valuation allowance |  |  | (204,899 | ) |  |  | (140,428 | )
Net deferred tax assets |  |  | 32,926 |  |  |  | 26,972 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Depreciation and amortization |  |  | (31,745 | ) |  |  | (25,883 | )
Outside basis difference deferred tax liability |  |  | (2,891 | ) |  |  | (2,891 | )
Foreign interest withholding tax |  |  | (990 | ) |  |  | (859 | )
Other |  |  | 572 |  |  |  | (754 | )
Gross deferred tax liabilities |  |  | (35,054 | ) |  |  | (30,387 | )
Net deferred tax assets (liabilities) |  | $ | (2,128 | ) |  | $ | (3,415 | )
On March 27, 2020, the United States enacted the CARES Act, which made changes to existing U.S. tax laws, including, but not limited to, (1) allowing U.S. federal net operating losses originated in the 2019 or 2020 tax years to be carried back five years to recover taxes paid based upon taxable income in the prior five years, (2) eliminated the 80% of taxable income limitation on net operating losses for the 2019 or 2020 tax years (the 80% limitation will be reinstated for tax years after 2020), (3) accelerating the refund of prior year alternative minimum tax credits, and (4) modifying the limitation on deductible interest expense. Considering the available carryback, we have recorded a tax benefit of $6.9 million in the year ended December 31, 2020 related to the realization of net operating loss deferred tax assets on which a valuation allowance was previously recorded. As of December 31, 2021, the Company had U.S. federal net operating loss carryforwards of $417.9 million, which includes $163.7 million of net operating losses subject to an IRC Section 382 limitation. As of December 31, 2020, the Company had $320.7 million of U.S. federal net operating losses, which includes $159.3 million of net operating losses subject to an IRC Section 382 limitation. We have $405.3 million foreign tax credits as of December 31, 2021. We have foreign net operating loss carryforwards of $160.0 million that will expire beginning in 2025 with many having indefinite carryforward periods. IRC Sections 382 and 383 provide an annual limitation with respect to the ability of a corporation to utilize its tax attributes, as well as certain built-in-losses, against future U.S. taxable income in the event of a change in ownership. Our emergence from Chapter 11 bankruptcy proceedings in 2017 is considered a change in ownership for purposes of IRC Section 382. The Company’s annual limitation under the IRC is approximately $15.0 million which is based on our value as of the ownership change date. In addition, the merger with GulfMark in 2018 resulted in a change in ownership of GulfMark for purposes of IRC Section 382. The GulfMark ownership change results in an annual limitation of approximately $7.0 million on GulfMark’s tax attributes generated prior to the ownership change date, which begin to expire in 2032. The Company has recorded a valuation allowance on the net operating loss balance as it believes that it is more likely than not that the deferred tax asset will not be realized. Management assesses the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit the use of the existing deferred tax assets. A significant piece of objective negative evidence evaluated, were the cumulative losses for financial reporting purposes that were incurred for the years ending December 31, 2021, 2020 and 2019. Such objective negative evidence limits the ability to consider other subjective evidence, such as our projections for future growth and tax planning strategies. Based on this evaluation, for the period ended December 31, 2021, a valuation allowance of $204.9 million was recorded against our net deferred tax asset. For the period ended December 31, 2020, a valuation allowance of $140.4 million was recorded against our net deferred tax asset. The increase in the valuation allowance was primarily attributable to the additional valuation allowance on foreign tax credits that were previously reduced by uncertain tax positions which were released by a statute of limitation expiration. The amount of the deferred tax asset considered realizable could be adjusted if estimates of future U.S. taxable income during the carryforward period are reduced or increased or if objective negative evidence in the form of cumulative losses is no longer present and additional weight is given to subjective evidence such as our projections for growth and/or tax planning strategies. We have not recognized a U.S. deferred tax liability associated with temporary differences related to investments in our non-U.S. holding companies as the Company does not intend to dispose of the stock of these companies. These differences relate primarily to stock basis differences attributable to factors other than earnings, given that any untaxed cumulative earnings were subject to taxation in the U.S. in 2017 in accordance with the Tax Act. Further, any post-2017 earnings of these subsidiaries will either be taxed currently for U.S. purposes or will be permanently exempt from U.S. taxation. It is not practicable to estimate the deferred tax liability associated with temporary differences related to investments in our non-U.S. holding companies due to the legal structure and complexity of U.S. and non-U.S. tax laws. Historically, it has been the practice and intention of the Company to indefinitely reinvest the earnings of its non-U.S. subsidiaries. Considering the significant changes made by the Tax Act, the Company will no longer be indefinitely reinvested with regards to its non-U.S. earnings which can be repatriated free of taxation. However, the Company is indefinitely reinvested in the non-U.S. earnings that could be subject to taxation and no deferred taxes have been provided. As of