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Income Taxes | 12 Months Ended
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Dec. 31, 2020
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes
| Years ended December 31,
| 2020 |  | 2019 |  | 2018
| (in thousands)
Income (loss) before taxes: |  |  |  |  |
United States operations | $ | (117,819) |  |  | $ | 42,833 |  |  | $ | 115,500 |
Foreign operations | 183,946 |  |  | 109,577 |  |  | 114,580 |
Income before taxes | $ | 66,127 |  |  | $ | 152,410 |  |  | $ | 230,080 |
Income tax expense (benefit): |  |  |  |  |
Currently payable |  |  |  |  |
United States federal | $ | 273 |  |  | $ | 21,893 |  |  | $ | 31,730 |
United States state and local | 91 |  |  | 3,090 |  |  | 3,912 |
Foreign | 11,511 |  |  | 13,859 |  |  | 16,968 |
| 11,875 |  |  | 38,842 |  |  | 52,610 |
Deferred |  |  |  |  |
United States federal | (1,754) |  |  | 7,567 |  |  | 7,220 |
United States state and local | (2,310) |  |  | (1,205) |  |  | (31) |
Foreign | 3,913 |  |  | (2,685) |  |  | 3,137 |
| (151) |  |  | 3,677 |  |  | 10,326 |
Income tax expense | $ | 11,724 |  |  | $ | 42,519 |  |  | $ | 62,936 |
In addition to the above income tax expense associated with continuing operations, we also recorded an income tax benefit associated with discontinued operations of $22.6 million, $27.2 million, an d $3.3 million in 2020, 2019, and 2018, respectively.
| Years Ended December 31,
| 2020 |  | 2019 |  | 2018
Effective income tax rate reconciliation from continuing operations: |  |  |  |  |
United States federal statutory rate | 21.0% |  | 21.0% |  | 21.0%
State and local income taxes | (2.6)% |  | 1.2% |  | 1.5%
Impact of change in tax contingencies | 2.3% |  | —% |  | (0.7)%
Foreign income tax rate differences | (38.2)% |  | (8.6)% |  | (1.0)%
Impact of change in deferred tax asset valuation allowance | 3.1% |  | 9.2% |  | 0.3%
Domestic permanent differences and tax credits | 33.9% |  | 5.1% |  | 1.9%
Impact of tax reform | —% |  | —% |  | 4.4%
Impact of CARES act | (1.8)% |  | —% |  | —%
| 17.7% |  | 27.9% |  | 27.4%
In 2020, the most significant difference between the U.S. federal statutory tax rate and our effective tax rate was the impact of foreign tax rate differences. Foreign tax rate differences resulted in an income tax benefit of $25.3 million, $13.1 million, and $2.4 million in 2020, 2019, and 2018, respectively. Additionally, in 2020, 2019 and 2018, our income tax expense was reduced by $4.0 million, $3.9 million, and $3.0 million, respectively, due to a tax holiday for our operations in St. Kitts. The tax holiday in St. Kitts is scheduled to expire in 2022. An additional significant difference between the U.S. federal statutory tax rate and our effective tax rate was the impact of domestic permanent differences and tax credits. We recognized a total income tax expense from domestic permanent differences and tax credits of $22.4 million in 2020, primarily associated with our foreign income inclusions. In March 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was signed into law in the United States. The Company generated a loss in the U.S. which will be carried back to prior years, as permitted by the CARES Act. The net impact to the tax provision as a result of the net operating loss carry back was a benefit of $1.2 million, primarily associated with the re-rate of the net operating loss carry back period. If we were to repatriate foreign cash to the U.S., we may be required to accrue and pay U.S. taxes in accordance with applicable U.S. tax rules and regulations as a result of the repatriation. However, it is our intent to permanently reinvest the earnings of our non-U.S. subsidiaries in those operations and for continued non-U.S. growth opportunities. As a result, as of December 31, 2020, we have not made a provision for U.S. or additional foreign withholding taxes.
