Integer Holdings CorpITGR
Integer Holdings Corp Income Taxes Disclosure
INCOME TAXES
Income from continuing operations before income taxes consisted of the following (in thousands):
| 2025 | 2024 | 2023 | |||||||||||||||
| U.S. | $ | 35,980 | $ | 55,571 | $ | 29,089 | |||||||||||
| Foreign | 89,416 | 91,992 | 76,293 | ||||||||||||||
| Total income from continuing operations before income taxes | $ | 125,396 | $ | 147,563 | $ | 105,382 | |||||||||||
The provision for income taxes from continuing operations comprises the following (in thousands):
| 2025 | 2024 | 2023 | |||||||||||||||
| Current: | |||||||||||||||||
| Federal | $ | 5,876 | $ | 18,309 | $ | 11,072 | |||||||||||
| State | 1,901 | 1,655 | 1,292 | ||||||||||||||
| Foreign | 17,476 | 19,476 | 13,140 | ||||||||||||||
| 25,253 | 39,440 | 25,504 | |||||||||||||||
| Deferred: | |||||||||||||||||
| Federal | (2,448) | (9,456) | (7,262) | ||||||||||||||
| State | (290) | (245) | (132) | ||||||||||||||
| Foreign | 51 | (3,229) | (1,871) | ||||||||||||||
| (2,687) | (12,930) | (9,265) | |||||||||||||||
| Total provision for income taxes | $ | 22,566 | $ | 26,510 | $ | 16,239 | |||||||||||
(13.) INCOME TAXES (Continued)
The provision for income taxes from continuing operations differs from the U.S. statutory rate due to the following:
| 2025 | 2024 | 2023 | |||||||||||||||||||||||||||
| US federal statutory tax rate | $ | 26,333 | 21.0 | % | $ | 30,988 | 21.0 | % | $ | 22,130 | 21.0 | % | |||||||||||||||||
| Domestic federal | |||||||||||||||||||||||||||||
| Tax credits | |||||||||||||||||||||||||||||
| R&D tax credits | (7,523) | (6.0) | % | (5,380) | (3.6) | % | (4,465) | (4.2) | % | ||||||||||||||||||||
| Foreign tax credit | (558) | (0.4) | % | (463) | (0.3) | % | (572) | (0.5) | % | ||||||||||||||||||||
| Nontaxable or nondeductible items | |||||||||||||||||||||||||||||
| Tax benefits on share-based payments | (5,843) | (4.7) | % | (2,519) | (1.7) | % | (375) | (0.4) | % | ||||||||||||||||||||
| Nondeductible covered employee compensation | 5,637 | 4.5 | % | 4,025 | 2.7 | % | 2,222 | 2.1 | % | ||||||||||||||||||||
| Nondeductible convertible debt inducement expense | 9,277 | 7.4 | % | — | — | % | — | — | % | ||||||||||||||||||||
| Other | 219 | 0.2 | % | (446) | (0.3) | % | 205 | 0.2 | % | ||||||||||||||||||||
| Effect of cross-border tax laws | |||||||||||||||||||||||||||||
| GILTI, net of GILTI FTC | 1,879 | 1.5 | % | 2,614 | 1.8 | % | 2,224 | 2.1 | % | ||||||||||||||||||||
| Foreign-derived intangible income | (3,316) | (2.6) | % | (2,763) | (1.9) | % | (3,087) | (2.9) | % | ||||||||||||||||||||
| Foreign royalty income | 1,365 | 1.1 | % | 1,418 | 1.0 | % | 1,349 | 1.3 | % | ||||||||||||||||||||
| Other | 494 | 0.4 | % | 299 | 0.2 | % | 354 | 0.3 | % | ||||||||||||||||||||
| Changes in valuation allowances | (1,100) | (0.9) | % | 86 | 0.1 | % | 817 | 0.8 | % | ||||||||||||||||||||
| Enactment of new tax laws or rates | — | — | % | — | — | % | — | — | % | ||||||||||||||||||||
| Other adjustments | (455) | (0.4) | % | (180) | (0.1) | % | 119 | 0.1 | % | ||||||||||||||||||||
Domestic state and local income taxes, net of federal income tax effect (a) | 1,299 | 1.0 | % | 1,375 | 0.9 | % | 1,078 | 1.0 | % | ||||||||||||||||||||
| Foreign tax effects | |||||||||||||||||||||||||||||
