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Income Taxes | 12 Months Ended
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Dec. 31, 2021
Income Tax Disclosure [Abstract] |
Income Taxes | 11. INCOME TAXES Income taxes are recognized for the amount of taxes payable or refundable for the current year and deferred tax liabilities and assets for the future tax consequences of events that have been recognized in our consolidated financial statements or tax returns. The effects of income taxes are measured based on enacted tax laws and rates. The provision for (benefit from) income taxes from continuing operations consisted of the following:
| Year ended December 31,
In thousands | 2021 |  | 2020 |  | 2019
Current taxes |  |  |  |  |
Federal | $ | (570) |  |  | $ | (4,989) |  |  | $ | (419) |
State | 584 |  |  | 166 |  |  | 134 |
Foreign | 20,561 |  |  | 18,470 |  |  | 14,014 |
| 20,575 |  |  | 13,647 |  |  | 13,729 |
Deferred taxes and other |  |  |  |  |
Federal | (1,159) |  |  | 540 |  |  | (20,448) |
State | 234 |  |  | (1,183) |  |  | (4,105) |
Foreign | (12,694) |  |  | (1,428) |  |  | 1,582 |
| (13,619) |  |  | (2,071) |  |  | (22,971) |
Income tax provision (benefit) | $ | 6,956 |  |  | $ | 11,576 |  |  | $ | (9,242) |
The following are the domestic and foreign components of pretax income (loss) from continuing operations:
| Year ended December 31,
In thousands | 2021 |  | 2020 |  | 2019
United States | $ | (44,682) |  |  | $ | (35,696) |  |  | $ | (107,455) |
Foreign | 58,359 |  |  | 68,055 |  |  | 73,002 |
Total pretax income (loss) | $ | 13,677 |  |  | $ | 32,359 |  |  | $ | (34,453) |
The following table sets forth a reconciliation of the statutory federal income tax rate to our actual effective tax rate for continuing operations.
| Year ended December 31,
| 2021 |  | 2020 |  | 2019
Federal income tax provision at statutory rate | 21.0 | % |  | 21.0 | % |  | 21.0 | %
State income taxes, net of federal income tax benefit | 2.7 |  |  | 0.6 |  |  | 3.7 |
Foreign income tax rate differential | (3.3) |  |  | 3.4 |  |  | 2.0 |
Tax effect of tax credits | (0.1) |  |  | (10.2) |  |  | 8.2 |
Provision for (resolution of) tax matters | 23.6 |  |  | 12.4 |  |  | (8.0) |
Rate changes due to enacted legislation | 15.3 |  |  | 0.7 |  |  | 0.1 |
Change in reinvestment assertion | 26.4 |  |  | — |  |  | — |
Effect of U.S. tax law change | 2.8 |  |  | (21.5) |  |  | — |
Global Intangible Low-Taxed Income | 18.7 |  |  | 7.1 |  |  | (9.4) |
Stock-based compensation | 3.9 |  |  | 1.4 |  |  | (1.0) |
Nondeductible officer's compensation | 3.9 |  |  | 1.0 |  |  | (0.7) |
Valuation allowance | (3.1) |  |  | 11.7 |  |  | 4.3 |
Recognition of non-U.S. intangible tax basis | (78.1) |  |  | — |  |  | — |
Capitalized transaction costs | 8.9 |  |  | — |  |  | — |
Pension termination, settlement and related | — |  |  | 5.4 |  |  | 5.0 |
Prior year adjustments | 7.1 |  |  | 4.5 |  |  | 1.8 |
Other | 1.2 |  |  | (1.7) |  |  | (0.2) |
Actual tax rate | 50.9 | % |  | 35.8 | % |  | 26.8 | %
The effective income tax rate for the year ended December 31, 2021 was unfavorably impacted by operating losses in the U.S. which generated no tax benefit, $25.6 million of restructuring and other non-recurring costs for which no tax benefit was recorded, and a $3.6 million tax charge related to unremitted earnings of a foreign subsidiary, offset in part by a $10.7 million benefit recorded in connection with the recognition of an intangible asset at a foreign subsidiary. The sources of deferred income taxes were as follows at December 31:
In thousands | 2021 |  | 2020
Reserves | $ | 1,060 |  |  | $ | 685 |
Environmental | 3,970 |  |  | 4,481 |
Compensation | 1,920 |  |  | 2,415 |
Pension | 4,479 |  |  | 4,279 |
Post-retirement benefits | 1,210 |  |  | 1,388 |
Research & development expenses | 4,239 |  |  | 3,092 |
Tax carryforwards | 45,729 |  |  | 16,703 |
Other | 2,444 |  |  | 5,714 |
Deferred tax assets | 65,051 |  |  | 38,757 |
Valuation allowance | (24,526) |  |  | (23,305) |
Net deferred tax assets | 40,525 |  |  | 15,452 |
Property | (93,164) |  |  | (70,492) |
Intangible assets | (14,063) |  |  | (18,808) |
Inventories | (37) |  |  | — |
Other | (5,201) |  |  | (3,282) |
Deferred tax liabilities | (112,465) |  |  | (92,582) |
Net deferred tax liabilities | $ | (71,940) |  |  | $ | (77,130) |
Non-current deferred tax assets and liabilities are included in the following balance sheet captions:
| December 31,
In thousands | 2021 |  | 2020
Other assets | $ | 15,345 |  |  | $ | 1 |
Deferred income taxes | 87,285 |  |  | 77,131 |
At December 31, 2021, we had federal, state and foreign tax net operating loss (“NOL”) carryforwards of $98.7 million, $198.8 million, and $40.2 million, respectively. These NOL carryforwards are available to offset future taxable income, if any. $6.2 million of the federal NOL carryforward expires in 2037; the residual $92.5 million of the federal NOL never expires. The state NOL carryforwards expire at various times and in various amounts beginning in 2022. Certain foreign NOL carryforwards begin to expire after 2025. The federal and state NOL carryforwards on the income tax returns filed included unrecognized tax benefits taken in prior years. The deferred tax assets recognized for financial statement purposes for such NOL carryforwards are presented net of these unrecognized tax benefits. In addition, we had various federal