v3.25.4

INCOME TAXES | 12 Months Ended
--- | ---
Dec. 31, 2025
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES The components of Loss before provision for income taxes for 2025, 2024 and 2023 consist of:
(in millions) |  | 2025 |  | 2024 |  | 2023
Domestic |  | $ | (239) |  |  | $ | (159) |  |  | $ | (194) |
Foreign |  | (78) |  |  | (75) |  |  | 28 |
|  | $ | (317) |  |  | $ | (234) |  |  | $ | (166) |
The components of Provision for income taxes for 2025, 2024 and 2023 consist of:
(in millions) |  | 2025 |  | 2024 |  | 2023
Current: |  |  |  |  |  |
Domestic |  | $ | — |  |  | $ | (1) |  |  | $ | — |
Foreign |  | (70) |  |  | (74) |  |  | (71) |
|  | (70) |  |  | (75) |  |  | (71) |
Deferred: |  |  |  |  |  |
Domestic |  | (1) |  |  | (1) |  |  | (20) |
Foreign |  | 36 |  |  | 5 |  |  | 9 |
|  | 35 |  |  | 4 |  |  | (11) |
|  | $ | (35) |  |  | $ | (71) |  |  | $ | (82) |
The (provision for) benefit from income taxes differs from the expected amount by applying the Company’s Canadian federal statutory rate to a loss before income taxes for 2025 as follows:
(in millions) |  | 2025
|  | Amount |  | Percent
Loss before provision for income taxes |  | $ | (317) |  |  |
Provision for income taxes |  |  |  |
Expected provision for income taxes at Canadian statutory rate |  | $ | 79 |  |  | 25 | %
Domestic provincial and local income taxes, net of federal (national) income tax effect |  | — |  |  | — | %
Foreign Tax Effects |  |  |  |
United States |  |  |  |
State and local taxes |  | 5 |  |  | 2 | %
Effects of cross-border taxes |  | (4) |  |  | (1) | %
Research & Development Tax Credits |  | 8 |  |  | 3 | %
Contingent Consideration Fair Value Adjustments |  | 6 |  |  | 2 | %
Intercompany Profit in Ending Inventory |  | (2) |  |  | (1) | %
All Other |  | (4) |  |  | (1) | %
Ireland |  |  |  |
Statutory Rate Differential |  | (49) |  |  | (15) | %
Changes in Valuation Allowance |  | (11) |  |  | (3) | %
Non-Deductible Interest |  | (17) |  |  | (5) | %
Capital Loss on Sale of Assets |  | 7 |  |  | 2 | %
Foreign exchange impact on EUR denominated assets in Ireland |  | (5) |  |  | (2) | %
Intercompany Profit in Ending Inventory |  | 18 |  |  | 6 | %
All Other |  | — |  |  | — | %
Netherlands |  |  |  |
Changes in Valuation Allowance |  | (4) |  |  | (1) | %
All Other |  | (1) |  |  | — | %
Germany |  |  |  |
Statutory Rate Differential |  | 8 |  |  | 3 | %
Other |  | (2) |  |  | (1) | %
Other Foreign Jurisdictions |  | (7) |  |  | (2) | %
Effect of Changes in Tax Laws or Rates enacted in the current period |  | — |  |  | — | %
Effect of Cross Border Taxes (FAPI) |  | (2) |  |  | (1) | %
Tax Credits |  | — |  |  | — | %
Changes in Valuation Allowances |  | (15) |  |  | (5) | %
Nontaxable and Nondeductible Items |  |  |  |
Share-based Compensation |  | (14) |  |  | (4) | %
Non-Deductible Interest |  | (5) |  |  | (2) | %
Worldwide Changes to Uncertain Tax Positions |  | — |  |  | — | %
All Other |  |  |  |
Foreign exchange impact on USD denominated debt in Canada |  | (24) |  |  | (8) | %
All Other |  | — |  |  | — | %
|  | $ | (35) |  |  | (11) | %
As a Canadian domiciled company, the Provision for income taxes differs from the expected amount calculated by applying the Company's Canadian statutory federal plus the applicable provincial rate of 26.5% to Loss before income taxes for 2024 and 2023 as follows:
(in millions) |  | 2024 |  | 2023
Loss before provision for income taxes |  | $ | (234) |  |  | $ | (166) |
Provision for income taxes |  |  |  |
Expected provision for income taxes at Canadian statutory rate |  | $ | 62 |  |  | $ | 44 |
Adjustments to tax attributes |  | 2 |  |  | 1 |
Non-deductible amount of share-based compensation |  | (10) |  |  | (7) |
Change in valuation allowance |  | (44) |  |  | (42) |
Change in uncertain tax positions |  | 1 |  |  | 2 |
Withholding tax |  | (7) |  |  | (5) |
Return to provision |  | 5 |  |  | (1) |
Foreign tax rate differences |  | (74) |  |  | (57) |
Foreign exchange impact on USD denominated debt in Canada |  | 25 |  |  | — |
Disallowed interest |  | (28) |  |  | (14) |
Other |  | (3) |  |  | (3) |
|  | $ | (71) |  |  | $ | (82) |
Deferred tax assets and liabilities consist of:
(in millions) |  | December 31, 2025 |  | December 31, 2024
Deferred tax assets: |  |  |  |
Tax loss and credit carryforwards |  | $ | 1,032 |  |  | $ | 923 |
Intangible assets |  | — |  |  | 25 |
Provisions |  | 173 |  |  | 145 |
Share-based compensation |  | 22 |  |  | 15 |
Leases |  | 15 |  |  | 14 |
Other |  | 28 |  |  | 45 |
Total deferred tax assets |  | 1,270 |  |  | 1,167 |
Less valuation allowance |  | (212) |  |  | (179) |
Net deferred tax assets |  | 1,058 |  |  | 988 |
Deferred tax liabilities: |  |  |  |
Plant, equipment and technology |  | 71 |  |  | 64 |
Intangible assets |  | 17 |  |  | — |
Leases and Right of Use Assets |  | 14 |  |  | 14 |
Outside basis differences |  | 41 |  |  | 38 |
Total deferred tax liabilities |  | 143 |  |  | 116 |
Net deferred tax asset |  | $ | 915 |  |  | $ | 872 |
The following table presents a reconciliation of the deferred tax asset valuation allowance for 2025, 2024 and 2023:
(in millions) |  | 2025 |  | 2024 |  | 2023
Balance, beginning of year |  | $ | 179 |  |  | $ | 150 |  |  | $ | 54 |
Charged to Benefit from income taxes |  | 29 |  |  | 30 |  |  | 42 |
