XML 32 R20.htm IDEA: XBRL DOCUMENT
v3.22.0.1

Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2021
Income Taxes [Abstract] |
Income Taxes | 11. Income Taxes Earnings before income taxes were as follows:
(In thousands) |  | 2021 |  |  | 2020 |  |  | 2019 |
United States |  | $ | 71,764 |  |  | $ | 72,593 |  |  | $ | 38,356 |
Foreign |  |  | 85,720 |  |  |  | 65,252 |  |  |  | 62,647 |
Total |  | $ | 157,484 |  |  | $ | 137,845 |  |  | $ | 101,003 |
The provision for income taxes was as follows:
(In thousands) |  | 2021 |  |  | 2020 |  |  | 2019 |
Current income tax expense: |  |  |  |  |  |  |  |  |
Federal |  | $ | 16,807 |  |  | $ | 9,660 |  |  | $ | 12,994 |
State |  |  | 5,128 |  |  |  | 3,000 |  |  |  | 2,622 |
Foreign |  |  | 22,875 |  |  |  | 24,418 |  |  |  | 22,680 |
|  |  | 44,810 |  |  |  | 37,078 |  |  |  | 38,296 |
Deferred expense (benefit): |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | (4,159 | ) |  |  | (6,918 | ) |  |  | (17,246 | )
State |  |  | (1,189 | ) |  |  | (565 | ) |  |  | 18 |
Foreign |  |  | (723 | ) |  |  | (1,222 | ) |  |  | (2,112 | )
|  |  | (6,071 | ) |  |  | (8,705 | ) |  |  | (19,340 | )
Income taxes |  | $ | 38,739 |  |  | $ | 28,373 |  |  | $ | 18,956 |
The reconciliation between the U.S. Federal tax rate and the actual effective tax rate was as follows:
|  | 2021 |  |  | 2020 |  |  | 2019 |
Taxes at statutory rate |  |  | 21.0 | % |  |  | 21.0 | % |  |  | 21.0 | %
State income taxes, net of federal income tax benefit |  |  | 2.9 |  |  |  | 2.2 |  |  |  | 2.2 |
Tax credits |  |  | (1.4 | ) |  |  | (1.5 | ) |  |  | (2.6 | )
Taxes on foreign earnings |  |  | 4.7 |  |  |  | 2.8 |  |  |  | 5.1 |
Global Intangible Low-Taxed Income |  |  | 0.7 |  |  |  | 0.1 |  |  |  | 0.9 |
Foreign Derived Intangible Income |  |  | (0.9 | ) |  |  | (1.1 | ) |  |  | (1.0 | )
Loss on balance sheet hedge |  |  | 0.7 |  |  |  | 2.0 |  |  |  | - |
Resolution of prior years’ tax matters |  |  | (0.4 | ) |  |  | (0.1 | ) |  |  | (0.4 | )
Valuation allowance adjustments |  |  | (1.9 | ) |  |  | (3.7 | ) |  |  | (8.8 | )
Other, net |  |  | (0.8 | ) |  |  | (1.1 | ) |  |  | 2.4 |
Effective tax rate |  |  | 24.6 | % |  |  | 20.6 | % |  |  | 18.8 | %
Taxes on foreign earnings include the difference between the tax rates applied to foreign earnings relative to the U.S. statutory tax rate, accruals for foreign unrecognized tax benefits, and the impact of the U.S. foreign tax credit, not including the impact from Global Intangible Low-Taxed Income (GILTI). The impact on the Company’s effective tax rate varies from year to year based on the finalization of prior year foreign and domestic tax items, audit settlements, and mix of foreign earnings. The effective tax rates in 2021 and 2020 were both impacted by tax costs related to the divestitures and the release of valuation allowances related to the foreign tax credit carryover and net operating losses. The Company’s valuation allowance at December 31, 2021 and 2020 was $36.9 million and $47.8 million, respectively. In 2021, the valuation allowance related to foreign tax credits and state and foreign NOLs was reduced. In the first quarter of 2019, the valuation allowance was increased by $16.2 million related to the increase in the foreign tax credit deferred tax asset. The valuation allowance was also increased in 2019 by $6.8 million for the deferred tax assets related to net operating losses that the Company does not believe are more likely than not to be realized. During 2020 and 2019, the Company completed tax planning strategies and Federal tax regulations were finalized that resulted in the partial release of this valuation allowance. The increase of the 2021 effective tax rate from GILTI compared to 2020 is primarily related to not filing the high tax election given the foreign rate mix. The decrease of the 2020 effective tax rate from GILTI compared to 2019 is primarily the result of the US Treasury releasing final regulations in 2020 that changed the high tax election for GILTI and Sensient applying the high tax election for 2020. The tax effects of temporary differences that give rise to significant portions of deferred tax assets and liabilities consisted of the following:
(In thousands) |  | 2021 |  |  | 2020 |
Deferred tax assets: |  |  |  |  |  |
Benefit plans |  | $ | 10,360 |  |  | $ | 7,665 |
Liabilities and reserves |  |  | 16,978 |  |  |  | 19,291 |
