Annual report pursuant to Section 13 and 15(d)

Income Taxes

v3.22.4
Income Taxes
 12 Months Ended
Dec. 31, 2022
Income Tax Disclosure [Abstract]  
Income Taxes
21. Income Taxes:
Income (loss) before income taxes and noncontrolling interest within or outside the United States are shown below:
Years ended
December 31,
2022 2021 2020
Domestic $ 86,695  $ 6,185  $ (10,454)
Foreign 8,040  7,756  12,669 
Total $ 94,735  $ 13,941  $ 2,215 
The provision (benefit) for income taxes as shown in the accompanying consolidated statements of income consists of the following:
Years ended
December 31,
2022 2021 2020
Current:  
Federal $ 18,210  $ 2,469  $ — 
State 3,100  1,813  1,982 
Foreign 1,978  3,317  6,013 
23,288  7,599  7,995 
Deferred:
Federal 4,544  (1,813) (58,125)
State (2,288) 2,551  (2,596)
Foreign (604) 3,810  661 
1,652  4,548  (60,060)
Provision (benefit) for income taxes $ 24,940  $ 12,147  $ (52,065)

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,
2022 2021 2020
Tax at statutory rate $ 19,894  $ 2,928  $ 314 
State income taxes, net of federal income tax benefit 248  3,942  (401)
Changes in uncertain tax positions 558  877  164 
Rate changes —  5,209  4,274 
Stock compensation 1,876  197  318 
Compensation Disallowance under 162(m) 3,146  466  206 
Foreign tax credits —  (759) (56,359)
Research and development tax credits (366) (620) (717)
Other, net (416) (93) 136 
Provision (benefit) for income taxes $ 24,940  $ 12,147  $ (52,065)
Deferred tax assets (liabilities) are comprised of the following:
December 31,
2022 2021
Deferred tax assets:
Net operating loss carryforwards $ 13,705  $ 24,107 
Interest disallowance carryforward 228  24 
Pension 879  227 
Operating lease liability 6,873  7,362 
Other 10,653  14,732 
State credits 13,773  13,110 
Foreign withholding tax credits 9,083  9,083 
Valuation allowance (30,615) (39,857)
$ 24,579  $ 28,788 
Deferred tax liabilities:
Depreciation $ (70,400) $ (71,815)
Inventory (3,039) (2,899)
Intangibles (63,873) (62,557)
Operating lease right-of-use assets (6,763) (7,384)
Other (15,910) (10,713)
$ (159,985) $ (155,368)
Net deferred tax liabilities $ (135,406) $ (126,580)
Under the tax laws of various jurisdictions in which we operate, deductions or credits that cannot be fully utilized for tax purposes during the year may be carried forward, subject to statutory limitations, to reduce taxable income or taxes payable in a future year. As of December 31, 2022, the Company has indefinite carryforwards of $9,083 foreign withholding tax credits. The Company has recorded a full valuation allowance against the foreign withholding tax credits as it is more likely than not that the benefit from these foreign tax credits will never be realized. The Company has $13,773 of deferred tax assets related to state tax credits, which are subject to a 16-year carryforward period. A partial valuation allowance of $10,203 has been recorded due to the expected expiration of these credits before they are able to be utilized. The Company has $13,705 of deferred tax assets related to state net operating losses, which are subject to various carryforward periods of 5 to 20 years or an indefinite carryforward period. A partial valuation allowance of $10,752 has been recorded due to the expected expiration of these state net operating losses before they are able to be utilized.
The change in net deferred tax liabilities for the years ended December 31, 2022 and 2021 was primarily related to activity connected to book amortization of intangible assets with no corresponding tax basis reducing those deferred tax liabilities, activity with respect to tax deductible goodwill, activity with respect to interest rate caps recorded against other comprehensive income, and activity with respect to stock compensation.
The net change in the total valuation allowance was a decrease of $9,242 in 2022. The valuation allowance at December 31, 2022 was related to 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 Company had total unrecognized tax benefits of $7,787 as of December 31, 2022 and 2021, respectively, and there was no activity related to these balances during the year then ended. 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.
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 Company recorded accrued interest and penalties amounting to $558 as of December 31, 2022 in other long-term liabilities on its consolidated balance sheets. The Company did not record accrued interest and penalties in December 31, 2021.
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, 2022:
Jurisdiction Period
United States-Federal 2011-2022
United States-State 2011-2022
Given that the Company has utilized state net operating loss in the current and prior years, the statute for examination by the 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.
As of December 31, 2022 and 2021, 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 twelve months.
As of December 31, 2022 and 2021, the Company no longer has a federal net operating loss or foreign tax credit carryforward.
Cash payments for income taxes, net of refunds, are as follows:
Years ended
December 31,
2022 2021 2020
Domestic $ 13,277  $ 549  $ 1,894 
Foreign 359  69  29 
$ 13,636  $ 618  $ 1,923 
On August 16, 2022, the Inflation Reduction Act of 2022, or IRA, was signed into law. Among other things, the IRA imposes a 15% corporate alternative minimum tax for certain large corporations with average annual adjusted financial statement income in excess of $1 billion for tax years beginning after December 31, 2022, levies a 1% excise tax on net stock repurchases after December 31, 2022, and provides tax incentives to promote clean energy. Historically the Company has made discretionary share repurchases under its share repurchase programs. Beginning in 2023, these transactions will be subject to the excise tax of the IRA. Based on the Company’s historical net repurchase activity, the excise tax and the other provisions of the IRA are not expected to have a material impact on the Company’s results of operations or financial position.