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Income Taxes | 12 Months Ended
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Dec. 31, 2023
Income Tax Disclosure [Abstract] |
Income Taxes | 10 Income Taxes Income tax data for the years ended December 31, 2023, 2022 and 2021 is as follows (in thousands):
|  | Year Ended December 31, |
|  | 2023 |  |  | 2022 |  |  | 2021 |
The components of income before income taxes are as follows: |  |  |  |  |  |  |  |  |  |  |  |
Domestic |  | $ | 74,119 |  |  | $ | 133,816 |  |  | $ | 144,410 |
Foreign |  |  | 662,124 |  |  |  | 704,030 |  |  |  | 661,783 |
Total |  | $ | 736,243 |  |  | $ | 837,846 |  |  | $ | 806,193 |
|  | Year Ended December 31, |
|  | 2023 |  |  | 2022 |  |  | 2021 |
The components of the income tax provision were as follows: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 178 |  |  | $ | 62,153 |  |  | $ | 16,302 |
State |  |  | 6,427 |  |  |  | 8,025 |  |  |  | 3,691 |
Foreign |  |  | 88,601 |  |  |  | 91,901 |  |  |  | 76,724 |
Total current tax provision |  | $ | 95,206 |  |  | $ | 162,079 |  |  | $ | 96,717 |
Federal |  | $ | (2,457 | ) |  | $ | (26,551 | ) |  | $ | 10,491 |
State |  |  | (3,029 | ) |  |  | (4,420 | ) |  |  | 345 |
Foreign |  |  | 4,289 |  |  |  | (1,017 | ) |  |  | 5,797 |
Total deferred tax provision |  |  | (1,197 | ) |  |  | (31,988 | ) |  |  | 16,633 |
Total provision |  | $ | 94,009 |  |  | $ | 130,091 |  |  | $ | 113,350 |
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, 2023, 2022 and 2021 (in thousands):
|  | Year Ended December 31, |
|  | 2023 |  |  | 2022 |  |  | 2021 |
Federal tax computed at U.S. statutory income tax rate |  | $ | 154,611 |  |  | $ | 175,948 |  |  | $ | 169,300 |
GILTI, net of foreign tax credits |  |  | 15,103 |  |  |  | 17,812 |  |  |  | 10,476 |
Uncertain tax positions |  |  | (16,211 | ) |  |  | 1,051 |  |  |  | 508 |
State income tax, net of federal income tax benefit |  |  | 2,880 |  |  |  | 3,605 |  |  |  | 4,037 |
Net effect of foreign operations |  |  | (48,587 | ) |  |  | (55,273 | ) |  |  | (56,214 | )
Effect of stock-based compensation |  |  | (2,262 | ) |  |  | (7,341 | ) |  |  | (6,682 | )
Other, net |  |  | (11,525 | ) |  |  | (5,711 | ) |  |  | (8,075 | )
Provision for income taxes |  | $ | 94,009 |  |  | $ | 130,091 |  |  | $ | 113,350 |
The Company’s effective tax rate was 12.8%, 15.5% and 14.1 % for the years ended December 31, 2023, 2022 and 2021, respectively. The decrease in the Company’s effective tax rate in 2023 can primarily be attributed to the recognition of a previously unrecognized tax benefit of $ 18 million as a result of the completion of a tax examination, decreasing the Company’s 2023 effective tax rate by approximately 2.5%. The Company’s effective income tax rate differs from the U.S. federal statutory rate each year due to differences in the proportionate amounts of pre-tax income recognized in jurisdictions with different effective tax rates and the items discussed below. The four principal jurisdictions in which the Company manufactures are the U.S., Ireland, the U.K. and Singapore, where the statutory tax rates were 21%, 12.5%, 25% and 17%, respectively, as of December 31, 2023. The Company has a new Development and Expansion Incentive in Singapore that provides a concessionary income tax rate of 5 % on certain types of income for the period April 1, 2021 through March 31, 2026. Prior to April 1, 2021, the Company had a tax exemption on income arising from qualifying activities in Singapore based upon the achievement of certain contractual milestones, which the Company met as of December 31, 2020 and maintained through March 2021. The effect of applying these concessionary income tax rates rather than the statutory tax rate to income arising from qualifying activities in Singapore increased the Company’s net income by $ 16 million, $ 20 million and $ 20 million and increased the Company’s net income per diluted share by $ 0.27 , $ 0.33 and $ 0.32 for the year s ended December 31, 2023, 2022 and 2021, respectively. During 2023, the Company’s effective tax rate differed from the 21% U.S. statutory tax rate primarily due to the jurisdictional mix of earnings, an $18 million recognition of a previously unrecognized tax benefit as a result of the completion of a tax examination, a $15 million provision related to the GILTI tax, including the impact of capitalizing research and development expenditures pursuant to IRC Section 174, and a tax benefit of $3 million on stock-based compensation. The 2022 effective tax rate differed from the 21% U.S. statutory tax rate primarily due to the jurisdictional mix of earnings, a $18 million provision related to the GILTI tax and a tax benefit of $7 million on stock-based compensation. The 2021 effective tax rate differed from the 21% U.S. statutory tax rate primarily due to the jurisdictional mix of earnings, an $10 million provision related to the GILTI tax and a tax benefit of $7 million on stock-based compensation. The Company recorded a tax provision of $4 million, $4 million and $3 million for 2023, 2022 and 2021, respectively, for future withholding taxes and U.S. state taxes on the repatriation of 2023, 2022 and 2021 undistributed earnings. 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, |
|  | 2023 |  |  | 2022 |
Deferred tax assets: |  |  |  |  |  |  |  |
Net operating losses and credits |  | $ | 54,901 |  |  | $ | 51,945 |