Operating loss and credit carryovers |  |  | 68,646 |  |  |  | 77,756 |
Other |  |  | 10,031 |  |  |  | 13,228 |
Gross deferred tax assets |  |  | 106,015 |  |  |  | 117,940 |
Valuation allowance |  |  | (36,859 | ) |  |  | (47,813 | )
Deferred tax assets |  |  | 69,156 |  |  |  | 70,127 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Property, plant, and equipment |  |  | (32,560 | ) |  |  | (31,709 | )
Goodwill |  |  | (21,044 | ) |  |  | (22,012 | )
Deferred tax liabilities |  |  | (53,604 | ) |  |  | (53,721 | )
Net deferred tax assets |  | $ | 15,552 |  |  | $ | 16,406 |
At December 31, 2021, foreign tax credit carryovers were $36.8 million, all of which expires before 2035. At December 31, 2021, foreign operating loss carryovers were $87.2 million. Included in the foreign operating loss carryovers are losses of $10.1 million that expire through 2035 and $77.1 million that expire after 2036 or do not have an expiration date. At December 31, 2021, state operating loss carryovers were $126.4 million, which expire prior to 2036. The Company is electing to recognize GILTI as a period expense in the period the tax is incurred. Federal and state income taxes are provided on international subsidiary income distributed to or taxable in the U.S. during the year. At December 31, 2021, no additional income or withholding taxes have been provided for the $625.9 million of undistributed earnings or any additional outside basis differences inherent in these entities, as these amounts are considered to be invested indefinitely. If the undistributed earnings were repatriated, the Company estimates it would have a withholding tax liability of $32.9 million. The determination of the tax liability for any outside basis differences is not practicable. A reconciliation of the change in the liability for unrecognized tax benefits for 2021 and 2020 is as follows:
(In thousands) |  | 2021 |  |  | 2020 |
Balance at beginning of year |  | $ | 7,445 |  |  | $ | 6,032 |
Increases for tax positions taken in the current year |  |  | 715 |  |  |  | 805 |
Increases for tax positions taken in prior years |  |  | - |  |  |  | 1,267 |
Decreases related to settlements with tax authorities |  |  | (3,643 | ) |  |  | (386 | )
Decreases as a result of lapse of the applicable statutes of limitations |  |  | (367 | ) |  |  | (625 | )
Foreign currency exchange rate changes |  |  | (389 | ) |  |  | 352 |
Balance at the end of year |  | $ | 3,761 |  |  | $ | 7,445 |
The amount of the unrecognized tax benefits that would affect the effective tax rate, if recognized, was approximately $4 million. The Company recognizes interest and penalties related to the unrecognized tax benefits in income tax expense. As of December 31, 2021 and 2020, $0.4 million and $0.7 million, respectively, of accrued interest and penalties were reported as an income tax liability in each period. The liability for unrecognized tax benefits relates to multiple jurisdictions and is reported in Other Liabilities on the Company’s Consolidated Balance Sheet at December 31, 2021. The Company believes that it is reasonably possible that the total amount of liability for unrecognized tax benefits as of December 31, 2021, will decrease by approximately $0.7 million during 2022, of which $0.4 million is estimated to impact the effective tax rate. The potential decrease relates to various tax matters for which the statute of limitations may expire or will be otherwise settled in 2022. The amount that is ultimately recognized in the financial statements will be dependent upon various factors including potential increases or decreases in unrecognized tax benefits as a result of examinations, settlements, and other unanticipated items that may occur during the year. With limited exceptions, the Company is no longer subject to federal, state, and local, or non-U.S. income tax examinations by tax authorities for years before 2017.

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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=121826272&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=122134291&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=121826272&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=122134291&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=121826272&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 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration