Acushnet Holdings Corp.GOLF
Acushnet Holdings Corp. Income Taxes Disclosure
Income Taxes
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The components of income before income taxes were as follows:
| Year ended December 31, | |||||||||||||||||
| (in thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| Domestic operations | $ | 123,515 | $ | 185,426 | $ | 158,999 | |||||||||||
| Foreign operations | 116,011 | 64,241 | 82,601 | ||||||||||||||
| Income before income taxes | $ | 239,526 | $ | 249,667 | $ | 241,600 | |||||||||||
Income tax expense (benefit) was as follows:
| Year ended December 31, | |||||||||||||||||
| (in thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| Current expense | |||||||||||||||||
| United States | $ | 9,692 | $ | 18,186 | $ | 9,704 | |||||||||||
| Foreign | 28,733 | 28,724 | 17,876 | ||||||||||||||
| Current income tax expense | 38,425 | 46,910 | 27,580 | ||||||||||||||
| Deferred expense (benefit) | |||||||||||||||||
| United States | 12,651 | (907) | 6,626 | ||||||||||||||
| Foreign | 1,290 | 1,822 | 8,787 | ||||||||||||||
| Deferred income tax expense | 13,941 | 915 | 15,413 | ||||||||||||||
| Total income tax expense | $ | 52,366 | $ | 47,825 | $ | 42,993 | |||||||||||
For the year ended December 31, 2025, the Company's United States current income tax expense is comprised of $5.0 million of U.S. federal current income tax expense and $4.7 million of U.S. state current income tax expense. For the year ended December 31, 2025, the Company's United States deferred income tax expense is comprised of $11.5 million of U.S. federal deferred income tax expense and $1.2 million of U.S. state deferred income tax expense.
The following table represents a reconciliation of income taxes computed at the federal statutory income tax rate of 21% to income tax expense as reported:
| Year ended December 31, 2025 | |||||||||||
| (in thousands) | Amount | Percent | |||||||||
| Earnings from continuing operations, before income tax expense | $ | 239,526 | |||||||||
| U.S. federal statutory tax rate | 50,300 | 21.0 | % | ||||||||
State and local income taxes (1) | 4,477 | 1.9 | % | ||||||||
| Federal | |||||||||||
| Effect of cross-border tax laws | |||||||||||
| Foreign-derived intangible income (FDII) | (8,061) | (3.4) | % | ||||||||
| Other | 3,052 | 1.3 | % | ||||||||
| Tax credits | |||||||||||
| Foreign tax credits | (4,616) | (1.9) | % | ||||||||
| R&D tax credits | (3,136) | (1.3) | % | ||||||||
| Changes in valuation allowances | 120 | — | % | ||||||||
| Nontaxable or nondeductible items | |||||||||||
| Executive compensation | 3,449 | 1.4 | % | ||||||||
| Other | (140) | (0.1) | % | ||||||||
| Other adjustments | 247 | 0.1 | % | ||||||||
| Cayman Islands | |||||||||||
| Nontaxable non-cash gain on deconsolidation | (4,152) | (1.7) | % | ||||||||
| Other | 131 | 0.1 | % | ||||||||
| Republic of Korea | |||||||||||
| Withholding taxes | 3,355 | 1.4 | % | ||||||||
| Other | 1,351 | 0.6 | % | ||||||||
| Other foreign jurisdictions | 4,456 | 1.9 | % | ||||||||
| Changes in unrecognized tax benefits | 1,533 | 0.6 | % | ||||||||
| Income tax expense as reported | $ | 52,366 | 21.9 | % | |||||||
(1) State taxes in California, Pennsylvania, New York, Illinois, Georgia, Indiana, and Massachusetts made up the majority of the tax effect in this category.