Depreciation |  |  | 1,517 |  |  |  | 18 |
Operating leases |  |  | 20,307 |  |  |  | 19,771 |
Amortization |  |  | 5,905 |  |  |  | 2,713 |
Stock-based compensation |  |  | 7,754 |  |  |  | 7,947 |
Deferred compensation |  |  | 14,886 |  |  |  | 23,488 |
Deferred revenue |  |  | 17,127 |  |  |  | 13,555 |
Revaluation of equity investments and licenses |  |  | 1,884 |  |  |  | 23 |
Inventory |  |  | 7,534 |  |  |  | 6,463 |
Accrued liabilities and reserves |  |  | 5,720 |  |  |  | 4,815 |
Capitalized interest |  |  | 12,586 |  |  |  | — |
Unrealized foreign currency gain/loss |  |  | 700 |  |  |  | 1,858 |
Capitalized Section 174 Expenditures |  |  | 34,487 |  |  |  | 34,234 |
Other |  |  | 5,086 |  |  |  | 1,098 |
Total deferred tax assets |  |  | 190,394 |  |  |  | 167,928 |
Valuation allowance |  |  | (57,873 | ) |  |  | (54,300 | )
Deferred tax assets, net of valuation allowance |  |  | 132,521 |  |  |  | 113,628 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Capitalized software |  |  | (29,281 | ) |  |  | (25,429 | )
Operating leases |  |  | (20,117 | ) |  |  | (19,543 | )
Indefinite-lived intangibles |  |  | (14,824 | ) |  |  | (16,057 | )
Deferred tax liability on foreign earnings |  |  | (20,374 | ) |  |  | (18,677 | )
Total deferred tax liabilities |  |  | (84,596 | ) |  |  | (79,706 | )
Net deferred tax assets |  | $ | 47,925 |  |  | $ | 33,922 |
The Company has gross foreign net operating losses of $231 million, of which $192 million do not expire under current laws and $39 million start expiring in 2024. As of December 31, 2023, the Company has provided a deferred tax valuation allowance of $58 million, of which $52 million relates to certain foreign net operating losses. The Company’s net deferred tax assets associated with net operating losses and tax credit carryforwards are approximately $3 million as of December 31, 2023, which represent the future tax benefit of foreign net operating loss carryforwards that do not expire under current law. The Company accounts for its uncertain tax return positions in accordance with the accounting standards for income taxes, which require financial statement reporting of the expected future tax consequences of uncertain tax reporting positions on the presumption that all concerned tax authorities possess full knowledge of those tax reporting positions, as well as all of the pertinent facts and circumstances, but prohibit any discounting of unrecognized tax benefits associated with those reporting positions for the time value of money. The Company continues to classify interest and penalties related to unrecognized tax benefits as a component of the provision for income taxes.
|  | 2023 |  |  | 2022 |  |  | 2021 |
Balance at the beginning of the period |  | $ | 29,019 |  |  | $ | 28,692 |  |  | $ | 28,666 |
Net reductions for settlement of tax audits |  |  | (17,651 | ) |  |  | — |  |  |  | (1,300 | )
Net reductions for lapse of statutes taken during the period |  |  | (512 | ) |  |  | (818 | ) |  |  | (433 | )
Net additions for tax positions taken during the prior period |  |  | 2,473 |  |  |  | — |  |  |  | — |
Net additions for tax positions taken during the current period |  |  | 994 |  |  |  | 1,145 |  |  |  | 1,759 |
Balance at the end of the period |  | $ | 14,323 |  |  | $ | 29,019 |  |  | $ | 28,692 |
As of 2023, the total amount of gross unrecognized tax benefits was $14 million, all of which, if recognized, would impact the Company’s effective tax rate. This represents a decrease of $18 million resulting from the completion of a tax audit in 2023. This decrease reduced the income tax expense in the statement of operations and did not impact cash flows. The Company is subject to various foreign audits and inquiries, and we currently do not expect any material adjustments. With limited exceptions, the Company is no longer subject to tax audit examinations in significant jurisdictions for the years ended on or before December 31, 2018. The Company continuously monitors the lapsing of statutes of limitations on potential tax assessments for related changes in the measurement of unrecognized tax benefits, related net interest and penalties and deferred tax assets and liabilities. As of December 31, 2023, the Company expects to record additional reductions in the measurement of its unrecognized tax benefits and related net interest and penalties of approximately $2 million within the next twelve months due to potential tax audit settlements and the lapsing of statutes of limitations on potential tax assessments. The Company does not expect to record any other material reductions in the measurement of its unrecognized tax benefits within the next twelve months. The following is a summary of the activity of the Company’s valuation allowance for the years ended December 31, 2023, 2022 and 2021 (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: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
2023 |  | $ | 54,300 |  |  | $ | 1,467 |  |  | $ | 2,106 |  |  | $ | 57,873 |
2022 |  | $ | 58,834 |  |  | $ | (1,647 | ) |  | $ | (2,887 | ) |  | $ | 54,300 |
2021 |  | $ | 60,101 |  |  | $ | 2,919 |  |  | $ | (4,186 | ) |  | $ | 58,834 |
* | 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, 2023, 2022 and 2021 are primarily due to the effect of foreign currency translation on a valuation allowance related to a net operating loss carryforward.

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