Income Taxes

12 Months Ended

Dec. 31, 2025

Income Taxes

Income Taxes

8. Income Taxes

The provision for income taxes for the years ended December 31 consists of the following:

(thousands)	2025		2024		2023
Current:
Federal	$	14,859	$	(8,586)	$	33,832
State		4,837		3,352		16,108
International		164,720		200,912		299,031
	$	184,416	$	195,678	$	348,971
Deferred:
Federal	$	(22,831)	$	(50,305)	$	(59,342)
State		655		(8,348)		(11,960)
International		(14,006)		(41,213)		(22,678)
		(36,182)		(99,866)		(93,980)
	$	148,234	$	95,812	$	254,991

The principal causes of the difference between the U.S. federal statutory tax rate of 21% and effective income tax rates for the years ended December 31 are as follows:

(thousands)	2025		2024		2023
United States	$	(68,852)	$	(234,972)	$	(38,848)
International		786,780		724,291		1,203,202
Income before income taxes	$	717,928	$	489,319	$	1,164,354

	2025
(thousands)	Amount		Percent
U.S. Federal statutory tax rate	$	150,765		21.0	%
State and local income taxes, net of federal income tax effect*		4,306		0.6	%
Foreign tax effects
Germany
Foreign exchange difference		(11,536)		(1.6)	%
Other		3,809		0.5	%
Cayman Islands
Statutory tax rate difference between Cayman Islands and United States		(12,170)		(1.7)	%
Taiwan
Foreign exchange difference		(7,930)		(1.1)	%
Other		807		0.1	%
Other foreign jurisdictions		11,743		1.6	%
Effect of cross-border tax laws		13,281		1.8	%
Tax credits
Research and development tax credits		(9,635)		(1.3)	%
Changes in valuation allowances
Nontaxable or nondeductible items		1,358		0.2	%
Changes in unrecognized tax benefits		1,452		0.2	%
Other adjustments		1,984		0.3	%
Effective tax rate	$	148,234		20.6	%

* State taxes in Ohio, California, District of Columbia, New York, Minnesota, and Virginia made up the majority (greater than 50 percent) of the tax effect in this category.

	Year Ended December 31,
(thousands)	2024		2023
United States	$	(234,972)	$	(38,848)
International		724,291		1,203,202
Income before income taxes	$	489,319	$	1,164,354
Provision at statutory tax rate	$	102,757	$	244,514
State taxes, net of federal benefit		(3,279)		2,379
International effective tax rate differential		8,958		27,993
Change in valuation allowance		333		(7,755)
Other non-deductible expenses		(585)		2,993
Changes in tax accruals		(9,419)		1,153
Tax credits		(10,786)		(7,666)
U.S. tax (benefit) on foreign earnings		6,801		(10,075)
Other		1,032		1,455
Provision for income taxes	$	95,812	$	254,991

The company is subject to taxation of GILTI on foreign subsidiaries and a tax provision to deduct a portion of FDII of U.S. corporations. GILTI tax expense, accounted for as a current period cost, net of FDII benefit, resulted in a net tax expense of $5.2 million, $4.7 million, and $23.0 million during 2025, 2024, and 2023, respectively.

At December 31, 2025, a short-term tax payable of $7.6 million was recorded in the consolidated balance sheets for a one-time transition tax on the foreign subsidiaries’ accumulated unremitted earnings related to the 2017 U.S. Tax Cuts and Jobs Act.

At December 31, 2025, the company had a liability for unrecognized tax positions of $50.5 million. The timing of the resolution of these uncertain tax positions is dependent on the tax authorities’ income tax examination processes. Material changes are not expected; however, it is possible that the amount of unrecognized tax benefits with respect to uncertain tax positions could increase or decrease during 2026. Currently, the company is unable to make a reasonable estimate of when cash settlement would occur and how it would impact the effective tax rate.

