Income Taxes

12 Months Ended

Dec. 31, 2024

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Income tax provision (benefit) for the years ended December 31, consists of the following (in thousands): 

	2024		2023		2022
Current:
Federal	$	66,505	$	125,875	$	139,423
State	8,368		22,340		20,367
Foreign	23,366		53,674		48,165
	98,239		201,889		207,955
Deferred:
Federal	(27,938)		(18,781)		(12,313)
State	7,511		(6,209)		(7,761)
Foreign	(5,849)		(5,069)		4,138
	(26,276)		(30,059)		(15,936)
	$	71,963	$	171,830	$	192,019

The components of Income before income taxes for the years ended December 31, were as follows (in thousands): 

	2024		2023		2022
Domestic	$	369,870	$	614,713	$	750,793
Foreign	147,268		252,163		180,440
	$	517,138	$	866,876	$	931,233

Income tax provision differs from the amount that would be provided by applying the statutory U.S. corporate income tax rate for the years ended December 31, due to the following items (in thousands): 

	2024		2023		2022
Provision at statutory rate	$	108,599	$	182,044	$	195,553
State taxes, net of federal benefit	10,003		21,659		19,223
Foreign rate differential	2,196		7,887		3,620
Foreign derived intangible income	(1,744)		(8,669)		(8,187)
Research and development credit	(20,706)		(23,130)		(18,809)
Unrecognized tax benefits including interest and penalties	(2,026)		(9,210)		(11,793)
Valuation allowance adjustments	10,797		7,345		6,714
State credits	(4,526)		(8,035)		(6,954)
Global intangible low-taxed income	2,605		474		1,607
Return to provision adjustments	(5,421)		1,057		(6,318)
Executive compensation limitation	5,404		8,712		4,893
Other foreign inclusions	(13,601)		1,563		16,562
Tax incentives	(16,476)		(12,996)		(7,202)
Other	(3,141)		3,129		3,110
Income tax provision	$	71,963	$	171,830	$	192,019

The 2017 Tax Cuts and Jobs Act subjects U.S. shareholders to current tax on global intangible low-taxed income (GILTI) earned by certain foreign subsidiaries for which a company can elect to either recognize deferred taxes or to provide tax expense in the year incurred. The Company has elected to account for GILTI in the year the tax is incurred.

The Company qualifies for certain tax holidays in Thailand if certain employment and manufacturing criteria are met. The impact of the tax holiday decreased foreign taxes by $16.6 million, $13.0 million and $7.2 million in 2024, 2023 and 2022, respectively, and the tax holidays have expected expiration periods between 2025 and 2027. The benefit of the tax holiday on net income per share (diluted) was $0.12, $0.09 and $0.04 in 2024, 2023 and 2022, respectively.

The principal components of the Company’s deferred income tax assets and liabilities as of December 31, include the following (in thousands):

	2024		2023
Deferred income tax assets:
Accruals not yet tax deductible	$	144,331	$	152,288
Stock compensation	11,779		12,995
Net operating loss and research & development tax credit carryforwards	82,027		68,809
Amortization of research and experimental costs	100,880		78,169
Other	62,889		66,749
	401,906		379,010
Valuation allowance	(59,313)		(48,516)
	342,593		330,494
Deferred income tax liabilities:
Depreciation, tax in excess of book	(51,107)		(57,641)
Pension and postretirement healthcare plan obligations	(90,589)		(82,682)
Withholding tax	(15,915)		(29,904)
Other	(26,045)		(32,597)
	(183,656)		(202,824)
	$	158,937	$	127,670

The Company reviews its deferred income tax asset valuation allowances on a quarterly basis, or whenever events or changes in circumstances indicate that a review is required. In determining the requirement for a valuation allowance, the historical and projected financial results of the legal entity or consolidated group recording the net deferred income tax asset is considered, along with any positive or negative evidence including tax law changes. Since future financial results and tax law may differ from previous estimates, periodic adjustments to the Company’s valuation allowances may be necessary.

The Company's gross state net operating loss carryforwards were as follows at December 31 (in thousands):

Year of Expiration	2024		2023
2031	$	238,682	$	238,682
2032	12		12
2033	46		46
2034	108		108
2035	1,085		1,085
2036	60		60
2037	187		187
2038	824		824
2039	11,285		11,285
2040	34,354		34,354
2041	2,135		2,135
2042	347		347
Indefinite	7,280		7,280
	$	296,405	$	296,405

The Company also had Wisconsin research and development credit carryforwards of $56.9 million at December 31, 2024, expiring in 2025-2039.

At December 31, 2024, the Company had a deferred tax asset of $62.2 million related to its state net operating loss and Wisconsin research and development credit carryforwards and a deferred tax asset of $13.9 million related to foreign net operating losses.

The Company's valuation allowance was $59.3 million at December 31, 2024 and included $43.5 million related to state net operating loss and Wisconsin research and development credit carryforwards, $7.2 million related to foreign net operating loss carryforwards and $8.6 million related to other deferred tax assets. The change in the valuation allowance from prior year included an increase of $10.7 million related to state net operating loss and Wisconsin research and development credit carryforwards while the valuation allowance related to foreign operations did not change from December 31, 2023.

The Company recognizes interest and penalties related to unrecognized tax benefits in Income tax provision (benefit). Changes in the Company’s gross liability for unrecognized tax benefits, excluding interest and penalties, were as follows (in thousands): 

	2024		2023
Unrecognized tax benefits, beginning of period	$	18,214	$	32,029
Increase in unrecognized tax benefits for tax positions taken in a prior period	3,818		3,159
Decrease in unrecognized tax benefits for tax positions taken in a prior period	(3,773)		(10,444)
Increase in unrecognized tax benefits for tax positions taken in the current period	2,473		870
Statute lapses	(3,800)		—
Settlements with taxing authorities	(753)		(7,400)
Unrecognized tax benefits, end of period	$	16,179	$	18,214

The amount of unrecognized tax benefits as of December 31, 2024 and 2023 that, if recognized, would affect the effective tax rate was $10.3 million and $16.5 million, respectively.

The total gross amount of benefit related to interest and penalties associated with unrecognized tax benefits recognized in the Consolidated statements of operations was a net expense of $0.7 million during 2024 and a net benefit of $8.7 million and $5.6 million during 2023 and 2022, respectively.

The total gross amount of interest and penalties associated with unrecognized tax benefits recognized at December 31, 2024 and 2023 in the Consolidated balance sheets was $7.1 million and $8.6 million, respectively.

The Company does not expect a significant increase or decrease to the total amounts of unrecognized tax benefits related to continuing operations during the fiscal year ending December 31, 2025. However, the Company is under regular audit by tax authorities. The Company believes that it has appropriate support for the positions taken on its tax returns and that its annual tax provision includes amounts sufficient to pay any assessments. Nonetheless, the amounts ultimately paid, if any, upon resolution of the issues raised by the taxing authorities may differ materially from the amounts accrued for each year.

The Company or one of its subsidiaries files income tax returns in the U.S. federal and Wisconsin state jurisdictions and various other state and foreign jurisdictions. The Company is no longer subject to income tax examinations for Wisconsin state income taxes before 2019 or for U.S. federal income taxes before 2019. In all other jurisdictions, tax periods prior to 2017 are closed.