Annual report pursuant to Section 13 and 15(d)

Income Taxes

v3.20.4
Income Taxes
 12 Months Ended
Dec. 31, 2020
Income Tax Disclosure [Abstract]  
Income Taxes
20. Income Taxes:
Income (loss) before income taxes and noncontrolling interest within or outside the United States are shown below:
Years ended
December 31,
2020 2019 2018
Domestic $ (175,143) $ 41,019  $ (1,559)
Foreign (52,442) 64,411  85,579 
Total $ (227,585) $ 105,430  $ 84,020 
The provision (benefit) for income taxes as shown in the accompanying consolidated statements of income consists of the following:
Years ended
December 31,
2020 2019 2018
Current:  
Federal $ —  $ (3) $ — 
State 1,087  1,381  2,507 
Foreign 15,484  22,810  27,062 
16,571  24,188  29,569 
Deferred:
Federal (58,744) 11,824  10,875 
State (2,910) 3,175  67 
Foreign (3,039) 490  (6,870)
(64,693) 15,489  4,072 
Provision (benefit) for income taxes $ (48,122) $ 39,677  $ 33,641 
A reconciliation of income tax expense (benefit) at the U.S. federal statutory income tax rate to actual income tax expense is as follows:
Years ended
December 31,
2020 2019 2018
Tax at statutory rate $ (47,793) $ 22,140  $ 17,644 
State income taxes, net of federal income tax benefit (2,324) 6,802  2,541 
Tax on global intangible low-taxed income 7,820  8,741  14,465 
Change in valuation allowances 135  1,415  5,070 
Rate changes 4,274  1,054  (4,016)
Foreign withholding taxes 258  (6,116) 142 
Foreign tax rate differential 1,240  3,278  6,439 
Non-taxable interest (5,353) —  — 
Non-deductible goodwill 53,342  —  — 
Foreign tax credits (56,359) —  — 
Permanent difference created by foreign exchange gain or loss (1,324) 1,852  (4,839)
Other, net (2,038) 511  (3,805)
Provision (benefit) for income taxes $ (48,122) $ 39,677  $ 33,641 
Deferred tax assets (liabilities) are comprised of the following:
December 31,
2020 2019
Deferred tax assets:
Net operating loss carryforwards $ 28,145  $ 77,062 
Section 163(j) interest disallowance carryforward 266  16,535 
Pension 12,701  14,359 
Operating lease liability 11,803  14,455 
Other 36,545  29,298 
State credits 12,733  12,280 
Foreign tax credit 62,752  — 
Valuation allowance (37,880) (39,379)
$ 127,065  $ 124,610 
Deferred tax liabilities:
Depreciation $ (107,805) $ (103,796)
Inventory (4,946) (11,481)
Intangible assets (162,301) (184,764)
Operating lease right-of-use assets (12,060) (14,278)
Other (15,348) (22,619)
$ (302,460) $ (336,938)
Net deferred tax liabilities $ (175,395) $ (212,328)

