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INCOME TAXES | 12 Months Ended
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Dec. 31, 2019
INCOME TAXES |
INCOME TAXES | NOTE 6 INCOME TAXES On December 22, 2017, the U.S. enacted the Tax Cuts and Jobs Act (“TCJA”), which significantly changed U.S. tax law. The TCJA lowered the Company’s U.S. statutory federal income tax rate from 35% to 21% effective January 1, 2018, while imposing a deemed repatriation tax on previously deferred foreign income. The Company completed its accounting for the income tax effects of the TCJA during 2018, in accordance with the U.S. Securities and Exchange Commission Staff Accounting Bulletin No. 118. Income before income taxes consists of: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Years Ended December 31, |  | 2019 |  | 2018 |  | 2017 |
United States | ​ | $ | 94,612 | ​ | $ | 34,404 | ​ | $ | 36,139 | ​
International | ​ |  | 247,457 | ​ |  | 231,616 | ​ |  | 258,686 | ​
Total | ​ | $ | 342,069 | ​ | $ | 266,020 | ​ | $ | 294,825 | ​
​ The provision (benefit) for income taxes is composed of: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Years Ended December 31, | ​ | 2019 | ​ | 2018 | ​ | 2017 |
Current: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
U.S. Federal | ​ | $ | 2,129 | ​ | $ | 10,273 | ​ | $ | (342) | ​
State/Local | ​ |  | 883 | ​ |  | 877 | ​ |  | 230 | ​
International | ​ |  | 88,084 | ​ |  | 83,456 | ​ |  | 72,670 | ​
​ | ​ | $ | 91,096 | ​ | $ | 94,606 | ​ | $ | 72,558 | ​
Deferred: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
U.S. Federal/State | ​ | $ | 4,670 | ​ | $ | (17,019) | ​ | $ | 2,570 | ​
International | ​ |  | 4,076 | ​ |  | (6,333) | ​ |  | (332) | ​
​ | ​ | $ | 8,746 | ​ | $ | (23,352) | ​ | $ | 2,238 | ​
Total | ​ | $ | 99,842 | ​ | $ | 71,254 | ​ | $ | 74,796 | ​
​ The difference between the actual income tax provision and the tax provision computed by applying the statutory federal income tax rate of 21.0% in 2019 and 2018, and 35.0% in 2017 to income before income taxes is as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Years Ended December 31, |  | 2019 |  | 2018 |  | 2017 |
Income tax at statutory rate | ​ | $ | 71,835 | ​ | $ | 55,864 | ​ | $ | 103,189 | ​
State income taxes (benefits), net of federal (tax) benefit | ​ |  | 2,622 | ​ |  | (1,516) | ​ |  | (2,620) | ​
Investment incentives | ​ | ​ | (2,530) | ​ | ​ | (1,900) | ​ | ​ | (1,900) | ​
Tax resolutions | ​ | ​ | (1,915) | ​ | ​ | (3,400) | ​ | ​ | (5,188) | ​
Excess tax benefits from share-based compensation | ​ | ​ | (12,520) | ​ | ​ | (10,800) | ​ | ​ | (10,383) | ​
Deferred benefits from tax rate changes | ​ | ​ | — | ​ | ​ | (2,800) | ​ | ​ | (5,055) | ​
U.S. GILTI and BEAT | ​ | ​ | (1,485) | ​ | ​ | 5,625 | ​ | ​ | — | ​
U.S. tax reform - transition tax | ​ | ​ | — | ​ | ​ | (2,570) | ​ | ​ | 31,575 | ​
Results of forward contract | ​ | ​ | — | ​ | ​ | — | ​ | ​ | (23,883) | ​
Valuation allowance | ​ | ​ | 10,623 | ​ | ​ | 3,170 | ​ | ​ | 1,344 | ​
Rate differential on earnings of foreign operations | ​ |  | 29,807 | ​ |  | 26,424 | ​ |  | (16,097) | ​
Other items, net | ​ |  | 3,405 | ​ |  | 3,157 | ​ |  | 3,814 | ​
Actual income tax provision | ​ | $ | 99,842 | ​ | $ | 71,254 | ​ | $ | 74,796 | ​
Effective income tax rate | ​ |  | 29.2 | % |  | 26.8 | % |  | 25.4 | %
