v3.25.4

Income Taxes | 12 Months Ended
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Dec. 31, 2025
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes Income (loss) from continuing operations before income taxes consists of the following components:
(In thousands) | Years Ended December 31,
2025 |  | 2024 |  | 2023
Domestic | $ | 182,190 |  |  | $ | (119,422) |  |  | $ | 239,061 |
Foreign | (34,192) |  |  | (55,075) |  |  | 56,945 |
Total | $ | 147,998 |  |  | $ | (174,497) |  |  | $ | 296,006 |
Income tax expense (benefit) attributable to continuing operations consists of the following components:
(In thousands) | Years Ended December 31,
2025 |  | 2024 |  | 2023
Current expense (benefit): |  |  |  |  |
U.S. federal | $ | 27,671 |  |  | $ | 43,284 |  |  | $ | 9,260 |
U.S. state and local | 20,698 |  |  | 41,990 |  |  | 12,624 |
Foreign | 11,887 |  |  | 20,441 |  |  | 23,517 |
Total current tax expense (benefit) | 60,256 |  |  | 105,715 |  |  | 45,401 |
Deferred expense (benefit): |  |  |  |  |
U.S. federal | (11,329) |  |  | (53,109) |  |  | 46,831 |
U.S. state and local | (1,397) |  |  | (6,631) |  |  | 1,034 |
Foreign | (4,552) |  |  | (3,323) |  |  | 1,871 |
Total deferred tax expense (benefit) | (17,278) |  |  | (63,063) |  |  | 49,736 |
Total income tax expense (benefit): |  |  |  |  |
U.S. federal | 16,342 |  |  | (9,825) |  |  | 56,091 |
U.S. state and local | 19,301 |  |  | 35,359 |  |  | 13,658 |
Foreign | 7,335 |  |  | 17,118 |  |  | 25,388 |
Total income tax expense (benefit) | 42,978 |  |  | 42,652 |  |  | 95,137 |
Tax expense (benefit) relating to uncertain tax positions, including accrued interest | 3,248 |  |  | 838 |  |  | (531) |
Income tax expense (benefit) | $ | 46,226 |  |  | $ | 43,490 |  |  | $ | 94,606 |
As noted in Note 2, the Company adopted the FASB issued guidance that enhances the transparency and decision usefulness of income tax information through improvements to income tax disclosures. The required disclosure updates related to the rate reconciliation are reflected below on a prospective basis. A reconciliation of the federal statutory income tax rate to the effective income tax rate for the year ended December 31, 2025 is as follows:
(in thousands) | Amount | Percent |  |  |  |
U.S. federal statutory income tax rate | $ | 31,080 |  | 21.0 | % |  |  |  |  |  |
Domestic federal |  |  |  |  |  |  |  |
Tax credits |  |  |  |  |  |  |  |
Foreign tax credits | (14,642) |  | (9.9) | % |  |  |  |  |  |
Nontaxable or nondeductible items |  |  |  |  |  |  |  |
Nondeductible goodwill impairment | 6,807 |  | 4.6 | % |  |  |  |  |  |
Nondeductible compensation expense | 5,133 |  | 3.5 | % |  |  |  |  |  |
Other | 208 |  | 0.1 | % |  |  |  |  |  |
Effect of cross-border tax laws | (2,511) |  | (1.7) | % |  |  |  |  |  |
Changes in valuation allowances | 4,544 |  | 3.1 | % |  |  |  |  |  |
Other |  |  |  |  |  |  |  |
Deferred tax outside basis adjustment (a) | (17,837) |  | (12.1) | % |  |  |  |  |  |
Share-based payment awards | 2,833 |  | 1.9 | % |  |  |  |  |  |
Other | (1,651) |  | (1.1) | % |  |  |  |  |  |
Domestic state and local income taxes, net of federal effect (b) | 19,285 |  | 13.0 | % |  |  |  |  |  |
Changes in unrecognized tax benefits | 2,523 |  | 1.7 | % |  |  |  |  |  |
Foreign tax effects |  |  |  |  |  |  |  |
Canada |  |  |  |  |  |  |  |
Withholding taxes | 7,726 |  | 5.2 | % |  |  |  |  |  |
United Kingdom |  |  |  |  |  |  |  |
Tax incentive adjustment | (11,301) |  | (7.6) | % |  |  |  |  |  |
Changes in valuation allowances | 11,269 |  | 7.6 | % |  |  |  |  |  |
Nontaxable income attributable to noncontrolling interests | (2,374) |  | (1.6) | % |  |  |  |  |  |
Other | 667 |  | 0.5 | % |  |  |  |  |  |
Spain |  |  |  |  |  |  |  |
Tax incentive adjustment | (5,944) |  | (4.0) | % |  |  |  |  |  |
Nondeductible goodwill impairment | 4,112 |  | 2.8 | % |  |  |  |  |  |
Changes in valuation allowances | 2,718 |  | 1.8 | % |  |  |  |  |  |
Other | (984) |  | (0.7) | % |  |  |  |  |  |
Other jurisdictions |  |  |  |  |  |  |  |
Withholding taxes | 4,174 |  | 2.8 | % |  |  |  |  |  |
Other | 391 |  | 0.3 | % |  |  |  |  |  |
Total income tax expense/(benefit) | $ | 46,226 |  | 31.2 | % |  |  |  |  |  |
