v3.25.4
INCOME TAXES
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
INCOME TAXES
16. INCOME TAXES
Income before income tax expense (benefit) for the years ended December 31, 2025, 2024 and 2023 was derived from the following sources:

(In millions)202520242023
Domestic$(286.0)$(239.8)$(457.9)
Foreign540.6 561.8 630.6 
Income before income tax expense (benefit)$254.6 $322.0 $172.7 
Income tax expense (benefit) for the years ended December 31, 2025, 2024 and 2023 is summarized as follows:
(In millions)202520242023
Current:
Federal$1.7 $14.8 $10.8 
State1.0 0.9 1.3 
Foreign102.7 91.5 125.1 
$105.4 $107.2 $137.2 
Deferred (net of valuation allowance):
Federal$(79.1)$(74.0)$(135.4)
State(3.6)(3.2)(5.8)
Foreign(4.7)(1.7)(4.4)
$(87.4)$(78.9)$(145.6)
Income tax expense (benefit)$18.0 $28.3 $(8.4)

Income tax expense differs from the expected amounts based upon the statutory federal tax rates for the year ended December 31, 2025 as follows:
(In millions)2025
U.S Federal Statutory Tax Rate$53.5 21.0 %
State income taxes before valuation allowance, net of federal tax effect (A)(3.6)(1.4)%
Effect of foreign source income:
Japan
     Statutory tax rate difference between Japan and United States6.2 2.4 %
     Other(2.0)(0.8)%
Taiwan
     Withholding tax4.4 1.7 %
     Foreign tax credit(4.2)(1.6)%
     Other0.1 0.1 %
Singapore
     Statutory tax rate difference between Singapore and United States(42.4)(16.6)%
     Non-deductible expenses17.1 6.7 %
     Withholding tax5.0 2.0 %
     Foreign tax credit(22.4)(8.8)%
     Other(0.4)(0.2)%
Other foreign jurisdictions6.6 2.6 %
Effect of Changes in Tax Laws or Rates Enacted in the Current Period
Effect of Cross-Border Tax Laws
   Global intangible low-taxed income10.9 4.3 %
   Foreign derived intangible income(4.8)(1.9)%
   Subpart F income inclusions2.9 1.1 %
   Other0.8 0.3 %
Tax Credits
   Research & development tax credits(17.3)(6.8)%
Changes in Valuation Allowances— — %
Nontaxable or Nondeductible Items
   Share-based payment awards6.9 2.7 %
   Executive compensation2.5 1.0 %
   Other1.6 0.6 %
Changes in Unrecognized Tax Benefits(3.8)(1.5)%
Other Adjustments
   Legal entity divestiture activity— — %
   Other Items0.4 0.2 %
Effective Tax Rate$18.0 7.1 %
(A) State taxes in California, Illinois and Oregon made up the majority (greater than 50%) of the tax effects in this category.
Income tax expense (benefit) differs from the expected amounts based upon the statutory federal tax rates for the years ended December 31, 2024 and 2023 as follows:
(In millions)20242023
Expected federal income tax at statutory rate$66.7 $36.3 
State income taxes before valuation allowance, net of federal tax effect(6.2)(9.4)
Effect of foreign source income(25.7)(18.4)
Tax contingencies(2.3)11.0 
Valuation allowance11.5 9.0 
U.S. federal research credit(14.3)(18.7)
Equity compensation5.4 7.4 
Foreign derived intangible income(7.9)(5.1)
Legal entity divestiture activity1.0 (20.3)
Other items, net0.1 (0.2)
Income tax expense (benefit) $28.3 $(8.4)
The Company has made employment and spending commitments to Singapore. In return for those commitments, the Company was granted a partial tax holiday for eight years starting in 2013. During 2017, this agreement was extended to 2027 in exchange for revised employment and spending commitments. The income tax benefits attributable to the tax status are $26.1 million ($0.17 per diluted share), $27.7 million ($0.18 per diluted share) and $19.7 million ($0.13 per diluted share) for the years ending December 31, 2025, 2024 and 2023, respectively. The 2025, 2024 and 2023 effective tax rates include additional benefits of $16.1 million, $17.1 million and $12.1 million because the corporate tax rate in Singapore is lower than the U.S. rate.
At December 31, 2025, there were approximately $393.2 million of accumulated undistributed earnings of subsidiaries outside of the United States, all of which are considered to be indefinitely reinvested. Management estimates that approximately $26.1 million of withholding taxes would be incurred if these undistributed earnings were distributed.   
The significant components of the Company’s deferred tax assets and deferred tax liabilities at December 31, 2025 and 2024 are as follows:
(In millions)20252024
Deferred tax assets attributable to:
Accounts receivable$0.5 $1.3 
Inventory12.7 11.9 
Accruals not currently deductible for tax purposes14.1 12.0 
Net operating loss and credit carryforwards108.5 69.5 
Capital loss carryforward7.5 7.5 
Equity compensation10.6 10.7 
Interest expense limitations52.2 51.4 
Capitalization of engineering, research and development expenses156.8 134.4 
Other, net8.2 6.3 
Gross deferred tax assets$371.1 $305.0 
Valuation allowance(79.1)(71.8)
Net deferred tax assets$292.0 $233.2 
Deferred tax liabilities attributable to:
Purchased intangible assets$(184.2)$(215.9)
Depreciation and amortization(18.7)(24.9)
Total deferred tax liabilities$(202.9)$(240.8)
Net deferred tax assets (liabilities)$89.1 $(7.6)
Deferred tax assets are generally required to be reduced by a valuation allowance if it is more likely than not that some portion or all of the deferred tax assets will not be realized.
As of December 31, 2025 and 2024, the Company had net U.S. deferred tax assets of $117.5 million and deferred tax assets of $20.1 million, respectively, which are composed of temporary differences and various tax credit carryforwards. The Company had state operating loss and credit carryforwards of approximately $30.5 million, which begin to expire in 2026. Management
believes that it is more likely than not that the benefit from certain state net operating loss carryforwards, state credit carryforwards, capital loss carryforwards and certain federal foreign tax credit carryforwards will not be realized. In recognition of this risk, management has provided valuation allowances of $40.8 million and $36.5 million as of December 31, 2025 and 2024, respectively, on the related deferred tax assets. If the assumptions change and management determines the assets will be realized, the tax benefits relating to any reversal of the valuation allowance on deferred tax assets at December 31, 2025 will be recognized as a reduction of income tax expense.
As of December 31, 2025 and 2024, the Company had net non-U.S. deferred tax assets of $50.7 million and $44.2 million, respectively, for which management determined based upon the available evidence a valuation allowance of $38.3 million and $35.3 million as of December 31, 2025 and 2024, respectively, was required against the non-U.S. gross deferred tax assets. For other non-U.S. jurisdictions, management relies upon projections of future taxable income to utilize deferred tax assets.
At December 31, 2025, the Company had foreign operating loss carryforwards of $69.7 million, which begin to expire in 2026.
Benefits from tax positions should be recognized in the financial statements only when it is more likely than not that the tax positions will be sustained upon examination by the appropriate taxing authority that would have full knowledge of all relevant information. A tax position that meets the more-likely-than-not recognition threshold is measured at the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. Tax positions that fail to meet the more-likely-than-not recognition threshold should be recognized in the first subsequent financial reporting period in which that threshold is met. Previously recognized tax positions that no longer meet the more-likely-than-not recognition threshold should be derecognized in the first subsequent financial reporting period in which that threshold is no longer met. The provisions also provide guidance on the accounting for and disclosure of unrecognized tax benefits, interest and penalties.
Reconciliations of the beginning and ending balances of the total amounts of gross unrecognized tax benefits for the years ended December 31, 2025 and 2024 are as follows:
(In millions)20252024
Gross unrecognized tax benefits at beginning of year$44.3 $67.7 
Increase in tax positions from prior years0.1 0.3 
Decrease in tax positions from prior years(5.6)(4.8)
Increases in tax positions for current year7.2 5.5 
Settlement of tax positions for current year(0.7)(21.6)
Lapse in statute of limitations(11.6)(2.8)
Gross unrecognized tax benefits at end of year$33.7 $44.3 
The total amount of net unrecognized tax benefits that, if recognized, would affect the effective tax rate was $28.4 million at December 31, 2025.
Penalties and interest paid or received are recorded in other expense, net in the consolidated statements of operations. As of December 31, 2025 and 2024, the Company had accrued interest and penalties related to unrecognized tax benefits of $5.1 million and $6.0 million, respectively. Expenses of $1.0 million, $3.0 million and $2.5 million were recognized as interest and penalties in the consolidated statements of operations for the years ended December 31, 2025, 2024 and 2023, respectively.
The Company files income tax returns in the U.S. and in various state, local and foreign jurisdictions. The statutes of limitations related to both the consolidated federal income tax return and state returns are closed for all years up to and including 2021 and 2021, respectively. With respect to foreign jurisdictions, the statute of limitations varies from country to country, with the earliest open year for the Company’s major foreign subsidiaries being 2019.
The significant components of the Company’s income taxes paid (net of refunds) at December 31, 2025 are as follows:
(In millions)2025
Federal$0.1 
State(0.1)
Foreign113.0
Total$113.0 
Income taxes paid (net of refunds) exceeded 5 percent of total income taxes paid (net refunds) in the following jurisdictions:

(In millions)2025
Japan$19.7 
Korea6.2
Singapore58.4
Taiwan20.3
Pillar 2
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 have already enacted, or are expected to enact, legislation to implement the 15% minimum tax rate. There was no material impact in 2025 and we will continue to evaluate the future potential impact on our consolidated financial statements and related disclosures.
One Big Beautiful Bill Act (the “Act”)
The Act was enacted on July 4, 2025. In accordance with ASC 740-10, the Company accounted for the effects of the new tax legislation in the quarter ended September 27, 2025, which is the quarter of enactment. The key provisions of the Act impacting the Company’s financial statements include the modification of interest expense limitations under IRC Section 163(j) and revisions to foreign-derived intangible income (FDII) and global intangible low-taxed income (GILTI). Certain provisions of the Act are effective for tax years beginning after December 31, 2025, and therefore did not affect the current year financial results. The Company will continue to evaluate the impact of the Act on its future tax positions.