Income Taxes

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The income tax expense (benefit) consists of the following:

	Year Ended December 31,
	2022		2021		2020
	(In thousands)
Current:
U.S. federal	$	(1,183)	$	3,480	$	(249)
U.S. state	316		250		(406)
Non U.S.	22,089		13,219		10,681
	21,222		16,949		10,026
Deferred:
U.S. federal	(1,968)		(4,802)		(1,220)
U.S. state	(750)		(1,288)		(657)
Non U.S.	(9,057)		(4,275)		(2,819)
	(11,775)		(10,365)		(4,696)
Total	$	9,447	$	6,584	$	5,330

Income (loss) before income taxes includes the following components:

	Year Ended December 31,
	2022		2021		2020
	(In thousands)
U.S.	$	(44,887)	$	(33,311)	$	(27,528)
Non U.S.	116,962		106,834		121,685
Total	$	72,075	$	73,523	$	94,157

A reconciliation of the statutory federal income tax rate to the effective income tax rate consists of the following:

	Year Ended December 31,
	2022		2021		2020
Statutory U.S. federal income tax rate	21.0	%	21.0	%	21.0	%
U.S. state income taxes, net of federal benefit	(0.7)	%	(1.1)	%	(0.9)	%
Non-U.S. tax rate differential	2.9	%	(3.2)	%	(12.2)	%
GILTI Related	20.4	%	13.7	%	12.5	%
Tax holidays	(19.1)	%	(14.3)	%	(4.0)	%
Tax Credits	(15.3)	%	(9.5)	%	(10.0)	%
Passive income exemption	—	%	—	%	(0.4)	%
Acquisition contingent earn-out liability adjustments	—	%	—	%	(0.7)	%
Nondeductible items	0.1	%	0.9	%	2.0	%
Effect of valuation allowance	0.7	%	0.6	%	(1.2)	%
Prior year Transition Tax and related true-ups	2.7	%	1.4	%	0.5	%
Uncertain tax positions	0.3	%	(0.5)	%	(1.0)	%
Other	—	%	—	%	—	%
Effective income tax rate	13.1	%	9.0	%	5.7	%

    

The Company's effective tax rate increased to 13.1% in 2022, compared with 9.0% in 2021. The increase in effective tax rate in 2022 is primarily related to the mix of pre-tax income in foreign jurisdictions with higher tax rates and the greater impact of GILTI related items.

Deferred tax assets and liabilities are comprised of the following:

	December 31, 2022				December 31, 2021
	Deferred				Deferred
	Assets		Liabilities		Assets		Liabilities
	(In thousands)
Depreciation and amortization	$	—	$	6,328	$	—	$	6,424
Share-based compensation	258		—		307		—
Accruals and prepaids	5,320		—		5,613		—
Bad debts	6,041		—		6,139		—
Acquired intangible assets	—		11,920		—		12,509
Net operating loss carryforwards	40,508		—		37,242		—
Tax credit carryforwards (primarily Minimum Alternative Tax ("MAT") in India)	62,259		—		53,995		—
	114,386		18,248		103,296		18,933
Valuation allowance	(999)		—		(999)		—
Total deferred taxes	$	113,387	$	18,248	$	102,297	$	18,933

We have U.S. federal, state and foreign operating losses and credit carryforwards as follows:

	Year Ended December 31,
	2022		2021
	(In thousands)
U.S. Federal loss carryforwards	$	55,616	$	52,544
U.S. state loss carryforwards	102,078		85,635
Foreign loss carryforwards	101,067		90,826
U.S. Federal credit carryforwards	8,257		7,144
Foreign credit carryforwards	54,017		46,851

The U.S. federal and state operating loss carryforwards expire at varying dates through 2037. The federal credits begin to expire in 2024. We also have non-U.S. tax credits (primarily MAT paid in India) carried forward of approximately $54.0 million as of December 31, 2022, which is available for set-off against the future tax liability of certain Indian operations on a staggered basis over a period up-to fifteen years.

The Company has not recognized a deferred U.S. tax liability and associated income tax expense for the undistributed earnings of its foreign subsidiaries which we consider indefinitely invested because those foreign earnings will remain permanently reinvested in those subsidiaries to fund ongoing operations and growth. Upon distribution of those earnings in the form of dividends or otherwise, we may be subject to income taxes and withholding taxes payable in various jurisdictions, which could potentially be partially offset by foreign tax credits. At December 31, 2022, the cumulative amount of the Company’s undistributed foreign earnings was approximately $953.4 million, inclusive of income previously taxed in the United States.

The following table summarizes the activity related to provision made by the Company in the books for uncertain tax positions:

	Year Ended December 31,
	2022		2021		2020
	(In thousands)
Beginning Balance	$	6,200	$	8,291	$	9,199
Additions for tax positions related to current year	—		—		—
Additions for tax positions of prior years	243		769		966
Reductions for tax position of prior years	—		(2,860)		(1,874)
Ending Balance	$	6,443	$	6,200	$	8,291

The Company recognizes estimated interest accrued and/or penalties related to uncertain tax positions as part of the income tax expense provided for such positions. The Company accrued as of December 31, 2022 and 2021 approximately $2.5 million and $2.3 million, respectively, of estimated interest and penalties related to uncertain tax positions. These amounts are included in the December 31, 2022 and 2021 balances in the preceding table of $6.4 million and $6.2 million, respectively, which is included in other long-term liabilities in the accompanying consolidated balance sheets.

We file income tax returns in the U.S. federal, many U.S. state and local jurisdictions, and certain foreign jurisdictions. We have substantially resolved all U.S. federal income tax matters for tax years prior to 2014. Our state and foreign tax matters may remain open from 2009 forward.