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Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Income Taxes
9 Income Taxes
Income tax data for the years ended December 31, 2024, 2023 and 2022 is as follows (in thousands):
 
Year Ended December 31,
2024
2023
2022
The components of income before income taxes are as follows:
Domestic
    $ 121,630      $ 74,119      $ 133,816  
Foreign
      633,238        662,124        704,030  
  
 
 
     
 
 
     
 
 
  
Total
    $ 754,868      $ 736,243      $ 837,846  
  
 
 
     
 
 
     
 
 
  
 
Year Ended December 31,
2024
2023
2022
The components of the income tax provision were as follows:
Federal
    $ 20,609     $ 178     $ 62,153  
State
    6,395     6,427       8,025  
Foreign
      90,907       88,601       91,901  
  
 
 
    
 
 
    
 
 
  
Total current tax provision
    $ 117,911     $ 95,206     $ 162,079  
  
 
 
    
 
 
    
 
 
  
Federal
    $ (383 )    $ (2,457 )    $ (26,551 ) 
State
    303     (3,029 )      (4,420 ) 
Foreign
      (797 )     4,289       (1,017 ) 
  
 
 
    
 
 
    
 
 
  
Total deferred tax provision
      (877 )     (1,197 )      (31,988 ) 
  
 
 
    
 
 
    
 
 
  
Total provision
    $ 117,034     $ 94,009     $ 130,091  
  
 
 
    
 
 
    
 
 
  
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, 2024, 2023 and 2022 (in thousands):
 
Year Ended December 31,
2024
2023
2022
Federal tax computed at U.S. statutory income tax rate
    $ 158,522     $ 154,611     $ 175,948  
GILTI, net of foreign tax credits
    4,820     15,103       17,812  
Uncertain tax positions
    5,024     (16,211 )      1,051  
State income tax, net of federal income tax benefit
    6,078     2,880       3,605  
Net effect of foreign operations
    (47,732 )     (48,587 )      (55,273 ) 
Effect of stock-based compensation
    (2,155 )      (2,262 )      (7,341 ) 
Other, net
      (7,523 )     (11,525 )      (5,711 ) 
  
 
 
    
 
 
    
 
 
  
Provision for income taxes
    $ 117,034     $ 94,009     $ 130,091  
  
 
 
    
 
 
    
 
 
  
 
The Company’s effective tax rate was 15.5%, 12.8% and 15.5
% for the years ended December 31, 2024, 2023 and 2022, respectively. The increase in the Company’s effective tax rate in 2024 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 in 2023
.
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. Included in the 2024 net effect of foreign operations is the impact of the Pillar Two system of global minimum tax rules, which did not have a material impact.
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, 2024. The Company has a 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. 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 $
14 million, $16 million and $20 million and increased the Company’s net income per diluted share by $0.24, $0.27 and $0.33 for the years ended December 31, 2024, 2023 and 2022, respectively.
During 2024, the Company’s effective tax rate differed from the 21
% U.S. statutory tax rate primarily due to the jurisdictional mix of earnings,
 a
$
5
 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 2023 effective tax rate differed from the 21% U.S. statutory tax rate primarily due to the jurisdictional mix of earnings, a $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, an $18 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 $3 million, $4 million and $4 million for 2024, 2023 and 2022, respectively, for future withholding taxes and U.S. state taxes on the repatriation of 2024, 2023 and 2022 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,
2024
2023
Deferred tax assets:
Net operating losses and credits
    $ 118,854      $ 54,901  
Operating leases
    16,573      20,307  
Amortization
    9,006      5,905  
Stock-based compensation
    6,343      7,754  
Deferred compensation
    20,515      14,886  
Deferred revenue
    15,707      17,127  
Inventory
    7,083      7,534  
Capitalized interest
      —        12,586  
Capitalized Section 174 Expenditures
    51,514      34,487  
Other
    13,212      14,907  
  
 
 
     
 
 
  
Total deferred tax assets
      258,807        190,394  
Valuation allowance
    (119,464 )      (57,873 ) 
  
 
 
     
 
 
  
Deferred tax assets, net of valuation allowance
      139,343        132,521  
Deferred tax liabilities:
      
Capitalized software
    (29,309 )       (29,281 ) 
Operating leases
    (16,312 )       (20,117 ) 
Indefinite-lived intangibles
    (29,924 )       (14,824 ) 
Deferred tax liability on foreign earnings
    (20,278 )       (20,374 ) 
  
 
 
     
 
 
  
Total deferred tax liabilities
      (95,823 )      (84,596 ) 
  
 
 
     
 
 
  
Net deferred tax assets
    $ 43,520      $ 47,925  
  
 
 
     
 
 
  
The Company has gross foreign net operating losses of $505 million, of which $176 million do not expire under current laws
,
$42 
million start expiring in 2025 and $287 million start expiring in 2041. As of December 31, 2024, the Company has provided a deferred tax valuation allowance of
 $119 million, of which $113 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 $5 million as of December 31, 2024, 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.
The following is a summary of the activity of the Company’s gross unrecognized tax benefits, excluding interest and penalties, for the year ended December 31, 2024, 2023 and 2022 (in thousands):
 
2024
2023
2022
Balance at the beginning of the period
    $ 14,323     $ 29,019     $ 28,692  
Net reductions for settlement of tax audits
      —        (17,651 )      —   
Net reductions for lapse of statutes taken during the period
      (616 )      (512 )      (818 ) 
Net additions for tax positions taken during the prior period
      3,407       2,473       —   
Net additions for tax positions taken during the current period
      543       994       1,145  
  
 
 
    
 
 
    
 
 
  
Balance at the end of the period
    $ 17,657     $ 14,323     $ 29,019  
  
 
 
    
 
 
    
 
 
  
 
 
As of 2024, the total amount of gross unrecognized tax benefits was $18 
million, all of which, if recognized, would impact the Company’s effective tax rate. 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, 2019. 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, 2024, the Company expects to record additional reductions in the measurement of its unrecognized tax benefits and related net interest and penalties of approximately $1 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, 2024, 2023 and 2022 (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:
2024
    $ 57,873      $ 64,310   $ (2,719 )   $ 119,464  
2023
    $ 54,300      $ 1,467     $ 2,106     $ 57,873  
2022
    $ 58,834      $ (1,647 )    $ (2,887 )    $ 54,300  
 
*
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 increase in the 2024 charge to the provision for income taxes can be attributed to an increase in foreign net operating losses.
**
The changes in the valuation allowance during the years ended December 31, 2024, 2023 and 2022 are primarily due to the effect of foreign currency translation on a valuation allowance related to a net operating loss carryforward.