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Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Income Taxes
(17)
Income Taxes

A reconciliation of the Company’s effective tax rate to the U.S. federal income tax statutory rate is as follows:

 

 

Years Ended December 31,

 

 

 

2024

 

 

2023

 

 

2022

 

U.S. federal income tax statutory rate

 

 

21.0

%

 

 

21.0

%

 

 

21.0

%

Foreign derived intangible income deduction

 

 

(24.9

)

 

 

0.6

 

 

 

(4.8

)

Change in valuation allowance

 

 

(22.7

)

 

 

0.1

 

 

 

(0.3

)

Withholding taxes, net of foreign tax credits

 

 

15.4

 

 

 

(0.4

)

 

 

10.9

 

Federal tax credits

 

 

(11.7

)

 

 

1.5

 

 

 

(1.5

)

Effect of foreign operations taxed at various rates

 

 

(8.9

)

 

 

0.9

 

 

 

(6.8

)

Change in income tax reserves (including interest)

 

 

6.7

 

 

 

(0.5

)

 

 

0.8

 

Base erosion waiver of deductions

 

 

5.6

 

 

 

—

 

 

 

—

 

State income taxes, net of federal benefit

 

 

(3.0

)

 

 

0.5

 

 

 

(0.3

)

Executive compensation

 

 

1.8

 

 

 

(0.1

)

 

 

0.7

 

Foreign subpart F income taxed in the U.S., net of foreign tax credits

 

 

1.6

 

 

 

—

 

 

 

(0.2

)

Global intangible low taxed income, net of foreign tax credits

 

 

1.0

 

 

 

0.2

 

 

 

3.6

 

Goodwill impairment

 

 

—

 

 

 

(18.4

)

 

 

—

 

Other

 

 

12.4

 

 

 

(0.9

)

 

 

—

 

 

 

(5.7

)%

 

 

4.5

%

 

 

23.1

%

 

The components of income (loss) before income taxes and the related (benefit) provision for income taxes consist of the following:

 

 

Years Ended December 31,

 

 

 

2024

 

 

2023

 

 

2022

 

Income (loss) before income taxes:

 

 

 

 

 

 

 

 

 

United States

 

$

(57

)

 

$

(760

)

 

$

(90

)

Foreign

 

 

237

 

 

 

(1,168

)

 

 

523

 

 

$

180

 

 

$

(1,928

)

 

$

433

 

Current taxes:

 

 

 

 

 

 

 

 

 

Federal

 

$

91

 

 

$

21

 

 

$

40

 

State

 

 

13

 

 

 

6

 

 

 

7

 

Foreign

 

 

112

 

 

 

120

 

 

 

99

 

 

 

216

 

 

 

147

 

 

 

146

 

Deferred taxes:

 

 

 

 

 

 

 

 

 

Federal

 

 

(106

)

 

 

(130

)

 

 

(68

)

State

 

 

(20

)

 

 

(18

)

 

 

(8

)

Foreign

 

 

(100

)

 

 

(86

)

 

 

30

 

 

 

(226

)

 

 

(234

)

 

 

(46

)

(Benefit) provision for income taxes

 

$

(10

)

 

$

(87

)

 

$

100

 

The significant components of the deferred tax assets and deferred tax liabilities are as follows:

 

 

December 31,

 

 

 

2024

 

 

2023

 

Deferred tax assets:

 

 

 

 

 

 

Interest expense carryforwards

 

$

178

 

 

$

171

 

Net operating loss carryforwards

 

 

71

 

 

 

85

 

Tax credit carryforwards

 

 

34

 

 

 

22

 

Capitalized research and development

 

 

146

 

 

 

98

 

Lease liability

 

 

49

 

 

 

51

 

Inventory and warranty reserves

 

 

48

 

 

 

54

 

Accrued expenses and other reserves

 

 

30

 

 

 

23

 

Other

 

 

9

 

 

 

15

 

Total deferred tax assets

 

 

565

 

 

 

519

 

Valuation allowance

 

 

(151

)

 

 

(190

)

Net deferred tax assets

 

$

414

 

 

$

329

 

 

 

 

 

 

 

Deferred tax liabilities:

 

 

 

 

 

 

Acquired intangible assets and goodwill

 

$

(558

)

 

$

(637

)

Right-of-use asset

 

 

(48

)

 

 

(49

)

Foreign withholding taxes

 

 

(40

)

 

 

(50

)

Loan costs

 

 

(9

)

 

 

(24

)

Depreciation and amortization

 

 

(4

)

 

 

(56

)

Total deferred tax liabilities

 

 

(659

)

 

 

(816

)

Net deferred tax liabilities

 

$

(245

)

 

$

(487

)

On a quarterly basis, the Company evaluates both positive and negative evidence that affects the realizability of its net deferred tax assets and assesses the need for a valuation allowance. The future benefit to be derived from its deferred tax assets is dependent upon its ability to generate sufficient future taxable income to realize the assets.

During 2024, the Company decreased its valuation allowance by $39, primarily related to the valuation allowance recorded in connection with certain foreign interest and net operating loss carryforwards. During 2023, the Company increased its valuation allowance by $9, primarily related to the valuation allowance recorded in connection with certain foreign interest and net operating loss carryforwards.

Deferred taxes have been recorded related to historical outside basis differences, primarily unremitted earnings, of certain of the Company’s foreign subsidiaries. During 2024, the Company recorded a tax benefit of $8 related to such taxes for prior periods.

As of December 31, 2024, the Company had U.S. federal and state as well as foreign gross research and other tax credit carryforwards of $16, $39 and $0, respectively. Included in the total carryforwards are $1 of federal and $20 of state credits that can be carried forward indefinitely while the remaining credits expire at various dates through 2038.

The Company also had U.S. federal and state as well as foreign gross net operating loss and capital loss carryforwards of $3, $41 and $273, respectively. Included in the total carryforwards are $2, $1 and $50 of losses from federal, state and foreign that can be carried forward indefinitely while the remaining losses expire at various dates through 2043.

The Company had $371 and $362 of U.S. federal and foreign interest carryforwards, respectively, that can be carried forward indefinitely.

Although the Company believes that its tax positions are consistent with applicable U.S. federal, state and international laws, it maintains certain income tax reserves as of December 31, 2024 in the event its tax positions were to be challenged by the applicable tax authority and additional tax assessed upon audit.

A reconciliation of the beginning and ending amount of gross unrecognized tax benefits, excluding interest and penalties, is as follows:

 

 

Years Ended December 31,

 

 

 

2024

 

 

2023

 

 

2022

 

Balance at beginning of year

 

$

86

 

 

$

83

 

 

$

43

 

(Decreases) increases for tax positions taken during prior years

 

 

(4

)

 

 

(5

)

 

 

35

 

Increases for tax positions taken during the current year

 

 

36

 

 

 

12

 

 

 

9

 

Reductions related to expiration of statutes of limitations and audit settlements

 

 

(24

)

 

 

(4

)

 

 

(4

)

Balance at end of year

 

$

94

 

 

$

86

 

 

$

83

 

The net increase in gross unrecognized tax benefits in 2024 was primarily due to the addition of income tax reserves related to intercompany transactions. The Company also recorded an offsetting asset of $18 against these reserves.

The Company accrues interest and, if applicable, penalties for any uncertain tax positions. Interest and penalties are classified as a component of income tax (benefit) expense. As of December 31, 2024, 2023 and 2022, the Company accrued interest on unrecognized tax benefits of approximately $8, $7 and $6, respectively.

Over the next 12 months, it is reasonably possible that the Company may recognize approximately $3 of previously net unrecognized tax benefits, excluding interest and penalties, related to various U.S. federal and state as well as foreign tax positions, primarily due to the expiration of statutes of limitations.

The Company is subject to examination by U.S. federal and state as well as foreign tax authorities. The U.S. federal statute of limitations remains open for tax years 2020 through the present. The statute of limitations for the Company’s tax filings in other jurisdictions varies between fiscal years 2019 through present. The Company also has certain prior year federal credit carryforwards and state tax loss and credit carryforwards that are subject to examination to the extent used in an open year.