Other |  | 4 |  |  | (1) |  |  | 54 |
Balance, end of year |  | $ | 212 |  |  | $ | 179 |  |  | $ | 150 |
The realization of deferred tax assets is dependent on the Company generating sufficient domestic and foreign taxable income in the years that the temporary differences become deductible. A valuation allowance has been provided for the portion of the deferred tax assets that the Company determined is more likely than not to remain unrealized based on estimated future taxable income and tax planning strategies. The valuation allowance increased by $33 million during 2025 primarily due to the losses incurred during the year in jurisdictions for which the Company has established a full valuation allowance and the establishment of partial valuation allowances related to specific items. As of December 31, 2025 the Company had accumulated taxable losses available to offset future years' federal taxable income in the U.S. of approximately $54 million and expire from 2025 to 2035. These taxable losses are subject to annual loss limitations as a result of previous ownership changes. As of December 31, 2025, the Company U.S. research and development credits available to offset future years’ federal income taxes in the U.S. were approximately $11 million, which includes acquired research and development credits and which expire in years 2025 through 2044. As of December 31, 2025 the Company had accumulated taxable losses available to offset future years taxable income in Ireland of approximately $6,401 million. These taxable losses do not expire. The Company provides for withholding tax on the unremitted earnings of its direct foreign affiliates except for its direct U.S. subsidiaries. The Company continues to assert that the unremitted earnings of its U.S. subsidiaries will be permanently reinvested and not repatriated. The Company provides for withholding tax on the unremitted earnings of its direct foreign affiliates except for its direct U.S. subsidiaries. The Company continues to assert that the unremitted earnings of its U.S. subsidiaries will be permanently reinvested and not repatriated. As of December 31, 2025, the Company estimates that there will be no tax liability attributable to unremitted earnings of its U.S. subsidiaries. However, future distributions could be subject to U.S. withholding tax. As of December 31, 2025, unrecognized tax benefits (including interest and penalties) were $71 million, of which $62 million would affect the effective income tax rate if recognized. The Company provides for interest and penalties related to unrecognized tax benefits in the provision for income taxes. As of December 31, 2025 and 2024, accrued interest and penalties related to unrecognized tax benefits were approximately $12 million and $9 million, respectively. In 2025, the Company recognized a net increase of approximately $3 million. In 2024 and 2023, the Company did not recognize a net change in interest and penalties. The Company and its subsidiaries file federal income tax returns in Canada, the U.S. and other foreign jurisdictions, as well as various provinces and states in Canada and the U.S. The Company and its subsidiaries have open tax years, primarily from 2006 to 2025, with significant taxing jurisdictions listed in the table below, respectively, including Canada and the U.S. These open years contain certain matters that could be subject to differing interpretations of applicable tax laws and regulations and tax treaties, as they relate to the amount, timing, or inclusion of revenues and expenses, or the sustainability of income tax positions of the Company and its subsidiaries. Certain of these tax years are expected to remain open indefinitely. The Company’s subsidiaries in Germany are under audit for tax years 2017 through 2019. During the three months ended September 30, 2023, the Company received a preliminary assessment from the German taxing authority for the 2014 through 2016 period that would disallow certain transfer pricing adjustments. The Company contested this alleged tax deficiency through the appropriate appeals process, and reached a preliminary settlement with the German taxing authority during the year ended December 31, 2024. The settlement was then finalized with the taxing authority and resulted in the accrual of an immaterial tax cost that will close out the 2014 to 2016 audit period. The Company continues to believe this liability will be indemnified by BHC pursuant to the Tax Matters Agreement.
Jurisdiction: |  | Open Years
United States - Federal |  | 2017 - 2024
Canada |  | 2021 - 2024
Germany |  | 2017 - 2024
France |  | 2013 - 2015, 2022 - 2024
Ireland |  | 2021 - 2024
China |  | 2015 - 2024
The following table presents a reconciliation of the unrecognized tax benefits, not including interest and penalties, for 2025, 2024 and 2023:
(in millions) |  | 2025 |  | 2024 |  | 2023
Balance, beginning of year |  | $ | 55 |  |  | $ | 59 |  |  | $ | 60 |
Additions for tax positions of prior years |  | 6 |  |  | — |  |  | 2 |
Reductions for tax positions of prior years |  | (1) |  |  | (3) |  |  | (1) |
Lapse of statute of limitations |  | (1) |  |  | (1) |  |  | (2) |
Balance, end of year |  | $ | 59 |  |  | $ | 55 |  |  | $ | 59 |

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