Income Taxes (Tables)

12 Months Ended

Dec. 31, 2022

Income tax data for the years ended December 31, 2022, 2021 and 2020 is as follows (in

thousands):


	Year Ended December 31,
	2022		2021		2020
The components of income before income taxes are as follows:
Domestic	$	133,816	$	144,410	$	75,193
Foreign		704,030		661,783		535,721

Total	$	837,846	$	806,193	$	610,914

Components of Income Taxes


	Year Ended December 31,
	2022			2021		2020
The components of the income tax provision were as follows:
Federal	$	62,153		$	16,302	$	28,385
State		8,025			3,691		4,243
Foreign		91,901			76,724		59,408

Total current tax provision	$	162,079		$	96,717	$	92,036

Federal	$	(26,551	)	$	10,491	$	(8,244	)
State		(4,420	)		345		(506	)
Foreign		(1,017	)		5,797		6,057

Total deferred tax provision		(31,988	)		16,633		(2,693	)

Total provision	$	130,091		$	113,350	$	89,343

Effective Income Tax Rate Reconciliation

The

differences between income taxes computed at the United States statutory rate and the provision for income taxes are summarized as follows for the years ended December 31, 2022, 2021 and 2020 (in

thousands):


	Year Ended December 31,
	2022			2021			2020
Federal tax computed at U.S. statutory income tax rate	$	175,948		$	169,300		$	128,292
GILTI, net of foreign tax credits		17,812			10,476			13,319
State income tax, net of federal income tax benefit		3,605			4,036			2,415
Net effect of foreign operations		(54,549	)		(54,566	)		(48,962	)
Effect of stock-based compensation		(7,341	)		(6,682	)		(6,798	)
Other, net		(5,384	)		(9,214	)		1,077

Provision for income taxes	$	130,091		$	113,350		$	89,343

Components of Deferred Tax Assets and Liabilities

The tax effects of temporary differences and carryforwards which give rise to deferred tax assets and deferred tax liabilities are summarized as follows (in thousands):


	December 31,
	2022			2021
Deferred tax assets:
Net operating losses and credits	$	51,945		$	55,813
Depreciation		18			—
Operating leases		19,771			19,288
Amortization		2,713			2,316
Stock-based compensation		7,947			8,074
Deferred compensation		23,488			30,105
Deferred revenue		13,555			10,997
Revaluation of equity investments and licenses		23			3,083
Inventory		6,463			5,405
Accrued liabilities and reserves		4,815			6,675
Unrealized foreign currency gain/loss		1,858			2,266
Capitalized Section 174 Expenditures		34,234			—
Other		1,098			6,713

Total deferred tax assets		167,928			150,735
Valuation allowance		(54,300	)		(58,834	)

Deferred tax assets, net of valuation allowance		113,628			91,901
Deferred tax liabilities:
Capitalized software		(25,429	)		(24,357	)
Operating leases		(19,543	)		(19,251	)
Indefinite-lived intangibles		(16,057	)		(15,534	)
Depreciation		—			(3,481	)
Deferred tax liability on foreign earnings		(18,677	)		(17,283	)

Total deferred tax liabilities		(79,706	)		(79,906	)

Net deferred tax assets	$	33,922		$	11,995

Unrecognized Tax Benefits


	2022			2021			2020
Balance at the beginning of the period	$	28,692		$	28,666		$	27,790
Net reductions for settlement of tax audits		—			(1,300	)		(399	)
Net reductions for lapse of statutes taken during the period		(818	)		(433	)		(684	)
Net additions for tax positions taken during the current period		1,145			1,759			1,959

Balance at the end of the period	$	29,019		$	28,692		$	28,666

Company's valuation allowance

The following is a summary of the activity of the Company’s valuation allowance for the years ended December 31, 2022, 2021 and 2020 (in thousands):


	Balance at Beginning of Period		Charged to Provision for Income Taxes*			Other**			Balance at End of Period
Valuation allowance for deferred tax assets:
2022	$	58,834	$	(1,647	)	$	(2,887	)	$	54,300
2021	$	60,101	$	2,919		$	(4,186	)	$	58,834
2020	$	51,221	$	1,137		$	7,743		$	60,101

*	These amounts have been recorded as part of the income statement provision for income taxes. The income statement effects of these amounts have largely been offset by amounts related to changes in other deferred tax balance sheet accounts.

The changes in the valuation allowance during the years ended December 31, 2022 and 2021 are primarily due to the effect of foreign currency translation on a valuation allowance related to a net operating loss carryforward. The change in the valuation allowance during the year ended December 31, 2020 was primarily due to the effect of foreign currency translation on a valuation allowance related to a net operating loss carryforward and acquired historical net operating losses.