(a) This amount relates to a reversal of a deferred tax liability resulting from an ownership interest change of RLJ Entertainment. (b) This amount includes an $11.4 million adjustment primarily related to a write-down of a state investment tax credit receivable. During the year ended December 31, 2025, state taxes in California, New York and Pennsylvania compromised greater than 50% of the tax effect in this category after adjusting for the $11.4 million above. A reconciliation of the federal statutory income tax rate to the effective income tax rate for the years ended December 31, 2024 and 2023 is as follows:
(In thousands) |  |  | Years Ended December 31,
|  | 2024 |  | 2023
U.S. federal statutory income tax rate |  |  | 21 | % |  | 21 | %
State and local income taxes, net of federal benefit |  |  | (1) |  |  | 4 |
Effect of foreign operations (a) |  |  | (11) |  |  | 1 |
Nondeductible compensation expenses |  |  | (3) |  |  | 2 |
Excess tax deficiencies related to share-based compensation |  |  | (1) |  |  | 1 |
Changes in the valuation allowance (b) |  |  | 1 |  |  | 3 |
Investment tax credit benefit/expense (c) |  |  | (19) |  |  | — |
Nondeductible goodwill impairment charges |  |  | (9) |  |  | — |
Expiration of foreign tax credits |  |  | (4) |  |  | — |
Other |  |  | 1 |  |  | — |
Effective income tax rate |  |  | (25) | % |  | 32 | %
(a)In the years ended December 31, 2024 and 2023, the effect of foreign operations relates to the income tax benefit or expense as a result of certain entities operating in foreign jurisdictions (inclusive of the nondeductible goodwill impairment charges at AMCNI). (b)In the year ended December 31, 2024, the decrease in the valuation allowance relates primarily to the expiration of foreign tax credits and utilization of foreign deferred tax assets offset by the generation of excess foreign tax credits. (c)In the year ended December 31, 2024, the increase in the investment tax credit benefit/expense relates primarily to a write-down of a state investment tax credit receivable. The tax effects of temporary differences that give rise to significant components of deferred tax assets or liabilities at December 31, 2025 and 2024 are as follows:
(In thousands) | December 31,
2025 |  | 2024
Deferred Tax Asset (Liability) |  |  |
NOLs and tax credit carryforwards | $ | 122,916 |  |  | $ | 96,968 |
Compensation and benefit plans | 19,695 |  |  | 20,128 |
Allowance for doubtful accounts | 1,440 |  |  | 1,729 |
Fixed assets and intangible assets | 21,527 |  |  | 23,411 |
Accrued interest expense | 6,049 |  |  | 28,148 |
Unused capital losses | 13,116 |  |  | 19,148 |
Accrued liabilities and other | 22,402 |  |  | 23,927 |
Deferred tax asset | 207,145 |  |  | 213,459 |
Valuation allowance | (142,368) |  |  | (127,563) |
Net deferred tax asset | 64,777 |  |  | 85,896 |
Prepaid liabilities | (770) |  |  | (664) |
Fixed assets and intangible assets | (61,270) |  |  | (69,203) |
Investments in partnerships | (86,408) |  |  | (99,864) |
Other | (6,712) |  |  | (24,284) |
Deferred tax liability | (155,160) |  |  | (194,015) |
Total net deferred tax liability | $ | (90,383) |  |  | $ | (108,119) |
Deferred Tax Assets - Valuation Allowance
(In thousands) | 2025 | 2024
Balance at beginning of year | $ | 127,563 |  | $ | 135,742 |
Charged (credited) to expense | 11,048 |  | (8,160) |
Other (a) | 3,757 |  | (19) |
Balance at end of year | $ | 142,368 |  | $ | 127,563 |
(a)Includes currency translation adjustments and other miscellaneous items. At December 31, 2025, the Company had foreign tax credit carryforwards of approximately $49.8 million, expiring on various dates from 2026 through 2035, which have been reduced by a full valuation allowance as it is more likely than not that these carryforwards will not be realized. The Company had net operating loss carryforwards of approximately $415.3 million, related primarily to federal and state net operating losses acquired as a result of the purchase of the outstanding shares of RLJ Entertainment of approximately $72.3 million, other state net operating loss carryforwards and net operating loss carryforwards of our foreign subsidiaries. The deferred tax asset related to the federal and state net operating loss carryforwards of approximately $19.5 million has expiration dates ranging from 2026 through 2045 (some are indefinite) and has been reduced by a valuation allowance of approximately $12.4 million, including $7.7 million that was previously recorded through goodwill as part of purchase accounting. Although the foreign net operating loss carryforward periods range from 5 years to unlimited, the related deferred tax assets of approximately $52.9 