The following table represents a reconciliation of income taxes computed at the federal statutory income tax rate of 21% to income tax expense as reported:
| Year ended December 31, | |||||||||||
| (in thousands) | 2024 | 2023 | |||||||||
| Income tax expense computed at federal statutory income tax rate | $ | 52,430 | $ | 50,736 | |||||||
| Foreign taxes, net of credits | (14,433) | (11,859) | |||||||||
| Net adjustments for uncertain tax positions | 1,943 | 1,010 | |||||||||
| State and local taxes | 5,341 | 6,160 | |||||||||
| Nondeductible expenses | 2,258 | 2,250 | |||||||||
| Valuation allowance | 6,763 | (110) | |||||||||
| Tax credits | (6,486) | (5,214) | |||||||||
| Miscellaneous other, net | 9 | 20 | |||||||||
| Income tax expense as reported | $ | 47,825 | $ | 42,993 | |||||||
| Effective income tax rate | 19.2 | % | 17.8 | % | |||||||
The components of net deferred tax assets (liabilities) were as follows:
| December 31, | |||||||||||
| (in thousands) | 2025 | 2024 | |||||||||
| Deferred tax assets | |||||||||||
| Compensation and benefits | $ | 15,648 | $ | 13,683 | |||||||
| Share-based compensation | 8,657 | 8,354 | |||||||||
| Pension and other postretirement benefits | 12,065 | 13,659 | |||||||||
| Inventories | 19,297 | 19,170 | |||||||||
| R&D capitalization | 61,994 | 60,261 | |||||||||
| Lease liability | 36,447 | 21,288 | |||||||||
| Transaction costs | 331 | 562 | |||||||||
| Nondeductible accruals and reserves | 13,415 | 13,033 | |||||||||
| Miscellaneous | 198 | 1,034 | |||||||||
| Net operating loss and other tax carryforwards | 44,931 | 52,770 | |||||||||
| Gross deferred tax assets | 212,983 | 203,814 | |||||||||
| Valuation allowance | (36,519) | (40,762) | |||||||||
| Total deferred tax assets | 176,464 | 163,052 | |||||||||
| Deferred tax liabilities | |||||||||||
| Property, plant and equipment | (5,665) | (6,986) | |||||||||
| Identifiable intangible assets | (102,949) | (94,563) | |||||||||
| Right-of-use assets | (35,028) | (19,904) | |||||||||
| Tax on unremitted earnings | (14,956) | (11,328) | |||||||||
| Foreign exchange derivative instruments | (1,245) | (2,416) | |||||||||
| Miscellaneous | (3,144) | (1,656) | |||||||||
| Total deferred tax liabilities | (162,987) | (136,853) | |||||||||
| Net deferred tax asset | $ | 13,477 | $ | 26,199 | |||||||
Under U.S. tax law and regulations, certain changes in the ownership of the Company’s shares can limit the annual utilization of tax attributes (tax loss and tax credit carryforwards) that were generated prior to such ownership changes. The annual limitation could affect the realizability of the Company’s deferred tax assets recorded in the financial statement for its tax credit carryforwards because the carryforward periods have a finite duration. The 2016 initial public offering, and associated share transfers, resulted in significant changes in the composition of the ownership of the Company’s shares. Based on its analysis of the change of ownership tax rules in conjunction with the estimated amount and source of its future earnings and related tax profile, the Company believes its existing U.S. tax attributes will be utilized prior to their expiration, with the exception of certain tax attributes for which the Company has established a valuation allowance.
As of December 31, 2025 and 2024, the Company had state net operating loss (“NOL”) carryforwards of $54.6 million and $53.6 million, respectively. These NOL carryforwards will begin to expire in 2026. As of December 31, 2025 and 2024, the Company had foreign NOL carryforwards of $11.8 million and $32.6 million, respectively. These foreign NOL carryforwards will begin to expire in 2034. As of December 31, 2025 and 2024, the Company had U.S. foreign tax credit carryforwards of $27.8 million and $27.7 million, respectively. These U.S. foreign tax credits will begin to expire in 2028. As of December 31, 2025 and 2024, the Company had U.S. general business credit carryforwards of $4.1 million and $6.2 million, respectively. These U.S. general business credits will begin to expire in 2034. As of December 31, 2025 and 2024, the Company had state income tax credits of $10.9 million and $9.8 million, respectively. These state income tax credits will begin to expire in 2036.
Changes in the valuation allowance for deferred tax assets were as follows:
| December 31, | |||||||||||||||||
| (in thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| Valuation allowance at beginning of year | $ | 40,762 | $ | 33,999 | $ | 34,109 | |||||||||||
| (Decreases) increases recorded to income tax provision | (4,243) | 6,763 | (110) | ||||||||||||||
| Valuation allowance at end of year | $ | 36,519 | $ | 40,762 | $ | 33,999 | |||||||||||
The Company evaluates the realizability of its deferred tax assets based upon the weight of available positive and negative evidence. In assessing the realizability of these assets, the Company considered numerous factors including historical profitability, the character and estimated future taxable income, prudent and feasible tax planning strategies, and the industry in which it operates. The Company’s conclusion was primarily driven by cumulative income in its respective tax jurisdictions as well as projections of future income driven by sustained profitability.
In 2025, the change in valuation allowance of $4.2 million is principally due to the deconsolidation of Lionscore as described in Note 8, as well as changes due to excess U.S. foreign tax credits arising from the Company's Japan branch operations and state tax attributes that the Company expects to expire unutilized. In 2024, the change in valuation allowance was principally due to losses incurred related to Lionscore (Note 24), excess U.S. foreign tax credits arising from the Company’s Japan branch operations, and state tax attributes that the Company expects to expire unutilized. In 2023, the change in valuation allowance was principally due to excess U.S. foreign tax credits arising from its Japan branch operations and state tax attributes that the Company expects to expire unutilized.
The Company has determined that its undistributed earnings for most of its foreign subsidiaries are not permanently reinvested. The Company has provided for withholding taxes on all unremitted earnings that are not permanently reinvested, as required.
The Company's unrecognized tax benefits represent tax positions for which reserves have been established. The following table represents a reconciliation of the activity related to the unrecognized tax benefits, excluding accrued interest and penalties:
| December 31, | |||||||||||||||||
| (in thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| Unrecognized tax benefits at beginning of year | $ | 12,587 | $ | 10,782 | $ | 9,538 | |||||||||||
| Gross additions - prior year tax positions | — | — | 191 | ||||||||||||||
| Gross additions - current year tax positions | 1,715 | 1,965 | 1,229 | ||||||||||||||
| Gross reductions - prior year tax positions | (568) | (160) | (176) | ||||||||||||||
| Unrecognized tax benefits at end of year | $ | 13,734 | $ | 12,587 | $ | 10,782 | |||||||||||
As of December 31, 2025, 2024 and 2023, the unrecognized tax benefits of $13.7 million, $12.6 million and $10.8 million, respectively, would affect the Company's future effective tax rate if recognized.
The Company recognizes accrued interest and penalties related to unrecognized tax benefits in the provision for income taxes on the consolidated statements of operations. As of December 31, 2025, the Company recognized a liability of $0.6 million for interest and penalties. As of both December 31, 2024 and 2023, the Company recognized a liability of $0.2 million for interest and penalties, respectively. During the year ended December 31, 2025, the Company recognized income tax expense of $0.4 million related to interest and penalties as a component of income tax expense. During the years ended December 31, 2024 and 2023, the Company recognized an income tax expense of $0.2 million and an income tax benefit of $0.2 million related to interest and penalties as a component of income tax expense, respectively.
The Company and certain subsidiaries have tax years that remain open and are subject to examination by tax authorities in the following major taxing jurisdictions: United States for years after July 29, 2011, Japan for years after 2019, Korea for years after 2020 and the United Kingdom for years after 2023. The Company files income tax returns on a combined, unitary, or stand-alone basis in multiple state and local jurisdictions, which generally have statute of limitations from three to four years. Various state and local income tax returns, as well as certain international jurisdictions, are currently in the process of examination. These examinations are unlikely to result in any significant changes to the amounts of unrecognized tax benefits on the consolidated balance sheet as of December 31, 2025.
On July 4, 2025, the U.S. government enacted the One Big Beautiful Bill Act, which includes, among other provisions, changes to the U.S. corporate income tax system, including the allowance of immediate expensing of qualifying research and development expenses and permanent extensions of certain provisions within the Tax Cuts and Jobs Act of 2017. The legislation has multiple effective dates, with certain provisions effective in 2025 and others in future periods. The Company has completed its initial assessment of the enacted law and has included the impact of the enactment within its consolidated financial statements for the year ended December 31, 2025.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 27, 2026 | Showing above |
| 2024 | Feb 27, 2025 | |
| 2023 | Feb 29, 2024 | |
| 2022 | Mar 1, 2023 | |
| 2021 | Mar 1, 2022 | |
| 2020 | Feb 25, 2021 | |
| 2019 | Feb 27, 2020 | |
| 2018 | Feb 28, 2019 | |
| 2017 | Mar 7, 2018 | |
| 2016 | Mar 30, 2017 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.