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INCOME TAXES | 12 Months Ended
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Dec. 31, 2024
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES Income before income taxes consists of:
Years Ended December 31, | 2024 |  | 2023 |  | 2022
United States | $ | 99,573 |  |  | $ | 49,681 |  |  | $ | 65,350 |
International | 370,192 |  |  | 325,144 |  |  | 269,354 |
Total | $ | 469,765 |  |  | $ | 374,825 |  |  | $ | 334,704 |
The provision (benefit) for income taxes is composed of:
Years Ended December 31, | 2024 |  | 2023 |  | 2022
Federal: |  |  |  |  |
Current | $ | 10,933 |  |  | $ | 11,777 |  |  | $ | 12,791 |
Deferred | (8,936) |  |  | (10,931) |  |  | (783) |
| $ | 1,997 |  |  | $ | 846 |  |  | $ | 12,008 |
State: |  |  |  |  |
Current | $ | 2,744 |  |  | $ | 1,300 |  |  | $ | 2,265 |
Deferred | (923) |  |  | (675) |  |  | (99) |
| $ | 1,821 |  |  | $ | 625 |  |  | $ | 2,166 |
International: |  |  |  |  |
Current | $ | 103,316 |  |  | $ | 97,455 |  |  | $ | 92,199 |
Deferred | (11,547) |  |  | (8,277) |  |  | (11,224) |
| $ | 91,769 |  |  | $ | 89,178 |  |  | $ | 80,975 |
Total | $ | 95,587 |  |  | $ | 90,649 |  |  | $ | 95,149 |
A reconciliation of the provision for income taxes with the amount computed by applying the statutory federal income tax rate of 21% to income before provision for income taxes is as follows:
Years Ended December 31, | 2024 |  | 2023 |  | 2022
Income tax at statutory rate | $ | 98,651 |  |  | $ | 78,713 |  |  | $ | 70,288 |
State income taxes, net of federal tax effect | 1,439 |  |  | 362 |  |  | 1,475 |
Excess tax benefits from share-based compensation | (11,041) |  |  | (5,935) |  |  | (3,306) |
Deferred tax (benefits) charges, incl. tax rate changes | 2,691 |  |  | (3,512) |  |  | (2,349) |
Valuation allowance | (14,625) |  |  | 158 |  |  | 1,486 |
Legal entity reorganization | — |  |  | 3,630 |  |  | 5,850 |
Rate differential on earnings of foreign operations | 21,357 |  |  | 18,917 |  |  | 19,165 |
Other items, net | (2,885) |  |  | (1,684) |  |  | 2,540 |
Actual income tax provision | $ | 95,587 |  |  | $ | 90,649 |  |  | $ | 95,149 |
Effective income tax rate | 20.3 | % |  | 24.2 | % |  | 28.4 | %
The provision for income tax is favorably impacted by excess tax benefits on deductible share-based compensation. The tax provision for 2024 reflects a $11.0 million benefit from this item compared with a $5.9 million and $3.3 million tax benefit for 2023 and 2022, respectively. The valuation allowance for 2023 and 2022 reflects losses in jurisdictions where we cannot tax effect the loss. During 2024, we changed our previous assessment on the realization of tax losses, and our need for a valuation allowance, in various jurisdictions due to sufficient positive evidence becoming available during the year. Our revised assessment of the realization of tax losses in Luxembourg resulted in a $11.0 million net tax benefit in 2024. Our mix of earnings has an unfavorable tax rate impact since a majority of our pretax income is earned in higher tax jurisdictions. The provision for income taxes for 2023 and 2022 include a $3.6 million and $5.9 million charge, respectively, for taxes related to a legal entity reorganization intended to enhance our dividend and cash management capabilities. Significant deferred tax assets and liabilities as of December 31, 2024 and 2023 are composed of the following temporary differences:
| 2024 |  | 2023
Deferred Tax Assets: |  |  |
Net operating loss carryforwards | $ | 72,766 |  |  | $ | 49,016 |
Operating and finance leases | 21,712 |  |  | 20,440 |
Pension liabilities | 6,472 |  |  | 13,608 |
Share-based compensation | 3,747 |  |  | 7,326 |
U.S. state tax credits | 5,790 |  |  | 6,110 |
Vacation and bonus | 16,223 |  |  | 16,915 |
U.S. capitalized research expenditures | 41,956 |  |  | 35,563 |
Inventory | 6,094 |  |  | 7,166 |
Accrued liabilities and other reserves | 9,598 |  |  | 9,622 |