A reconciliation of the beginning and ending amount of unrecognized tax benefits for the years ended December 31 is as follows:

(thousands)	2025		2024		2023
Balance at beginning of year	$	63,953	$	82,808	$	75,666
Additions based on tax positions taken during a prior period		7,710		4,537		7,466
Reductions based on tax positions taken during a prior period		(10,242)		(20,245)		(4,448)
Additions based on tax positions taken during the current period		5,930		7,943		5,505
Reductions based on tax positions taken during the current period		(1,575)		—		—
Reductions related to settlement of tax matters		(15,265)		(11,090)		—
Reductions related to a lapse of applicable statute of limitations		—		—		(1,381)
Balance at end of year	$	50,511	$	63,953	$	82,808

Interest costs related to unrecognized tax benefits are classified as a component of “Interest and other financing expense, net” in the company’s consolidated statements of operations. In 2025, 2024, and 2023, the company recognized $7.3 million, $5.9 million, and $4.0 million, respectively, of interest expense related to unrecognized tax benefits. At December 31, 2025 and 2024, the company had accrued a liability of $24.2 million and $23.5 million, respectively, for interest related to unrecognized tax benefits.

In many cases the company’s uncertain tax positions are related to tax years that remain subject to examination by tax authorities. The following describes the open tax years, by major tax jurisdiction, as of December 31, 2025:

United States - Federal	2016 - present
United States - States	2015 - present
China and Hong Kong	2018 - present
Germany (a)	2020 - present
Italy (a)	2013 - present
Netherlands	2019 - present
Sweden	2020 - present
Taiwan	2020 - present
United Kingdom	2021 - present

(a) Includes national as well as local jurisdictions.

Deferred income taxes are provided for the effects of temporary differences between the tax basis of an asset or liability and its reported amount in the consolidated balance sheets. These temporary differences result in taxable or deductible amounts in future years.

Deferred tax assets and liabilities consist of the following at December 31:

(thousands)	2025		2024
Deferred tax assets:
Net operating loss carryforwards	$	35,971	$	16,567
Inventory adjustments		119,898		110,370
Allowance for credit losses		24,918		20,475
Accrued expenses		100,853		81,951
Interest carryforward		4,612		21,923
Foreign tax credit carryforward		9,194		—
Intangibles		10,499		4,939
Stock-based compensation awards		6,345		5,490
Lease liability		65,130		65,718
Research and experimentation costs (a)		83,305		73,971
Other		1,921		1,066
		462,646		402,470
Valuation allowance		(16,011)		(16,165)
Total deferred tax assets	$	446,635	$	386,305
Deferred tax liabilities:
Goodwill	$	(165,985)	$	(157,786)
Depreciation		(42,175)		(42,540)
Lease right-of-use assets		(61,493)		(61,685)
Other comprehensive income items		(20,328)		(15,615)
Total deferred tax liabilities	$	(289,981)	$	(277,626)
Total net deferred tax assets	$	156,654	$	108,679

(a) At December 31, 2025, and 2024, the company recorded deferred tax asset of $83.3 million and $74.0 million, respectively, related to capitalized U.S. based research and experimental (“R&E”) costs, pursuant to the U.S. Internal Revenue Code Section 174, as amended by the 2017 U.S. Tax Cuts and Jobs Act.

At December 31, 2025, the company had international tax loss carryforwards of approximately $147.9 million, of which $3.8 million have expiration dates ranging from 2026 to 2045, and the remaining $144.1 million have no expiration date. Deferred tax assets related to these international tax loss carryforwards were $25.8 million with a corresponding valuation allowance of $0.8 million.

At December 31, 2025, the company had deferred tax assets of approximately $10.2 million with a corresponding valuation allowance of $7.4 million, related to U.S. state net operating loss carryforwards. Valuation allowances are needed when deferred tax assets may not be realized due to the uncertainty of the timing and the ability of the company to generate sufficient future taxable income in certain tax jurisdictions.

At December 31, 2025, the company had approximately $5.4 billion in undistributed foreign earnings which it deems to be indefinitely reinvested. The company recognizes that if it reverses its indefinite reinvestment assertion on foreign earnings, it may be subject to additional foreign taxes and U.S. state income taxes. It is not practicable to determine the income tax liability that would be payable if these earnings were distributed and not reinvested indefinitely.

Income taxes paid, net of income taxes refunded, for the year ended December 31 were:

(thousands)	2025
U.S. federal	$	12,354
U.S. state and local		5,287
		17,641
Foreign
Spain		16,184
Italy		15,581
Canada		14,937
United Kingdom		11,116
France		11,045
China		10,087
Other		98,609
Total Foreign		177,559
Total	$	195,200

Income taxes paid, net of income taxes refunded, amounted to $195.2 million, $230.5 million, and $538.4 million in 2025, 2024, and 2023, respectively.