December 31, 2021, the non-U.S. positive unremitted earnings, for which the Company is indefinitely reinvested, are $36.4 million. It is not practicable for the Company to estimate the amount of taxes on positive unremitted earnings due to the legal structure and complexity of non-U.S. tax laws. The Company decides each period whether to indefinitely reinvest these earnings. If, as a result of these reassessments, the Company distributes these earnings in the future, additional tax liabilities could result. We record uncertain tax positions on the basis of a two-step process in which (1) we determine whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, we recognize the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority. The recognition and measurement of tax liabilities for uncertain tax positions in any tax jurisdiction requires the interpretation of the related tax laws and regulations as well as the use of estimates and assumptions regarding significant future events. Changes in tax laws, regulations, agreements and treaties, foreign currency exchange restrictions or our level of operations or profitability in each taxing jurisdiction could have an impact on the amount of income taxes during any given year. Our balance sheet reflects the following in accordance with ASC 740:
(In Thousands) |  | December 31, |  |  | December 31, |
|  | 2021 |  |  | 2020 |
Tax liabilities for uncertain tax positions |  | $ | 29,283 |  |  | $ | 35,304 |
Income tax payable |  |  | 11,480 |  |  |  | 15,928 |
Income tax receivable |  |  | 1,322 |  |  |  | 8,280 |
Included in the liability balances for uncertain tax positions above for the periods ending December 31, 2021 and 2020, are $17.8 million and $22.1 million of penalties and interest, respectively. Penalties and interest related to income tax liabilities are included in income tax expense. Income tax payable is included in other current liabilities. A reconciliation of the beginning and ending amount of all unrecognized tax benefits, and the liability for uncertain tax positions (but excluding related penalties and interest) are as follows:
(In Thousands) |  |  |  |
Balance at December 31, 2018 |  | $ | 399,292 |
Additions based on tax positions related to the current year |  |  | 14,741 |
Additions based on tax positions related to a prior year |  |  | 1,964 |
Settlement and lapse of statute of limitations |  |  | (1,897 | )
Reductions based on tax positions related to a prior year |  |  | (58 | )
Balance at December 31, 2019 (A) |  | $ | 414,042 |
Additions based on tax positions related to a prior year |  |  | 2,223 |
Settlement and lapse of statute of limitations |  |  | (64,458 | )
Reductions based on tax positions related to a prior year |  |  | (760 | )
Balance at December 31, 2020 (A) |  | $ | 351,047 |
Additions based on tax positions related to the current year |  |  | 53 |
Additions based on tax positions related to a prior year |  |  | 18,515 |
Settlement and lapse of statute of limitations |  |  | (35,962 | )
Balance at December 31, 2021 (A) |  | $ | 333,653 |
| (A) | The gross balance reported as uncertain tax positions is largely offset by $322.1 million of foreign tax credits and other tax attributes.
It is reasonably possible that a decrease of $6.4 million in unrecognized tax benefits may be necessary within the coming year due to the lapse of statutes of limitations or audit settlements. The amount of unrecognized tax benefits that, if recognized for tax purposes, would affect the effective tax rate are $29.3 million and $35.3 million as of December 31, 2021 and December 31, 2020 respectively. With limited exceptions, we are no longer subject to tax audits by U.S. federal, state, local or foreign taxing authorities for fiscal years prior to March 2015. In October 2020, the Company received notification from the IRS that the GulfMark U.S. income tax return ending December 31, 2017 was selected for examination. The IRS audit of the GulfMark U.S. income tax return ending December 31, 2017 was closed on November 15, 2021 with no additional tax due. We have ongoing examinations by various foreign tax authorities and do not believe that the results of these examinations will have a material adverse effect on our financial position or results of operations. The Tax Act The Tax Act was enacted on December 22, 2017 and introduced significant changes to U.S. income tax law, including a reduction in the statutory income tax rate from 35% to 21% effective January 1, 2018, a one-time transition tax on deemed repatriation of deferred foreign income, a base erosion anti-abuse tax (“BEAT”) that effectively imposes a minimum tax on certain payments to non-U.S. affiliates, new and revised rules relating to the current taxation of certain income of foreign subsidiaries under the global intangible low-tax income (“GILTI”) regime, changes to net operating loss carryforwards, immediate expensing for capital expenditures, and revised rules associated with limitations on the deduction of interest. The Tax Act subjects a US shareholder to tax on GILTI earned by certain foreign subsidiaries. We have made an accounting policy election to account for GILTI in the year the tax is incurred. Due to current year losses, no GILTI was recognized for the years ending December 31, 2021, 2020 or 2019. The BEAT provisions in the Tax Act eliminate the deduction of certain base-erosion payments made to related foreign corporations beginning in 2018, and impose a minimum tax if greater than regular tax. The BEAT did not have a material impact on our provision for income tax for the years ending December 31, 2021, 2020 or 2019.

X
- References No definition available. + Details
Name: | us-gaap_DisclosureTextBlockAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration