Vistance Networks, Inc. Income Taxes Disclosure
13. INCOME TAXES
Income (loss) from continuing operations before income taxes includes the results from domestic and international operations as follows:
|
|
Year Ended December 31, |
|
|||||||||
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
U.S. companies |
|
$ |
17.9 |
|
|
$ |
(298.9 |
) |
|
$ |
(575.1 |
) |
Non-U.S. companies |
|
|
37.0 |
|
|
|
26.0 |
|
|
|
2.1 |
|
Income (loss) from continuing operations before income taxes |
|
$ |
54.9 |
|
|
$ |
(272.9 |
) |
|
$ |
(573.0 |
) |
The components of income tax expense (benefit) were as follows:
|
|
Year Ended December 31, |
|
|||||||||
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Current: |
|
|
|
|
|
|
|
|
|
|||
Federal |
|
$ |
(130.5 |
) |
|
$ |
(81.2 |
) |
|
$ |
70.1 |
|
Foreign |
|
|
33.4 |
|
|
|
19.3 |
|
|
|
44.1 |
|
State |
|
|
(24.6 |
) |
|
|
(15.6 |
) |
|
|
(4.4 |
) |
Current income tax expense (benefit) |
|
$ |
(121.7 |
) |
|
$ |
(77.5 |
) |
|
$ |
109.8 |
|
Deferred: |
|
|
|
|
|
|
|
|
|
|||
Federal |
|
$ |
(106.7 |
) |
|
$ |
(30.7 |
) |
|
$ |
(24.5 |
) |
Foreign |
|
|
(19.6 |
) |
|
|
6.3 |
|
|
|
(23.4 |
) |
State |
|
|
(21.4 |
) |
|
|
35.0 |
|
|
|
17.9 |
|
Deferred income tax expense (benefit) |
|
|
(147.7 |
) |
|
|
10.6 |
|
|
|
(30.0 |
) |
Total income tax expense (benefit) |
|
$ |
(269.4 |
) |
|
$ |
(66.9 |
) |
|
$ |
79.8 |
|
The following table reflects the effective income tax rate reconciliation for the year ended December 31, 2025 (ASU 2023-09) (Prospective Adoption):
|
|
Amount |
|
|
% of Statutory |
|
||
Pre-tax book income |
|
$ |
54.9 |
|
|
|
|
|
|
|
|
|
|
|
|
||
U.S. federal statutory tax rate |
|
|
11.5 |
|
|
|
21.0 |
% |
State and local income taxes, net of federal income tax effect (1) |
|
|
(41.2 |
) |
|
|
-74.9 |
% |
Foreign tax effects: |
|
|
|
|
|
|
||
United Kingdom: |
|
|
|
|
|
|
||
Statutory tax rate difference between United Kingdom & United States |
|
|
0.8 |
|
|
|
1.4 |
% |
Foreign tax credit |
|
|
(1.3 |
) |
|
|
-2.3 |
% |
Other |
|
|
1.2 |
|
|
|
2.3 |
% |
Other foreign jurisdictions |
|
|
3.6 |
|
|
|
6.5 |
% |
Subpart F income net of U.S. foreign tax credits |
|
|
0.7 |
|
|
|
1.3 |
% |
Unremitted earnings |
|
|
1.8 |
|
|
|
3.2 |
% |
Tax credits: |
|
|
|
|
|
|
||
U.S. R&D credit |
|
|
(8.0 |
) |
|
|
-14.5 |
% |
U.S. foreign tax credits |
|
|
(1.0 |
) |
|
|
-1.9 |
% |
Changes in valuation allowances |
|
|
(259.8 |
) |
|
|
-472.9 |
% |
Nontaxable or nondeductible items: |
|
|
|
|
|
|
||
Nondeductible compensation |
|
|
25.6 |
|
|
|
46.6 |
% |
Equity-based compensation awards |
|
|
(5.5 |
) |
|
|
-10.1 |
% |
Other |
|
|
0.8 |
|
|
|
1.4 |
% |
Changes in unrecognized tax benefits |
|
|
1.4 |
|
|
|
2.5 |
% |
Income tax provision |
|
$ |
(269.4 |
) |
|
|
-490.4 |
% |
The Company adopted ASU 2023-09 prospectively beginning in fiscal year 2025. As permitted by the standard, prior-period disclosures have not been retrospectively adjusted. The reconciliation of income taxes attributable to operations at the applicable U.S. federal statutory tax rates to income tax expense for periods prior to adoption reflects the presentation required under legacy ASC 740 and is not directly comparable to the current year presentation.
|
|
Year Ended December 31, |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
Provision for income taxes at federal statutory rate |
|
$ |
(56.7 |
) |
|
$ |
(121.3 |
) |
State income taxes, net of federal tax effect |
|
|
(13.9 |
) |
|
|
(8.7 |
) |
Other permanent items |
|
|
0.7 |
|
|
|
0.7 |
|
Equity-based compensation |
|
|
7.2 |
|
|
|
7.0 |
|
Other changes in tax laws and tax rulings |
|
|
0.2 |
|
|
|
(4.1 |
) |
Goodwill related items |
|
|
— |
|
|
|
97.8 |
|
Base erosion and anti-abuse tax |
|
|
4.3 |
|
|
|
— |
|
Federal tax credits |
|
|
(12.4 |
) |
|
|
(13.6 |
) |
Change in unrecognized tax benefits |
|
|
(9.4 |
) |
|
|
(3.4 |
) |
Withholding taxes and Subpart F income, net of foreign tax credits |
|
|
15.2 |
|
|
|
12.8 |
|
Foreign earnings taxed at other than federal rate |
|
|
(3.8 |
) |
|
|
4.4 |
|
Tax provision adjustments and revisions to prior yearsʾ returns |
|
|
(5.1 |
) |
|
|
13.2 |
|
Change in valuation allowance |
|
|
6.8 |
|
|
|
95.0 |
|
Total provision for income taxes |
|
$ |
(66.9 |
) |
|
$ |
79.8 |
|
Cash paid for income taxes, net of refunds received by jurisdiction pursuant to the disclosure requirements of ASU 2023-09, is as follows:
|
|
Year Ended December 31, |
|
|
|
|
2025 |
|
|
Federal |
|
$ |
107.4 |
|
State |
|
|
22.6 |
|
Foreign: |
|
|
|
|
Mexico |
|
|
18.0 |
|
United Kingdom |
|
|
10.4 |
|
Other |
|
|
46.2 |
|
Cash paid for income taxes, net of refunds received |
|
$ |
204.6 |
|
The components of deferred income tax assets and liabilities and the classification of deferred tax balances on the balance sheet were as follows:
|
|
December 31, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Deferred tax assets: |
|
|
|
|
|
|
||
Accounts receivable, inventory and warranty reserves |
|
$ |
83.0 |
|
|
$ |
107.2 |
|
Property, plant and equipment |
|
|
8.3 |
|
|
|
9.4 |
|
Employee benefits |
|
|
10.4 |
|
|
|
29.7 |
|
Foreign net operating loss and tax credit carryforwards |
|
|
6.5 |
|
|
|
27.3 |
|
Federal net operating loss and tax credit carryforwards |
|
|
3.3 |
|
|
|
3.3 |
|
State net operating loss and tax credit carryforwards |
|
|
93.9 |
|
|
|
80.5 |
|
Interest limitation |
|
|
236.7 |
|
|
|
260.3 |
|
Capitalized research and development costs |
|
|
144.1 |
|
|
|
371.6 |
|
Basis difference in U.S. subsidiaries (1) |
|
|
1,337.9 |
|
|
|
— |
|
Other |
|
|
52.9 |
|
|
|
76.5 |
|
Total deferred tax assets |
|
|
1,977.0 |
|
|
|
965.8 |
|
Valuation allowance |
|
|
(97.0 |
) |
|
|
(356.8 |
) |
Total deferred tax assets, net of valuation allowance |
|
$ |
1,880.0 |
|
|
$ |
609.0 |
|
|
|
|
|
|
|
|
||
Deferred tax liabilities: |
|
|
|
|
|
|
||
Intangible assets |
|
$ |
(176.3 |
) |
|
$ |
(249.8 |
) |
Undistributed foreign earnings |
|
|
(5.0 |
) |
|
|
(18.6 |
) |
Total deferred tax liabilities |
|
|
(181.3 |
) |
|
|
(268.4 |
) |
Net deferred tax asset |
|
$ |
1,698.7 |
|
|
$ |
340.6 |
|
|
|
|
|
|
|
|
||
Deferred taxes recognized on the balance sheet: |
|
|
|
|
|
|
||
Noncurrent deferred tax asset |
|
$ |
1,765.9 |
|
|
$ |
431.5 |
|
Noncurrent deferred tax liability |
|
|
(67.2 |
) |
|
|
(90.9 |
) |
Net deferred tax asset |
|
$ |
1,698.7 |
|
|
$ |
340.6 |
|
The deferred tax asset for foreign net operating loss and tax credit carryforwards as of December 31, 2025 includes foreign net operating loss carryforwards (net of federal tax effects) of $5.1 million, which have no expiration date, and foreign tax credit carryforwards (net of federal tax effects) of $1.4 million, which begin to expire in 2026. Certain of these foreign net operating loss carryforwards are subject to local restrictions limiting their utilization. Valuation allowances of $3.7 million have been established related to these foreign deferred tax assets.
The deferred tax asset for federal net operating loss and tax credit carryforwards as of December 31, 2025 relates to $2.2 million of net operating loss carryforwards, which begin to expire in 2032, and $1.1 million of U.S. foreign tax credit carryforwards, which begin to expire in 2029. A valuation allowance of $0.1 million has been established against these deferred tax assets.