million for these carryforwards have been reduced by a valuation allowance of approximately $51.0 million as it is more likely than not that these carryforwards will not be realized. The deferred tax asset related to unused capital losses and other related losses has been reduced by a valuation allowance of approximately $19.1 million as it is more likely than not that these losses will not be realized. The remainder of the valuation allowance at December 31, 2025 relates primarily to deferred tax assets attributable to temporary differences of certain foreign subsidiaries for which it is more likely than not that these deferred tax assets will not be realized. At December 31, 2025, the Company had investment tax credit carryforwards of approximately $126.9 million, expiring on various dates from 2032 through 2040, reduced by $109.7 million for expected realization. At December 31, 2025, the liability for uncertain tax positions was $6.7 million, excluding accrued interest of $3.4 million and deferred tax assets of $2.2 million. All of such unrecognized tax benefits, if recognized, would reduce the Company's income tax expense and effective tax rate. A reconciliation of the beginning to ending amount of the liability for uncertain tax positions (excluding related accrued interest and deferred tax benefit) is as follows:
(In thousands) |
Balance at December 31, 2024 | $ | 5,949 |
Increases related to current year tax positions | 478 |
Increases related to prior year tax positions | 1,678 |
Decreases related to prior year tax positions | (45) |
Decreases due to settlements/payments | (834) |
Decreases due to lapse of statute of limitations | (561) |
Balance at December 31, 2025 | $ | 6,665 |
Interest expense (net of the related deferred tax benefit) of $1.3 million was recognized during the year ended December 31, 2025 and is included in income tax expense in the consolidated statement of income (loss). At December 31, 2025 and 2024, the liability for uncertain tax positions and accrued interest are included in accrued liabilities and other liabilities, in the consolidated balance sheets. During 2025, $18.0 million of cash and cash equivalents, previously held by foreign subsidiaries, was repatriated to the United States. As of December 31, 2025, the Company's cash and cash equivalents balance of $502.4 million, included $132.5 million held by foreign subsidiaries. Of this amount $7.3 million is currently expected to be repatriated to the United States with the remaining amount continuing to be reinvested in foreign operations. Tax expense related to the repatriated amount, as well as the expected remaining amount to be repatriated, has been accrued for. The Company does not expect to incur any significant, additional taxes related to the remaining balance. The Company is currently being audited by the Internal Revenue Service, the State and City of New York and various other states or jurisdictions, with most of the periods under examination relating to tax years 2015 and forward. In December 2021, the Organization for Economic Co-operation and Development (OECD) released the Pillar Two Model Rules, which aim to reform international corporate taxation rules, including the implementation of a global minimum tax rate. The Company began the phased implementation of the Pillar Two Model Rules in 2024 and the minimum tax requirement has not had a material impact upon the Company's full year results of operations or financial position. As noted in Note 2, the Company adopted the FASB issued guidance that enhances the transparency and decision usefulness of income tax information through improvements to income tax disclosures. The required disclosure updates related to income taxes paid are reflected below on a prospective basis. The following table summarizes income taxes paid, net, for the year ended December 31, 2025:
(In thousands) |  |  |  |  |
U.S. Federal | $ | 28,000 |  |  |  |  |
U.S State and local | 6,637 |  |  |  |  |
Foreign | 11,753 |  |  |  |  |
Total income taxes paid, net | $ | 46,390 |  |  |  |  |
Individual jurisdictions representing 5% or more or the total income taxes paid, net for the year ended December 31, 2025 included U.S. Federal at $28.0 million, Canada at $7.7 million and Massachusetts at $2.5 million. Income taxes paid, net, were $37,994 and $63,020 for the years ended December 31, 2024 and 2023, respectively.

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