Other | 15,575 |  |  | 16,470 |
Total gross deferred tax assets | $ | 199,933 |  |  | $ | 182,236 |
Less valuation allowance | (61,134) |  |  | (48,856) |
Net deferred tax assets | $ | 138,799 |  |  | $ | 133,380 |
Deferred Tax Liabilities: |  |  |
Acquisition related intangibles | $ | 51,155 |  |  | $ | 57,426 |
Depreciation and amortization | 21,325 |  |  | 25,541 |
Operating and finance leases | 22,672 |  |  | 22,715 |
Other | 8,059 |  |  | 6,988 |
Total gross deferred tax liabilities | $ | 103,211 |  |  | $ | 112,670 |
Net deferred tax assets (liabilities) | $ | 35,588 |  |  | $ | 20,710 |
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 $56.9 million of the $72.8 million of tax effected net operating loss carryforwards. These losses are generally in locations that have not produced cumulative three year operating profit. During 2024 we recorded a $29.5 million deferred tax asset for our tax losses in Luxembourg and have established a valuation allowance of $18.5 million related to this asset. Additionally, given our current earnings and anticipated future earnings, we believe there is a reasonable possibility that within the next 12 months, sufficient positive evidence may become available to support the realization of $7.0 million to $10.0 million of deferred tax assets for which there is currently a corresponding valuation allowance. A valuation allowance of $4.0 million has also been established against the $5.8 million of U.S. state tax credit carryforwards. There is no expiration date on $63.7 million of the tax-effected net operating loss carryforwards and $9.1 million (tax effected) will expire in the years 2025 to 2044. The U.S. state tax credit carryforwards of $5.8 million (tax effected) will expire in the years 2025 to 2039. None of the earnings accumulated outside of the U.S. will be subject to U.S. taxation under the current U.S. federal income tax laws. We maintain our assertion that all other cash and distributable reserves at our non-U.S. affiliates will continue to be indefinitely reinvested, with the exception of earnings in Germany and the pre-2020 earnings in Italy, Switzerland and Colombia. We estimate the amount of additional local income tax and withholding tax that would be payable on distributions to be in the range of $15 million to $20 million if earnings accumulated outside the U.S. are repatriated to the U.S. 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:
| 2024 |  | 2023 |  | 2022
Balance at January 1 | $ | 5,942 |  |  | $ | 6,919 |  |  | $ | 7,225 |
Increases based on tax positions for the current year | 300 |  |  | 985 |  |  | 1,433 |
Increases (Decreases) based on tax positions of prior years | 107 |  |  | (997) |  |  | (1,616) |
Settlements | (127) |  |  | (901) |  |  | (80) |
Lapse of statute of limitations | (430) |  |  | (64) |  |  | (43) |
Balance at December 31 | $ | 5,792 |  |  | $ | 5,942 |  |  | $ | 6,919 |
As of December 31, 2024, the total amount of unrecognized tax benefits was $5.8 million, which if recognized, would favorably impact our effective tax rate. We estimate that it is reasonably possible that the liability for uncertain tax positions will decrease by approximately $1.3 million in the next 12 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 related to unrecognized tax benefits as a component of income taxes. As of December 31, 2024, 2023 and 2022, we had approximately $3.6 million, $3.4 million and $4.9 million, respectively, accrued for the payment of interest and penalties, of which approximately $0.2 million, $0.2 million and $0.3 million was recognized in income tax expense for the years ended December 31, 2024, 2023 and 2022, 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:
Major Tax Jurisdiction | Tax Years Subject to Examination
United States — Federal | 2021-2024
United States — State | 2020-2024
France | 2021-2024
Germany | 2022-2024
Italy | 2018-2024
China | 2014-2024

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