| Switzerland | Statutory income tax rate differential | (4,333) | (3.5) | % | (4,149) | (2.8) | % | (3,245) | (3.1) | % | |||||||||||||||||||
| Federal income exemption | (2,691) | (2.1) | % | (2,605) | (1.8) | % | (2,030) | (1.9) | % | ||||||||||||||||||||
| Cantonal taxes, net | 539 | 0.4 | % | 455 | 0.3 | % | 373 | 0.4 | % | ||||||||||||||||||||
| Other | (127) | (0.1) | % | 20 | — | % | (332) | (0.3) | % | ||||||||||||||||||||
| Ireland | Statutory income tax rate differential | (1,427) | (1.1) | % | (2,120) | (1.4) | % | (2,157) | (2.0) | % | |||||||||||||||||||
| OECD Pillar II: Global minimum tax | 472 | 0.4 | % | 409 | 0.3 | % | — | — | % | ||||||||||||||||||||
| Other | (674) | (0.5) | % | (108) | (0.1) | % | 229 | 0.2 | % | ||||||||||||||||||||
| Netherlands | OECD Pillar II: Global minimum tax | 2,718 | 2.2 | % | 1,780 | 1.2 | % | — | — | % | |||||||||||||||||||
| Other | 36 | — | % | 17 | — | % | 22 | — | % | ||||||||||||||||||||
| Malaysia | Holiday | — | — | % | — | — | % | (1,664) | (1.6) | % | |||||||||||||||||||
| Other | 839 | 0.7 | % | 930 | 0.6 | % | 784 | 0.7 | % | ||||||||||||||||||||
| Mexico | 2,323 | 1.9 | % | 1,298 | 0.9 | % | 1,744 | 1.7 | % | ||||||||||||||||||||
| Uruguay | 1,732 | 1.4 | % | 1,320 | 0.9 | % | 877 | 0.8 | % | ||||||||||||||||||||
| Israel | Change in valuation allowances | — | — | % | — | — | % | 1,345 | 1.3 | % | |||||||||||||||||||
| Other | 69 | 0.1 | % | 152 | 0.1 | % | (117) | (0.1) | % | ||||||||||||||||||||
| Other foreign jurisdictions | (436) | (0.3) | % | (270) | (0.2) | % | (449) | (0.4) | % | ||||||||||||||||||||
| Worldwide changes in unrecognized tax benefits | (4,182) | (3.3) | % | 327 | 0.2 | % | (1,140) | (1.1) | % | ||||||||||||||||||||
| Effective tax rate | $ | 22,566 | 18.0 | % | $ | 26,510 | 18.0 | % | $ | 16,239 | 15.4 | % | |||||||||||||||||
__________
(a) State taxes in California and Massachusetts make up the majority, greater than 50 percent, of the tax effect in this category for each year presented.
(13.) INCOME TAXES (Continued)
The difference between the Company’s effective tax rate and the U.S. federal statutory income tax rate in the current year is primarily attributable to the impact of the net nondeductible induced conversion expenditures incurred as a result of the induced conversion from the exchange of the 2028 Convertible Notes, the impact of deductible stock based compensation, net of limitations, the availability of Foreign Tax Credits and R&D Credits, the impact of the Company’s earnings realized in foreign jurisdictions with statutory rates that are different than the U.S. federal statutory rate, the impact of the Organization for Economic Co-operation and Development (“OECD”) Pillar II Global Minimum Tax enacted on January 1, 2024, and the provision for Global Intangible Low Taxed income (“GILTI”), net of the statutory deduction of 50% of the GILTI inclusion and the Foreign Derived Intangible Income (“FDII”) deduction (collectively “Section 250 deduction”). The Company’s foreign earnings are primarily derived from Switzerland, Mexico, Uruguay, Ireland and Malaysia. The Company has previously operated under a tax holiday in Malaysia, which expired in accordance with its original terms on April 30, 2023. The Company’s operations in Costa Rica and the Dominican Republic operate under a free trade zone agreement through April 2031 and March 2034, respectively.
Difference Attributable to Foreign Investment: Certain foreign subsidiary earnings are subject to U.S. taxation under the Tax Cuts and Jobs Act of 2017 (the “Tax Reform Act”) . The Company intends to permanently reinvest substantially all of its foreign subsidiary earnings, as well as its capital in those foreign subsidiaries, with the exception of planned distributions made out of current year earnings and profits (“E&P”) and E&P previously taxed as of and for the year ended December 29, 2017, including E&P subject to the toll charge under the Tax Reform Act. The Company accrues for withholding taxes on distributions in the year associated with earnings that are intended to be distributed.
As of December 31, 2025 and December 31, 2024, the Company had a net deferred tax liability consisting of the following (in thousands):
| December 31, 2025 | December 31, 2024 | ||||||||||
| Research and development | $ | 49,042 | $ | 37,201 | |||||||
| Lease liabilities | 32,443 | 28,772 | |||||||||
| Original issue discount from capped calls | 16,400 | 5,733 | |||||||||
| Net operating loss carryforwards | 8,276 | 8,093 | |||||||||
| Accrued expenses | 5,823 | 7,122 | |||||||||
| Stock-based compensation | 5,226 | 5,438 | |||||||||
| Tax credit carryforwards | 4,567 | 5,749 | |||||||||
| Other | 2,576 | 5,578 | |||||||||
| Gross deferred tax assets | 124,353 | 103,686 | |||||||||
| Less valuation allowance | (11,427) | (13,387) | |||||||||
| Net deferred tax assets | 112,926 | 90,299 | |||||||||
| Intangible assets | (164,269) | (167,514) | |||||||||
| Lease assets | (33,146) | (28,802) | |||||||||
| Property, plant and equipment | (12,425) | (10,282) | |||||||||
| Other | (10,419) | — | |||||||||
| Gross deferred tax liabilities | (220,259) | (206,598) | |||||||||
| Net deferred tax liability | $ | (107,333) | $ | (116,299) | |||||||
| Presented as follows: | |||||||||||
| Noncurrent deferred tax asset | $ | 8,994 | $ | 8,309 | |||||||
| Noncurrent deferred tax liability | (116,327) | (124,608) | |||||||||
| Net deferred tax liability | $ | (107,333) | $ | (116,299) | |||||||
(13.) INCOME TAXES (Continued)
As of December 31, 2025, the Company has the following carryforwards available (in millions):
| Jurisdiction | Tax Attribute | Gross Amount | Deferred Tax Asset | Valuation Allowance | Begin to Expire | |||||||||||||||||||||||||||
| U.S. State | Net operating losses(a)(b) | $ | 61.7 | $ | 2.4 | $ | (2.3) | 2026 | ||||||||||||||||||||||||
| Foreign | Net operating losses(a) | $ | 24.9 | $ | 5.9 | $ | (5.9) | 2026 | ||||||||||||||||||||||||
| U.S. State | State tax credits(b) | $ | 3.6 | $ | 2.8 | $ | (2.8) | 2026 | ||||||||||||||||||||||||
| U.S. Federal | Foreign tax credits | $ | 1.0 | $ | 1.0 | $ | (0.4) | 2033 | ||||||||||||||||||||||||
| U.S. State | R&D tax credits(b) | $ | 0.9 | $ | 0.7 | $ | — | 2037 | ||||||||||||||||||||||||
__________
(a) Net operating losses are presented as pre-tax amounts.
(b) U.S. State deferred tax assets and valuation allowance are presented net of federal benefit.
In assessing the realizability of deferred tax assets, management considers, within each taxing jurisdiction, whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Based on the consideration of the weight of both positive and negative evidence, management has determined it is more likely than not that a portion of the deferred tax assets as of December 31, 2025 and December 31, 2024 related to certain foreign tax credits, state investment tax credits, and foreign and state net operating losses will not be realized.
The Company files annual income tax returns in the U.S., various state and local jurisdictions, and in various foreign jurisdictions. A number of years may elapse before an uncertain tax position, for which the Company has unrecognized tax benefits, is examined and finally settled. While it is often difficult to predict the final outcome or the timing of resolution of any particular uncertain tax position, the Company believes that its unrecognized tax benefits reflect the most probable outcome. The Company adjusts these unrecognized tax benefits, as well as the related interest, in light of changing facts and circumstances. The resolution of an uncertain tax position, if recognized, would be recorded as an adjustment to the provision for income taxes and the effective tax rate in the period of resolution.
Below is a summary of changes to the unrecognized tax benefit (in thousands):
| 2025 | 2024 | 2023 | |||||||||||||||
| Balance, beginning of year | $ | 6,201 | $ | 6,470 | $ | 7,739 | |||||||||||
| Additions based upon tax positions related to the current year | 406 | 353 | 356 | ||||||||||||||
| Additions (reductions) related to prior period tax returns | 144 | (6) | (18) | ||||||||||||||
| Reductions related to settlements (amounts paid) | — | (166) | — | ||||||||||||||
| Reductions as a result of a lapse of applicable statute of limitations | (3,975) | (450) | (1,607) | ||||||||||||||
| Balance, end of year | $ | 2,776 | $ | 6,201 | $ | 6,470 | |||||||||||
As of December 31, 2025, approximately $2.7 million of the unrecognized tax benefits would favorably impact the effective tax rate (net of federal impact on state issues), if recognized.
The tax years that remain open and subject to tax audits vary depending on the tax jurisdiction. The Company is no longer subject to tax authority examinations in the U.S. for tax years prior to 2022 and is generally no longer subject to tax authority examinations in other major foreign, or state tax jurisdictions for years prior to fiscal year 2021.
The Company recognizes accrued interest and penalties related to unrecognized tax benefits as a component of Provision for income taxes on the Consolidated Statements of Operations. As of December 31, 2025, 2024 and 2023, interest and penalties accrued for unrecognized tax benefits were $0.5 million, $1.4 million and $0.8 million. Expenses related to interest and penalties during 2025, 2024, and 2023 were not material.
(13.) INCOME TAXES (Continued)
On December 15, 2022, the European Union (“EU”) Member States formally adopted the EU’s Pillar Two Directive, which generally provides for a minimum effective tax rate of 15%, as established by the Organization for Economic Co-operation and Development (“OECD”) Pillar Two Framework. The effective dates are January 1, 2024 and January 1, 2025, for different aspects of the directive. The Company is continuing to evaluate the potential impact on future periods of the Pillar Two Framework, pending legislative adoption by additional individual countries. The Company’s 2025 provision for income taxes includes the impact of the Pillar Two 15% Global Minimum Tax.
On July 4, 2025, President Trump signed the One Big Beautiful Bill Act (“OBBBA”) enacting a broad range of tax reform provisions, including extending and modifying certain key domestic and international Tax Cuts & Jobs Act provisions. Only certain provisions will have current-year financial reporting implications due to varying effective dates and discretionary elections. The Company’s 2025 provision for income taxes includes the impact of the OBBBA enacted provisions. The Company continues to evaluate the potential impact on future periods of the OBBBA provisions with delayed enactment dates beginning after December 31, 2025.
The amounts of cash income taxes paid, net of refunds received, by the Company were as follows (in thousands):
| 2025 | 2024 | 2023 | |||||||||||||||
| U.S. federal | $ | 11,527 | $ | 22,596 | $ | 18,800 | |||||||||||
| U.S. state and local | 2,931 | 2,797 | 1,809 | ||||||||||||||
| Foreign | |||||||||||||||||
| Ireland | 2,884 | 2,499 | 3,774 | ||||||||||||||
| Malaysia | 5,789 | 3,298 | 3,292 | ||||||||||||||
| Mexico | 4,053 | 5,160 | 2,614 | ||||||||||||||
| Other | 1,036 | 122 | 62 | ||||||||||||||
| Total | $ | 28,220 | $ | 36,472 | $ | 30,351 | |||||||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 23, 2026 | Showing above |
| 2024 | Feb 20, 2025 | |
| 2023 | Feb 20, 2024 | |
| 2022 | Feb 21, 2023 | |
| 2021 | Feb 22, 2022 | |
| 2020 | Feb 18, 2021 | |
| 2019 | Feb 20, 2020 | |
| 2018 | Feb 22, 2019 | |
| 2017 | Feb 22, 2018 | |
| 2016 | Mar 1, 2016 | |
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.