tax credit carryforwards totaling $14.2 million which begin to expire after 2034 and state tax credit carryforwards totaling $3.4 million, which begin to expire in 2028. As of December 31, 2021 and 2020, we had a valuation allowance of $24.5 million and $23.3 million, respectively, against net deferred tax assets, primarily due to uncertainty regarding the ability to utilize federal, state and foreign tax NOL carryforwards and certain state tax credits. In assessing the need for a valuation allowance, management considers all available positive and negative evidence in its analysis. Based on this analysis, we recorded a valuation allowance for the portion of deferred tax assets where the weight of available evidence indicated it is more likely than not that the deferred tax assets will not be realized. Tax credits and other incentives reduce tax expense in the year the credits are claimed. We recorded tax credits of $0.0 million, $3.3 million and $2.8 million in 2021, 2020 and 2019, respectively, related to research and development credits. At December 31, 2021 and 2020, unremitted earnings of certain subsidiaries outside the United States deemed to be indefinitely reinvested totaled $107.0 million and $109.0 million, respectively. Because the unremitted earnings of those subsidiaries are deemed to be indefinitely reinvested as of December 31, 2021 and because we have no need for or plans to repatriate such earnings, no deferred tax liability has been recognized in our consolidated financial statements with regard to those subsidiaries. During 2021, we designated unremitted earnings of a subsidiary as not indefinitely reinvested, and as a result, recorded a $3.6 million deferred tax charge with regard to the unremitted earnings of that subsidiary. As of December 31, 2021, 2020 and 2019, we had $55.7 million, $46.3 million and $30.5 million of gross unrecognized tax benefits, respectively. As of December 31, 2021, if such benefits were to be recognized, approximately $51.1 million would be recorded as a component of income tax expense, thereby affecting our effective tax rate. A reconciliation of the beginning and ending balances of the total amounts of gross unrecognized tax benefits is as follows:
In thousands | 2021 |  | 2020 |  | 2019
Balance at January 1 | $ | 46,259 |  |  | $ | 30,458 |  |  | $ | 29,620 |
Increases in tax positions for prior years | 38 |  |  | 13,866 |  |  | 2,803 |
Decreases in tax positions for prior years | (638) |  |  | (72) |  |  | (2,892) |
Acquisition related: |  |  |  |  |
Purchase Accounting | 12,718 |  |  | — |  |  | — |
Increases in tax positions for current year | 3,683 |  |  | 4,400 |  |  | 4,552 |
Settlements | — |  |  | (1,101) |  |  | (309) |
Lapse in statutes of limitation | (6,400) |  |  | (1,292) |  |  | (3,316) |
Balance at December 31 | $ | 55,660 |  |  | $ | 46,259 |  |  | $ | 30,458 |
We, or one of our subsidiaries, file income tax returns with the United States Internal Revenue Service, as well as various state and foreign authorities. The following table summarizes tax years that remain subject to examination by major jurisdiction:
| Open Tax Years
Jurisdiction | Examinations not yet initiated |  | Examination in progress
United States |  |  |
Federal | 2014, 2015; 2018 - 2021 |  | N/A
State | 2017 - 2021 |  | N/A
Canada(1) | 2014 - 2018; 2021 |  | 2019 - 2020
Germany(1) | 2020 - 2021 |  | 2016 - 2019
France | 2019 - 2021 |  | N/A
United Kingdom | 2020 - 2021 |  | N/A
Philippines | 2020 - 2021 |  | 2018, 2019
(1)Includes provincial or similar local jurisdictions, as applicable. The amount of income taxes we pay is subject to ongoing audits by federal, state and foreign tax authorities, which often result in proposed assessments. Management performs a comprehensive review of its global tax positions on a quarterly basis and accrues amounts for uncertain tax positions. Based on these reviews and the result of discussions and resolutions of matters with certain tax authorities and the closure of tax years subject to tax audit, reserves are adjusted as necessary. However, future results may include favorable or unfavorable adjustments to our estimated tax liabilities in the period the assessments are determined or resolved or as such statutes are closed. Due to potential for resolution of federal, state and foreign examinations, and the expiration of various statutes of limitation, it is reasonably possible our gross unrecognized tax benefits balance may decrease within the next twelve months by a range of zero to $1.7 million. The majority of this range relates to tax positions taken in Canada and the U.S. We recognize interest and penalties related to uncertain tax positions as income tax expense. The following table summarizes information related to interest and penalties on uncertain tax positions. $3.0 million of penalty accruals and $1.2 million of interest accruals were recorded in 2021 through purchase accounting:
| As of or for the year ended December 31,
In thousands | 2021 |  | 2020 |  | 2019
Accrued interest payable | $ | 3,947 |  |  | $ | 1,792 |  |  | $ | 424 |
Interest expense (income) | 974 |  |  | 927 |  |  | (649) |
Penalties | 3,020 |  |  | — |  |  | — |

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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=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
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