XML 128 R17.htm IDEA: XBRL DOCUMENT v3.22.4
Income Taxes
 12 Months Ended
Dec. 31, 2022
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
On August 9, 2022, President Biden signed the CHIPS and Science Act (CHIPS Act) into law. The CHIPS Act provides incentives, beginning in 2023, for manufacturing semiconductors and certain tooling equipment used in the semiconductor manufacturing process. On August 16, 2022, President Biden also signed the Inflation Reduction Act of 2022 (IRA) into law. The IRA, among other provisions, includes a new corporate alternative minimum tax on certain large corporations, an excise tax on stock buybacks, and tax credits for certain critical minerals. The Company does not expect to be an applicable corporation subject to the alternative minimum tax based on our reported GAAP earnings the past three years. The CHIPS Act and the IRA did not have an impact to our consolidated financial statements for the year ended December 31, 2022. We continue to examine the impacts the CHIPS Act and the IRA may have on the Company in 2023 and subsequent years.

Income (loss) before income taxes and income tax expense (benefit) are comprised of the following:
(Thousands)202220212020
Income (loss) before income taxes:
Domestic$90,403 $54,684 $(1,153)
Foreign12,697 22,641 9,428 
Total income (loss) before income taxes$103,100 $77,325 $8,275 
Income tax expense:
Current income tax expense (benefit):
Domestic$12,571 $14,603 $812 
Foreign2,806 3,205 1,851 
Total current$15,377 $17,808 $2,663 
Deferred income tax (benefit) expense:
Domestic$588 $(7,953)$(5,641)
Foreign1,145 (5,004)(4,209)
Total deferred$1,733 $(12,957)$(9,850)
Total income tax expense (benefit)$17,110 $4,851 $(7,187)

A reconciliation of the U.S. federal statutory income tax rate to the Company's effective income tax rate is as follows:
202220212020
U.S. federal statutory rate21.0 %21.0 %21.0 %
State and local income taxes, net of federal tax effect1.7 (0.3)(10.0)
Effect of excess of percentage depletion over cost depletion(3.1)(3.4)(43.0)
Foreign derived intangible income deduction(1.7)(2.3)(1.8)
Non-deductible goodwill impairment— — 7.1 
Research and development tax credit(2.0)(1.2)(16.4)
Impact of foreign operations0.6 0.3 (5.3)
Non-deductible transaction costs— 1.6 6.9 
Interest from tax authorities— — (3.8)
Adjustment to unrecognized tax benefits(0.5)(1.9)1.8 
Equity compensation(0.9)(0.5)(5.3)
Non-deductible officers' compensation1.2 1.4 6.8 
Valuation allowance0.6 (8.5)(45.5)
Other items(0.3)0.1 0.6 
Effective tax rate16.6 %6.3 %(86.9)%

Deferred tax assets and (liabilities) are determined based on temporary differences between the financial reporting and tax basis of assets and liabilities. Deferred tax assets and (liabilities) recorded in the Consolidated Balance Sheets consist of the following:
 December 31,
(Thousands)20222021
Asset (liability)
Post-employment benefits other than pensions$1,230 $1,714 
Other reserves1,831 1,901 
Deferred compensation3,850 3,263 
Environmental reserves1,321 1,358 
Inventory6,118 — 
Research expenditures7,069 — 
Revenue recognition7,878 5,027 
Lease liabilities12,651 11,639 
Interest expense carryforward12,470 14,163 
Pensions— 1,393 
Accrued compensation expense5,477 6,410 
Net operating loss and credit carryforwards9,915 11,423 
Subtotal69,810 58,291 
Valuation allowance(4,935)(4,957)
Total deferred tax assets64,875 53,334 
Depreciation(42,481)(24,484)
Lease assets(12,078)(11,184)
Inventory— (2,329)
Amortization(32,925)(35,542)
Mine development— (917)
Pensions(400)— 
Unrealized gains
(1,940)(663)
Total deferred tax liabilities(89,824)(75,119)
Net deferred tax liabilities$(24,949)$(21,785)

The Company had deferred income tax assets offset with a valuation allowance for certain foreign and state net operating losses, a domestic capital loss carryforward, state investment and research and development tax credit carryforwards, and deferred tax assets that are not likely to be realized for certain of the Company's controlled foreign corporations. The Company intends to maintain a valuation allowance on these deferred tax assets until a realization event occurs to support reversal of all or a portion of the allowance.

At December 31, 2022, for income tax purposes, the Company had foreign net operating loss carryforwards of $21.2 million that do not expire, and $3.2 million that expire in calendar years 2023 through 2027. The Company had state net operating loss carryforwards of $16.3 million that expire in calendar years 2023 through 2040 and state tax credits of $4.1 million that expire in calendar years 2023 through 2037. The Company also had a capital loss carryforward of $7.4 million that expires in 2026. A valuation allowance of $4.9 million has been provided against certain foreign and state net operating loss carryforwards, a U.S. capital loss carryforward, and state tax credits due to uncertainty of their realization.

The Company files income tax returns in the U.S. federal jurisdiction, and in various state, local, and foreign jurisdictions. With limited exceptions, the Company is no longer subject to U.S. federal examinations for years before 2019, state and local examinations for years before 2018, and foreign examinations for tax years before 2017.

We operate under a tax holiday in Malaysia, which was extended and is effective through July 31, 2027. The tax holiday is conditional upon our meeting certain employment, sales, and investment thresholds. The impact of this holiday decreased foreign taxes by $3.0 million in 2022.
A reconciliation of the Company’s unrecognized tax benefits for the year-to-date periods ended December 31, 2022 and 2021 is as follows:
(Thousands)20222021
Balance at January 1$1,142 $2,360 
Additions to tax provisions related to the current year— 431 
Additions to tax positions related to prior years— — 
Reduction to tax positions related to prior years(8)(45)
Lapses on statutes of limitations(482)(1,604)
Balance at December 31$652 $1,142 
Included in the balance of unrecognized tax benefits, including interest and penalties, as of December 31, 2022 and December 31, 2021 are $0.7 million and $1.2 million, respectively, of tax benefits that would affect the Company’s effective tax rate if recognized. It is reasonably possible that the amount of unrecognized tax benefits will change in the next twelve months; however, we do not expect the change to have a material impact on the Consolidated Statements of Income or the Consolidated Balance Sheets.

The Company recognizes interest and penalties related to unrecognized tax benefits on the income tax expense line in the accompanying Consolidated Statements of Income. Accrued interest and penalties are included on the related tax liability line in the Consolidated Balance Sheets. The amount of interest and penalties, net of the related tax benefit, recognized in earnings was immaterial during 2022, 2021, and 2020. As of December 31, 2022 and 2021, accrued interest and penalties, net of the related tax benefit, were immaterial.
Income taxes paid during 2022, 2021, and 2020, were approximately $14.5 million, $21.8 million, and $3.9 million, respectively.
No additional income taxes have been provided for any remaining undistributed foreign earnings not subject to the transition tax, or any additional outside basis difference inherent in these entities, as these amounts continue to be indefinitely reinvested in foreign operations as of December 31, 2022. The amount of such unrepatriated earnings totaled $105.4 million as of December 31, 2022. It is not practicable to estimate the additional income taxes and applicable withholding taxes that would be payable on the remittance of such undistributed earnings.