​ The 2019 tax provision was favorably impacted by excess tax benefits on deductible share-based compensation. The tax provision for 2019 reflects a $12.5 million benefit from this item. The mix of pretax income has an unfavorable impact, because the majority of our income is earned in higher tax jurisdictions. Additionally, we have incurred losses in jurisdictions where we cannot tax effect the loss. We have elected to account for the tax on the U.S. GILTI as a period cost and not as a measure of deferred taxes. The 2018 tax provision was favorably impacted by excess tax benefits on deductible stock compensation. The tax provision for 2018 reflects a $10.8 million benefit from this item. The mix of pretax income has an unfavorable impact, reflecting that the majority of our income is earned in higher tax jurisdictions. The U.S. GILTI tax and Base Erosion Anti-Abuse Tax (“BEAT”) also had a $5.6 million unfavorable impact. The 2017 tax provision was favorably impacted by the mix of pretax income in various non-U.S. tax jurisdictions. The tax provision for 2017 reflects $10.4 million related to the excess tax benefits on deductible stock compensation, which is new for 2017. The deferred tax benefit of $5.1 million is net of a provisional benefit of $6.8 million recorded for the change in the U.S. tax rate and a charge of $1.7 million for tax rate changes in France and Argentina. The $5.2 million related to tax resolutions includes an amount of $3.2 million related to uncertain tax positions in Europe. The remaining $2.0 million is a refund from a distribution tax paid in France. Furthermore, the tax provision for 2017 reflects a provisional charge of $31.6 million from the transition tax enacted as part of the U.S. tax reform. This was partially offset by a benefit of $23.9 million from the forward contracts discussed in Note 11 – Derivative Instruments and Hedging Activities. Significant deferred tax assets and liabilities as of December 31, 2019 and 2018 are composed of the following temporary differences: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | 2019 |  | 2018 |
Deferred Tax Assets: | ​ | ​ | ​ | ​ | ​ | ​ | ​
Net operating loss carryforwards | ​ | $ | 24,941 | ​ | $ | 22,462 | ​
Operating and finance leases | ​ | ​ | 25,440 | ​ | ​ | — | ​
Pension liabilities | ​ | ​ | 24,925 | ​ | ​ | 15,405 | ​
Share-based compensation | ​ |  | 6,082 | ​ | ​ | 10,130 | ​
U.S. federal tax credits | ​ | ​ | 8,575 | ​ | ​ | 12,045 | ​
U.S. state tax credits | ​ |  | 7,881 | ​ | ​ | 10,186 | ​
Vacation and bonus | ​ |  | 7,645 | ​ | ​ | 6,891 | ​
Research and development | ​ | ​ | 7,539 | ​ | ​ | 6,945 | ​
Inventory | ​ | ​ | 5,993 | ​ | ​ | 6,038 | ​
Workers compensation | ​ |  | 3,835 | ​ | ​ | 3,373 | ​
Other | ​ |  | 16,496 | ​ | ​ | 13,985 | ​
Total gross deferred tax assets | ​ |  | 139,352 | ​ | ​ | 107,460 | ​
Less valuation allowance | ​ |  | (23,320) | ​ | ​ | (11,189) | ​
Net deferred tax assets | ​ |  | 116,032 | ​ | ​ | 96,271 | ​
Deferred Tax Liabilities: | ​ | ​ | ​ | ​ | ​ | ​ | ​
Acquisition related intangibles | ​ |  | 62,851 | ​ | ​ | 59,004 | ​
Depreciation and amortization | ​ | ​ | 28,284 | ​ | ​ | 31,140 | ​
Operating and finance leases | ​ | ​ | 27,555 | ​ | ​ | 2,034 | ​
Other | ​ |  | 6,215 | ​ | ​ | 10,351 | ​
Total gross deferred tax liabilities | ​ |  | 124,905 | ​ | ​ | 102,529 | ​
Net deferred tax (liabilities) assets | ​ | $ | (8,873) | ​ | $ | (6,258) | ​
​ The $12.1 million increase in our valuation allowance in 2019 is primarily due to losses in foreign jurisdictions where we cannot record the benefit of the losses. We evaluate the deferred tax assets and record a valuation allowance when it is believed it is more likely than not that the benefit will not be realized. We have established a valuation allowance for $20.2 million of the $24.9 million of tax effected net operating loss carryforwards. These losses are generally in locations that have not produced cumulative three year operating profit. A valuation allowance of $3.1 million has also been established against the $7.9 million of U.S. state tax credit carryforwards. The U.S. federal tax credits will expire in the years 2026 and 2027. There is no expiration date on $20.8 million of the tax-effected net operating loss carryforwards and $4.1 million (tax effected) will expire in the years 2020 to 2038. The U.S. state tax credit carryforwards of $7.9 million (tax effected) will expire in the years 2020 to 2034. As a result of U.S. tax reform and the U.S. GILTI provisions, none of the non-U.S. unremitted earnings will be subject to U.S. taxation. We maintain our assertion that all other cash and distributable reserves at our non-U.S. affiliates will continue to be indefinitely reinvested. We estimate the amount of additional local and withholding tax that would be payable on distributions to be in the range of $20 million to $30 million. We have not provided for taxes on certain tax-deferred income of a foreign operation. The income arose predominately from government grants. Taxes of approximately $1.6 million would become payable in the event the terms of the grant are not fulfilled. Income Tax Uncertainties We provide a liability for the amount of tax benefits realized from uncertain tax positions. A reconciliation of the beginning and ending amount of income tax uncertainties is as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | 2019 |  | 2018 |  | 2017 |
Balance at January 1 | ​ | $ | 3,559 | ​ | $ | 3,080 | ​ | $ | 6,356 | ​
Increases based on tax positions for the current year | ​ |  | 412 | ​ | ​ | 360 | ​ | ​ | 370 | ​
Increases based on tax positions of prior years | ​ |  | 663 | ​ | ​ | 610 | ​ | ​ | 1,562 | ​
Settlements | ​ |  | (558) | ​ | ​ | (491) | ​ | ​ | (4,874) | ​
Lapse of statute of limitations | ​ |  | (429) | ​ | ​ | — | ​ | ​ | (334) | ​
Balance at December 31 | ​ | $ | 3,647 | ​ | $ | 3,559 | ​ | $ | 3,080 | ​
​ The amount of income tax uncertainties that, if recognized, would impact the effective tax rate is approximately $3.6 million. We estimate that it is reasonably possible that the liability for uncertain tax positions will decrease no more than $1.8 million in the next twelve months from the resolution of various uncertain positions as a result of the completion of tax audits, litigation and the expiration of the statute of limitations in various jurisdictions. We recognize interest and penalties accrued related to unrecognized tax benefits as a component of income taxes. As of December 31, 2019, 2018 and 2017, we had approximately $1.7 million, $1.9 million and $1.6 million, respectively, accrued for the payment of interest and penalties, of which approximately $0.2 million was recognized as a tax benefit for the year ended 2019 and $0.4 million and $0.1 million was recognized in income tax expense in the years ended December 31, 2018 and 2017, respectively. Aptar or its subsidiaries file income tax returns in the U.S. Federal jurisdiction and various state and foreign jurisdictions. The major tax jurisdictions we file in, with the years still subject to income tax examinations, are listed below: ​
​ | ​ | ​ | ​
​ |  | Tax Years |
Major Tax | ​ | Subject to |
Jurisdiction | ​ | Examination |
United States — Federal |  | 2014-2019 | ​
United States — State |  | 2010-2019 | ​
France |  | 2016-2019 | ​
Germany |  | 2015-2019 | ​
Italy |  | 2014-2019 | ​
China |  | 2010-2019 | ​
​

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- 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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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