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Income Taxes | 12 Months Ended
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Dec. 31, 2020
Income Tax Disclosure [Abstract] |
Income Tax Expense | Income Taxes Our income before income tax expense, as well as our provision for income taxes is shown in the table below.
|  | Years Ended December 31,
(in thousands) |  | 2020 |  | 2019 |  | 2018
Income before income tax expense |  |  |  |  |  |
Domestic |  | $ | 203,327 |  |  | $ | 183,907 |  |  | $ | 157,459 |
Foreign |  | 127,960 |  |  | 147,683 |  |  | 132,826 |
|  | $ | 331,287 |  |  | $ | 331,590 |  |  | $ | 290,285 |
Income tax expense |  |  |  |  |  |
Current income taxes |  |  |  |  |  |
Federal |  | $ | 14,861 |  |  | $ | 29,955 |  |  | $ | 9,153 |
State |  | 6,106 |  |  | 9,551 |  |  | 4,679 |
Foreign |  | 32,198 |  |  | 30,414 |  |  | 27,192 |
|  | 53,165 |  |  | 69,920 |  |  | 41,024 |
Deferred income taxes |  |  |  |  |  |
Federal |  | 4,498 |  |  | 1,671 |  |  | 16,545 |
State |  | 1,090 |  |  | 630 |  |  | 2,888 |
Foreign |  | 1,966 |  |  | 5,083 |  |  | (4,906) |
|  | 7,554 |  |  | 7,384 |  |  | 14,527 |
Total income tax expense |  | $ | 60,719 |  |  | $ | 77,304 |  |  | $ | 55,551 |
The reconciliation of the U.S. federal statutory rate to the effective income tax rate follows.
|  | % of Income Before Income Tax Expense
|  | 2020 |  | 2019 |  | 2018
Federal statutory rate |  | 21.0 | % |  | 21.0 | % |  | 21.0 | %
State taxes, net of federal tax |  | 1.7 |  |  | 2.4 |  |  | 2.1 |
Foreign operations |  | 0.7 |  |  | 1.7 |  |  | (0.9) |
Research tax credit |  | (1.7) |  |  | (1.7) |  |  | (1.5) |
Foreign-derived intangible tax benefit |  | (0.4) |  |  | (2.1) |  |  | (2.4) |
U.S. minimum tax on foreign income |  | 0.5 |  |  | 1.0 |  |  | 1.5 |
Uncertain tax positions |  | (1.7) |  |  | 0.8 |  |  | 0.7 |
Taxes applicable to prior years |  | (1.4) |  |  | (0.3) |  |  | (0.7) |
Change in U.S. tax rate |  | 0.0 |  |  | 0.0 |  |  | (2.0) |
Other items and adjustments |  | (0.4) |  |  | 0.5 |  |  | 1.3 |
Effective income tax rate |  | 18.3 | % |  | 23.3 | % |  | 19.1 | %
Our deferred income tax assets and liabilities follow.
|  | December 31,
(in thousands) |  | 2020 |  | 2019
Deferred income tax assets |  |  |  |
Operating loss and credit carryforwards |  | $ | 14,965 |  |  | $ | 13,375 |
Trademark expenses |  | 3,678 |  |  | 3,892 |
Foreign currency translation adjustments |  | 3,728 |  |  | 4,772 |
Other |  | 6,238 |  |  | 7,015 |
Gross deferred income tax assets |  | 28,609 |  |  | 29,054 |
Valuation allowance |  | (12,548) |  |  | (13,152) |
Total deferred income tax assets |  | 16,061 |  |  | 15,902 |
Deferred income tax liabilities |  |  |  |
Depreciation and amortization |  | 59,847 |  |  | 56,618 |
Future employee benefits |  | 1,670 |  |  | 4,064 |
Other |  | 6,593 |  |  | 6,089 |
Total deferred income tax liabilities |  | 68,110 |  |  | 66,771 |
Net deferred income tax (liabilities) assets |  | $ | (52,049) |  |  | $ | (50,869) |
Net deferred income tax (liabilities) assets in the table above are reflected in the Consolidated Balance Sheets on a net jurisdictional basis. Deferred income tax assets are included in deferred charges and other assets. See Note 11. Deferred income tax liabilities are included in other noncurrent liabilities. See Note 14. Our deferred taxes are in a net liability position at December 31, 2020. Our deferred tax assets include $15 million of foreign operating loss carryforwards, foreign capital loss carryforwards, and foreign and state tax credits. The operating loss carryforwards expire in 2023 through 2037 and certain tax credits expire in 2026 through 2030. The largest change during 2020 on the carryforward items related to an increase in foreign tax credit carryforwards generated in 2019. Based on current forecasted operating plans and historical profitability, we believe that we will recover the full benefit of our deferred tax assets with the exception of $13 million of the aforementioned operating loss, capital loss, and tax credit carryforwards. Therefore, as of December 31, 2020, we have recorded an offsetting valuation allowance against these items. During 2020, we released the valuation allowance on $1 million of net operating losses that we utilized during the year. As a result of the Tax Reform Act, we do not expect to distribute earnings from our foreign subsidiaries in a manner that would result in significant U.S. tax, as these earnings have been previously taxed in the U.S. or meet the requirements for a dividends received deduction. However, we have recorded a $2 million deferred tax liability for the currency impact and for the withholding taxes that will not be creditable upon distribution. We have not provided a deferred tax liability on approximately $163 million of temporary differences related to investments in foreign subsidiaries that are essentially permanent in duration, as these earnings are considered to be indefinitely reinvested. If we were to repatriate these earnings, we could be subject to income taxes and withholding taxes in various countries. Determination of the amount of unrecognized deferred income tax liability is not practicable due to the complexity associated with the hypothetical calculation. A reconciliation of the beginning and ending balances of the unrecognized tax benefits from uncertain positions is as follows:
|  | December 31,
(in thousands) |  | 2020 |  | 2019 |  | 2018
Balance at beginning of year |  | $ | 13,543 |  |  | $ | 10,660 |  |  | $ | 9,102 |
Increases for tax positions of prior years |  | 363 |  |  | 3,176 |  |  | 2,123 |
Increases for tax positions of the current year |  | 824 |  |  | 703 |  |  | 614 |
Settlements |  | 0 |  |  | (440) |  |  | (252) |
Lapses of statutes |  | (7,825) |  |  | (556) |  |  | (927) |
Balance at end of year |  | $ | 6,905 |  |  | $ | 13,543 |  |  | $ | 10,660 |
At December 31, 2020, all of the amount of unrecognized tax benefits, if recognized, would affect our effective tax rate. We expect the amount of unrecognized tax benefits to change in the next twelve months; however, we do not expect the change to have a material impact on our financial statements. Our U.S. subsidiaries file a U.S. federal consolidated income tax return. We are currently under examination by various U.S. state and foreign jurisdictions and remain subject to examination until the statute of limitations expires for the respective tax jurisdiction. We are no longer subject to U.S. federal income examination for years before 2017. Foreign and U.S. state jurisdictions have statutes of limitations generally ranging from 3 years to 5 years. Years still open to examination by foreign tax authorities in major jurisdictions include: the U.K. (2019 and forward); Singapore (2016 and forward); Belgium (2018 and forward); and Mexico (2015 and forward).

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