Income Taxes

12 Months Ended

Dec. 31, 2023

Income Taxes

Income Taxes

Note 11 Income Taxes

Income (loss) from continuing operations before income taxes consisted of the following:

	Year Ended December 31,
United States and Other Jurisdictions	2023		2022		2021
	(In thousands)
United States	$	215,306	$	(19,820)	$	(153,243)
Other jurisdictions		(86,182)		(225,862)		(334,846)
Income (loss) from continuing operations before income taxes	$	129,124	$	(245,682)	$	(488,089)

Income tax expense (benefit) from continuing operations consisted of the following:

	Year Ended December 31,
	2023		2022		2021
	(In thousands)
Current:
U.S. federal	$	4,783	$	1,320	$	(1,905)
Outside the U.S.		55,769		48,837		60,318
State		2,787		4,042		7,914
	$	63,339	$	54,199	$	66,327
Deferred:
U.S. federal	$	16,886	$	681	$	(4,669)
Outside the U.S.		(1,898)		(241)		(3,608)
State		893		6,897		(2,429)
	$	15,881	$	7,337	$	(10,706)
Income tax expense (benefit)	$	79,220	$	61,536	$	55,621

A reconciliation of our statutory tax rate to our worldwide effective tax rate consists of the following:

	Year Ended December 31,
	2023		2022		2021
	(In thousands)
Income tax provision at statutory (Bermuda rate of 0%)	$	—	$	—	$	—
Taxes (benefit) on U.S. and other international earnings (losses) at greater than the Bermuda rate		74,581		25,685		23,395
Increase (decrease) in valuation allowance		22,533		43,060		8,276
Impact of foreign exchange rates		(28,484)		(32,108)		—
Prior year adjustments to provision		(3,513)		15,959		—
Uncertain tax positions		5,854		2,080		26,266
Audit settlements		12,464		—		—
State income taxes (benefit)		3,838		266		(2,316)
Other		(8,053)		6,594		—
Income tax expense (benefit)	$	79,220	$	61,536	$	55,621
Effective tax rate		61.4%		(25.0%)		(11.4%)

Our worldwide income tax expense for 2023 was $79.2 million compared to $61.5 million for 2022. The increase in tax expense was primarily attributable to changes in the operating income and the geographic mix of our pre-tax earnings (losses) in the jurisdictions in which we operate.

The components of our net deferred taxes consisted of the following:

	December 31,
	2023		2022
	(In thousands)
Deferred tax assets:
Net operating loss carryforwards	$	4,004,602	$	3,878,344
Tax credit and other attribute carryforwards		86,896		84,812
Accrued interest		19,311		13,302
Property, plant and equipment		—		20,431
Other		106,520		100,316
Subtotal		4,217,329		4,097,205
Valuation allowance		(3,962,200)		(3,839,885)
Deferred tax assets:	$	255,129	$	257,320
Deferred tax liabilities:
Property, plant and equipment	$	15,181	$	—
Other		2,443		2,858
Deferred tax liability	$	17,624	$	2,858
Net deferred tax assets (liabilities)	$	237,505	$	254,462
Balance Sheet Summary:
Net noncurrent deferred tax asset	$	238,871	$	257,320
Net noncurrent deferred tax liability		(1,366)		(2,858)
Net deferred tax asset (liability)	$	237,505	$	254,462

As of December 31, 2023, we had federal, state, and foreign net operating loss (“NOL”) carryforwards of approximately $588.9 million, $788.1 million and $16.1 billion, respectively. Of those amounts, $7.9 billion will expire between 2024 and 2044 if not utilized. We provide a valuation allowance against NOL carryforwards in various tax jurisdictions based on our consideration of existing temporary differences and expected future earning levels in those jurisdictions. A valuation allowance of approximately $3.9 billion as of December 31, 2023 has been recognized related to certain NOL carryforwards as we believe it is more likely than not that the benefit of these NOL carryforwards will not be realized.

The following is a reconciliation of our uncertain tax positions:

	2023		2022		2021
	(In thousands)
Balance as of January 1	$	45,452	$	45,988	$	26,704
Additions for tax positions of prior years		2,207		806		19,760
Reductions for tax positions for prior years		(256)		(1,342)		(476)
Settlements		(13,387)		—		—
Balance as of December 31	$	34,016	$	45,452	$	45,988

If the unrecognized tax benefits of $34.0 million are realized, this would favorably impact the worldwide effective tax rate. As of December 31, 2023, 2022 and 2021, we had approximately $11.1 million, $17.0 million and $14.4 million, respectively, of interest and penalties related to uncertain tax positions. During 2023, 2022 and 2021, we accrued and recognized estimated interest and penalties related to uncertain tax positions of approximately $(6.0) million, $2.6 million and $6.9 million, respectively. During the fourth quarter of 2023, we settled tax audits for which we had accrued an uncertain tax position of $13.4 million and interest and penalties of $9.9 million. Upon settlement, we reversed the uncertain tax position accrual and related interest and penalties. We include potential interest and penalties related to uncertain tax positions within our global operations in the income tax expense (benefit) line item in our consolidated statements of income (loss).

It is reasonably possible that our existing liabilities related to our reserve for uncertain tax positions may increase or decrease in the next twelve months primarily due to the completion of open audits or the expiration of statutes of limitation. However, we cannot reasonably estimate a range of changes in our existing liabilities due to various uncertainties, such as the unresolved nature of various audits.

We conduct business globally and, as a result, we file numerous income tax returns in the U.S. and non-U.S. jurisdictions. In the normal course of business we are subject to examination by taxing authorities throughout the world, including major jurisdictions such as Colombia, Mexico, Saudi Arabia, Norway and the United States. We are no longer subject to U.S. Federal income tax examinations for years before 2020 and non-U.S. income tax examinations for years before 2007.

On August 16, 2022, the Inflation Reduction Act (“IRA”) was signed into law in the United States. Among other provisions, the IRA includes a 15% corporate minimum tax rate applied to certain large corporations and a 1% excise tax on corporate stock repurchases made after December 31, 2022. We do not expect the IRA to have a material impact to the Company.

The Organization Economic Co-operation and Development (“OECD”) introduced Base Erosion and Profit Shifting (“BEPS”) Pillar 2 rules that impose a global minimum tax rate of 15%. Numerous countries, including European Union member states, have enacted or are expected to enact legislation to be effective as early as January 1, 2024, with general implementation of a global minimum tax by January 1, 2025. There are no impacts to our consolidated financial statements for the year ended December 31, 2023.

On December 18, 2023, Bermuda enacted a 15% corporate income tax regime (the “Bermuda CIT”) that applies to Bermuda businesses that are part of multinational enterprise groups with annual revenue of €750 million or more and is effective for tax years beginning on or after January 1, 2025. As a result of the Bermuda CIT, the Company’s exemption from Bermuda corporate income taxes will cease in 2025. With the enactment of the Bermuda CIT in 2023, the Company underwent an analysis to determine the tax impacts to its consolidated financial statements for the year ended December 31, 2023. Bermuda CIT allows for a beginning net operating loss balance related to the five years preceding the effective date of Bermuda CIT. We have recorded a deferred tax asset of $171.9 million for the Bermuda net operating losses generated from 2020 through 2023 with an offsetting valuation allowance of $171.9 million.