| December 31,
| 2020 |  | 2019
| (In thousands)
Components of deferred income tax balances: |  |  |
Deferred income tax liabilities: |  |  |
Plant, equipment, and intangibles | $ | (92,271) |  |  | $ | (96,254) |
Right of use asset | (17,610) |  |  | (16,906) |
| (109,881) |  |  | (113,160) |
Deferred income tax assets: |  |  |
Postretirement, pensions, and stock compensation | 35,394 |  |  | 28,169 |
Reserves and accruals | 24,388 |  |  | 15,395 |
Net operating loss, capital loss, and tax credit carryforwards | 107,028 |  |  | 76,456 |
Lease liability | 18,515 |  |  | 17,882 |
Valuation allowances | (84,308) |  |  | (48,251) |
| 101,017 |  |  | 89,651 |
Net deferred income tax liability | $ | (8,864) |  |  | $ | (23,509) |
On July 2, 2020, we completed the divestiture of Grass Valley to Black Dragon Capital. The increase in pensions and reserves is primarily due to the divestiture of Grass Valley. We derived $23.8 million of deferred tax assets in relation to a capital loss in the U.S. for the divestiture of Grass Valley. The increase in deferred tax valuation allowances is primarily due to the valuation allowance against the capital loss of $23.8 million that we do not expect to be able to realize prior to expiration and the valuation allowance against the seller’s note allowance. As of December 31, 2020, we had $205.4 million of gross net operating loss carryforwards and $57.1 million of tax credit carryforwards. Unless otherwise utilized, net operating loss carryforwards will expire upon the filing of the tax returns for the following respective years: $0.9 million in 2020, $19.7 million between 2021 and 2024, and $126.8 million between 2025 and 2040. Net operating loss with an indefinite carryforward period total $58.0 million. Of the $205.4 million in net operating loss carryforwards, we have determined, based on the weight of all available evidence, both positive and negative, that we will utilize $137.1 million of these net operating loss carryforwards within their respective expiration periods. A valuation allowance has been recorded on the remaining portion of the net operating loss carryforwards. Unless otherwise utilized, tax credit carryforwards of $57.1 million will expire as follows: $2.1 million between 2020 and 2024 and $49.6 million between 2025 and 2040. Tax credit carryforwards with an indefinite carryforward period total $5.4 million. We have determined, based on the weight of all available evidence, both positive and negative, that we will utilize $17.3 million of these tax credit carryforwards within their respective expiration periods. A valuation allowance has been recorded on the remaining portion of the tax credit carryforwards. As of December 31, 2020, we had $100.5 million of gross capital loss carryforwards in the U.S. with a full valuation allowance as we do not expect to be able to utilize the capital loss prior to expiration. The following tables summarize our net operating losses carryforwards and tax credit carryforwards as of December 31, 2020 by jurisdiction:
| Net Operating Loss Carryforwards
| (In thousands)
Australia | $ | 10,546 |
Germany | 15,852 |
Japan | 653 |
Luxembourg | 163 |
Netherlands | 6,578 |
Other | 20,723 |
United Kingdom | 10,720 |
United States - Federal and various states | 140,117 |
Total | $ | 205,352 |
| Tax Credit Carryforwards
| (In thousands)
United States | $ | 56,617 |
Canada | 492 |
Total | $ | 57,109 |
In 2020, we recognized a net $1.8 million increase to reserves for uncertain tax positions. A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows:
| 2020 |  | 2019
| (In thousands)
Balance at beginning of year | $ | 6,779 |  |  | $ | 6,591 |
Additions based on tax positions related to the current year | 548 |  |  | 488 |
Additions for tax positions of prior years | 1,574 |  |  | — |
Reductions for tax positions of prior years - Settlement | (328) |  |  | (300) |
Balance at end of year | $ | 8,573 |  |  | $ | 6,779 |
The balance of $8.6 million at December 31, 2020, reflects tax positions that, if recognized, would impact our effective tax rate. As of December 31, 2020, we believe it is reasonably possible that $1.7 million of unrecognized tax benefits will change within the next twelve months primarily attributable to the expected completion of tax audits in foreign jurisdictions. Our practice is to recognize interest and penalties related to uncertain tax positions in interest expense and operating expenses, respectively. We have approximately $0.2 million and $0.0 million accrued for the payment of interest and penalties as of December 31, 2020 and 2019, respectively. Our federal tax return for the tax years 2017 and later remain subject to examination by the Internal Revenue Service. Our state and foreign income tax returns for the tax years 2012 and later remain subject to examination by various state and foreign tax authorities.

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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://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=116825942&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=116825942&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 + Details
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