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Income Taxes
 12 Months Ended
Dec. 31, 2023
Income Tax Disclosure [Abstract]  
Income Taxes 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 thousands202320222021
Current taxes   
Federal$2,864 $(801)$(570)
State974 239 584 
Foreign15,349 14,309 20,561 
19,187 13,747 20,575 
Deferred taxes and other
Federal(258)(33)(1,159)
State(1,233)477 234 
Foreign(10,685)(24,466)(12,694)
(12,176)(24,022)(13,619)
Income tax provision (benefit)$7,011 $(10,275)$6,956 
The following are the domestic and foreign components of pretax income (loss) from continuing operations:
Year ended December 31,
In thousands202320222021
United States$(60,092)$(63,421)$(44,682)
Foreign(11,000)(140,971)58,359 
Total pretax income (loss)$(71,092)$(204,392)$13,677 
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,
202320222021
    
Federal income tax provision at statutory rate21.0 %21.0 %21.0 %
State income taxes, net of federal income tax benefit(2.3)(0.6)2.7 
Foreign income tax rate differential(0.1)(4.6)(1.9)
Tax effect of tax credits1.0 0.1 (0.1)
Provision for (resolution of) tax matters(6.2)(1.4)23.6 
Rate changes due to enacted legislation(1.3)(0.1)15.3 
Change in reinvestment assertion— — 26.4 
Effect of U.S. tax law change(1.3)(0.2)2.8 
Income inclusions from foreign subsidiaries(1.6)(0.6)18.7 
Stock-based compensation(0.5)0.7 3.9 
Nondeductible officer's compensation— (0.3)3.9 
Valuation allowance(30.1)(6.8)(3.1)
Tax effect of U.S. impairment— (1.5)— 
Recognition of non-U.S. intangible tax basis— — (78.1)
Capitalized transaction costs— — 8.9 
Foreign Attribute Recognition
13.0 — — 
Other(1.5)(0.6)6.9 
Actual tax rate(9.9)%5.1 %50.9 %

The effective income tax rate in the year ended December 31, 2023 was impacted by losses in the U.S. and certain foreign jurisdictions for which no income tax benefit was recorded, offset in part by the recognition of a $9.3 million deferred tax benefit associated with a notional interest deduction carryforward at a foreign subsidiary.
The lower income tax rate in the year ended December 31, 2022 was largely impacted by the $119.0 million goodwill impairment charge (refer to Note 6), and operating losses in the U.S. and Spunlace operations in France, for which no tax benefit was recorded.
The effective income tax rate for the year ended December 31, 2021 was unfavorably impacted by operating losses in the U.S., restructuring and other non-recurring costs for which no tax benefit was recorded.
The sources of deferred income taxes were as follows at December 31:
In thousands20232022
Reserves$391 $1,489 
Environmental3,279 3,562 
Compensation2,583 2,687 
Pension1,473 2,323 
Post-retirement benefits749 795 
Research & development expenses6,062 5,986 
Inventories2,635 1,984 
Tax carryforwards101,017 61,828 
Interest limitation carryforwards59,579 9,854 
Other2,540 1,689 
Deferred tax assets180,308 92,197 
Valuation allowance(126,516)(52,960)
Net deferred tax assets53,792 39,237 
Property(77,518)(79,164)
Intangible assets(3,940)(1,549)
Inventories— — 
Other(5,963)(3,591)
Deferred tax liabilities(87,421)(84,304)
Net deferred tax liabilities$(33,629)$(45,067)
Non-current deferred tax assets and liabilities are included in the following balance sheet captions:
December 31,
In thousands20232022
Other assets$18,590 $9,321 
Deferred income taxes52,219 54,388 
At December 31, 2023, we had federal, state and foreign tax net operating loss (“NOL”) carryforwards of $124.3 million, $203.2 million, and $260.5 million, respectively. These NOL carryforwards are available to offset future taxable income. $0.8 million of the federal NOL carryforward expires in 2037. The remaining $123.5 million of the federal NOL has an indefinite carryforward and never expires. The state NOL carryforwards expire at various times and in various amounts beginning in 2024. Certain foreign NOL carryforwards begin to expire after 2029.
The federal, state, and international 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 $15.0 million which begin to expire in 2035 and state tax credit carryforwards totaling $3.6 million, which begin to expire in 2028.
As of December 31, 2023 and 2022, we had a valuation allowance of $126.5 million and $53.0 million, respectively, against net deferred tax assets, primarily due to uncertainty regarding the ability to utilize federal, state and foreign tax NOL carryforwards, federal and foreign interest deduction limitation 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 $0.5 million, $0.7 million and $0.0 million in 2023, 2022 and 2021, respectively, related to research and development credits.
At December 31, 2023 and 2022, unremitted earnings of certain subsidiaries outside the United States deemed to be indefinitely reinvested totaled $94.0 million and $130.0 million, respectively. Because the unremitted earnings of those subsidiaries are deemed to be indefinitely reinvested as of December 31, 2023 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. In 2021, we designated unremitted earnings of a subsidiary as not indefinitely reinvested. As of
December 31, 2023, we have $2.3 million of deferred tax liabilities recorded with regard to the unremitted earnings of that subsidiary.
As of December 31, 2023, 2022 and 2021, we had $60.7 million, $56.5 million and $55.7 million of gross unrecognized tax benefits, respectively. As of December 31, 2023, if such benefits were to be recognized, approximately $58.1 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 thousands202320222021
Balance at January 1$56,506 $55,660 $46,259 
Increases in tax positions for prior years51 — 38 
Decreases in tax positions for prior years— (995)(638)
Acquisition related:
Purchase Accounting— — 12,718 
Increases in tax positions for current year5,728 3,644 3,683 
Settlements— — — 
Lapse in statutes of limitation(1,552)(1,803)(6,400)
Balance at December 31
$60,733 $56,506 $55,660 
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
Federal2014, 2015; 2020 - 2023N/A
State2019 - 2023N/A
Canada(1)
2016 - 2018, 20232019-2022
Germany(1)
2020 - 20232016-2019
France20232021-2022
United Kingdom2022-2023N/A
Philippines2020, 2022-2023N/A
(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 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 may decrease within the next twelve months by a range of zero to $8.4 million. The majority of this range relates to tax positions taken in foreign jurisdictions.
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:
As of or for the year ended December 31,
In thousands202320222021
Accrued interest payable$6,251 $4,767 $3,947 
Accrued penalties2,782 2,975 3,020 
Interest expense 1,483 820 974 
The Organization for Economic Cooperation and Development (“OECD”) reached agreement among various countries to implement a minimum 15% tax rate on certain multinational enterprises, commonly referred to as Pillar Two. The minimum tax directive has been adopted by the EU for implementation by its Member States into national legislation
effective for fiscal years beginning after 2023 and may be adopted by other jurisdictions including the U.S. Many countries where we have operations continue to announce changes in their tax laws and regulations based on the Pillar Two principles. We continue to monitor and evaluate the impact of these proposed and enacted legislative changes. Given the uncertainty regarding such proposed legislative changes, the impact of Pillar Two cannot be determined at this time.