The change in net deferred tax liabilities for the years ended December 31, 2020 and 2019 was primarily related to the usage of U.S. federal and state net operating losses reducing those deferred tax assets, activity related to book amortization of intangible assets with no corresponding tax basis reducing those deferred tax liabilities, activity with respect to tax deductible goodwill, as well as the election for full expensing on certain assets creating additional deferred tax liabilities for depreciable property. Further, the increase of the foreign tax credits on the deferred tax assets and the decrease of the Section 163(j) interest disallowance carryforward accounted for the change in net deferred tax liabilities for year ended December 31, 2020.
The net change in the total valuation allowance was a decrease of $1,499 in 2020. The valuation allowance at December 31, 2020 was primarily related to foreign and state net operating loss carryforwards and tax credits that, in the judgment of management, are not more likely than not to be realized. In assessing the ability to realize deferred tax assets, management considered whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considered the scheduled reversal of deferred tax liabilities (including the impact of available carryback and carryforward periods), projected future taxable income, and tax-planning strategies that are prudent in making this assessment. In order to fully realize deferred tax assets, the Company will need to generate future taxable income prior to the expiration of the net operating loss and credit carryforwards. The amount of the deferred tax assets considered realizable, however, could be reduced in the near term if estimates of future taxable income during the carryforward period are reduced.
The cumulative unremitted earnings of foreign subsidiaries outside the United States are considered permanently reinvested, for which no withholding taxes have been provided. Such earnings are expected to be reinvested indefinitely and, as a result, no deferred tax liability has been recognized with regard to such earnings. Determination of the deferred withholding tax liability on these unremitted earnings is not practicable.
The following table summarizes the activity related to the Company’s gross unrecognized tax benefits:
Years ended
December 31,
2020 2019
Balance at beginning of period $ 8,310  $ 9,434 
Increases related to prior year tax positions —  22 
Decreases related to prior year tax positions (14) (1,046)
Increases related to current year tax positions 164  — 
Decreases related to settlements with taxing authorities (626) (100)
Balance at end of period $ 7,834  $ 8,310 
The total unrecognized tax benefits of $7,834 and $8,310 as of December 31, 2020 and 2019, respectively. If these amounts are recognized in future periods, it would affect the effective tax rate on income from continuing operations for the years in which they are recognized.
Interest and penalties released related to uncertain tax positions amounted to $35 and $701 for the years ended December 31, 2020 and 2019, respectively. To the extent interest and penalties are not assessed with respect to uncertain tax positions, amounts accrued will be reduced and reflected as a reduction of the overall income tax provision in the period for which the event occurs requiring the adjustment. The $112 and $181 in accrued interest and penalties as of December 31, 2020 and 2019, respectively, is recorded in other long-term liabilities on the consolidated balance sheets.
The Company files numerous consolidated and separate income tax returns in the U.S. federal jurisdiction and in many state and foreign jurisdictions. The following describes the open tax years, by significant tax jurisdiction, as of December 31, 2020:
Jurisdiction Period
United States-Federal 2007-Present
United States-State 2007-Present
Canada(1)
2012-Present
Netherlands 2014-Present
Mexico 2016-Present
United Kingdom 2014-Present
Brazil 2016-Present

(1)     Includes federal as well as local jurisdictions
Given that the Company has utilized U.S. and state net operating loss in the current and prior years, the statute for examination by the U.S. and state taxing authorities will typically remain open for a period following the use of such net operating loss carryforwards, extending the period for examination beyond the years indicated above.
The Company has subsidiaries in various states, provinces and countries that are currently under audit for years ranging from 2014 through 2018. To date, no material adjustments have been proposed as a result of these audits. As of December 31, 2020, the Company does not believe that there are any positions for which it is reasonably possible that the total amount of unrecognized tax benefits will significantly increase or decrease within the next 12 months.
As of December 31, 2020, the Company no longer has a federal NOL carryforward. As of December 31, 2020, the Company has foreign tax credit carryforwards of $62,752, which are net of $7,658 of uncertain tax position balances, which is permissible per ASU 2013-11. These carryforwards have a ten year carryforward, of which $13,241 are set to expire in 2021.
Cumulative state net operating losses carrying forward into December 31, 2020 are $24,467. A valuation allowance of $14,344 has been applied against the total state net operating loss deferred tax assets, leaving losses of $10,123 that have been recognized for financial accounting purposes for the portion of those losses that the Company believes, on a more likely than not basis, will be realized.
Foreign net operating losses of $3,678, of which $68 will begin to expire in 2028, $160 will begin to expire in 2036, with the remaining $3,450 carrying forward indefinitely, are available to reduce future foreign income taxes payable. A valuation allowance of $3,531 has been applied to deferred tax assets related to foreign net operating loss carry-forwards, leaving a net deferred tax asset relating to foreign net operating losses of $147 that has been recognized for financial accounting purposes.
Cash payments for income taxes, net of refunds, are as follows:
Years ended
December 31,
2020 2019 2018
Domestic $ 2,198  $ 1,879  $ 2,154 
Foreign 20,810  12,354  17,654 
$ 23,008  $ 14,233  $ 19,808