The deferred tax asset for state net operating loss and tax credit carryforwards as of December 31, 2025 includes state net operating loss carryforwards (net of federal tax impact) of $35.6 million, which begin to expire in 2026, and state tax credit carryforwards (net of federal tax impact) of $58.3 million, which begin to expire in 2026. A valuation allowance of $91.0 million has been established against these and other state income tax related deferred tax assets.
The deferred tax asset for federal and state interest limitation carryforwards as of December 31, 2025 is $236.7 million, which has an indefinite carryforward. A valuation allowance of $1.8 million has been established against the state deferred tax assets.
In 2025, the Company released approximately $260.0 million of valuation allowance that had been established against federal and state deferred tax assets primarily related to interest limitation carryforwards.
Under current U.S. tax regulations, repatriation of foreign earnings to the U.S. can generally be completed with no incremental U.S. tax. However, repatriation of foreign earnings could subject the Company to U.S. state and non-U.S. jurisdictional taxes (including withholding taxes) on distributions. As of December 31, 2025, the Company has a deferred tax liability of $5.0 million for the estimated foreign costs associated with the expected repatriation of the Company’s undistributed foreign earnings. The unrecorded deferred tax liability for foreign costs associated with earnings considered permanently reinvested is not material as of December 31, 2025.
The following table reflects a reconciliation of the beginning to ending period amounts of gross unrecognized tax benefits, excluding interest and penalties:
|
|
Year Ended December 31, |
|
|||||||||
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Balance at beginning of period |
|
$ |
146.3 |
|
|
$ |
162.1 |
|
|
$ |
145.5 |
|
Increase related to prior periods |
|
|
(0.1 |
) |
|
|
— |
|
|
|
22.5 |
|
Decrease related to prior periods |
|
|
0.9 |
|
|
|
(0.9 |
) |
|
|
(7.9 |
) |
Increase related to current periods |
|
|
2.7 |
|
|
|
3.3 |
|
|
|
5.5 |
|
Decrease related to settlements with taxing authorities |
|
|
3.5 |
|
|
|
— |
|
|
|
(0.3 |
) |
Decrease related to lapse in statutes of limitations |
|
|
(12.2 |
) |
|
|
(14.2 |
) |
|
|
(3.2 |
) |
Decrease related to divestitures |
|
|
(1.0 |
) |
|
|
(4.0 |
) |
|
|
— |
|
Balance at end of period |
|
$ |
140.1 |
|
|
$ |
146.3 |
|
|
$ |
162.1 |
|
The Company’s liability for unrecognized tax benefits that, if recognized, would favorably affect the effective tax rate in future periods was $130.1 million as of December 31, 2025. The Company operates in numerous jurisdictions worldwide and is subject to routine tax audits on a regular basis. The determination of the Company’s unrecognized tax benefits involves significant management judgment regarding interpretation of relevant facts and tax laws in each of these jurisdictions.
The Company provides for interest and penalties related to unrecognized tax benefits as income tax expense. The Company accrued $7.1 million and $5.9 million for interest and penalties as of December 31, 2025 and 2024, respectively. During the years ended December 31, 2025, 2024 and 2023, the net expense (benefit) for interest and penalties recognized through income tax expense (benefit) was $3.1 million, $0.5 million and $(4.0) million, respectively.
The Company files federal, state and local tax returns with statutes of limitation generally ranging from 3 to 4 years. The Company is currently undergoing a U.S. federal income tax audit for the 2019 tax year and is generally no longer subject to state and local tax examinations for years prior to 2021. Tax returns filed by the Company’s significant foreign subsidiaries are generally subject to statutes of limitation of 3 to 7 years and are generally no longer subject to examination for years prior to 2019. In many jurisdictions, tax authorities retain the ability to review prior years’ tax returns and to adjust any net operating loss or tax credit carryforwards from these years that are available to be utilized in subsequent periods. During 2025, the Company recognized $(8.6) million (net of payments) related to the lapse of applicable statutes of limitations and the conclusion of various domestic and foreign examinations.
The Organization for Economic Co-operation and Development has proposed a global minimum tax of 15% under its Pillar Two Model Rules. Beginning in 2023, many countries began to incorporate Pillar Two into their domestic laws with Pillar Two becoming effective in some countries beginning in 2024. In 2025, the company incurred insignificant tax expense in connection with Pillar Two. On January 5, 2026, the OECD released a comprehensive package for a “side-by-side arrangement” with respect to Pillar Two. Notably, once adopted, this new guidance will prevent other countries from imposing tax on the U.S. profits of American companies. The Company will continue to monitor U.S. and international legislative developments, including further announcements on the side-by-side package, to assess any potential impacts on its operations.
On July 4, 2025, U.S. legislation formally titled “An Act to Provide for Reconciliation Pursuant to Title II of H. Con. Res. 14” (the Act), commonly referred to as the One Big Beautiful Bill Act, was signed into law. The Act, among other provisions, extended certain key elements of the 2017 Tax Cuts and Jobs Act and introduced targeted changes to the U.S. federal income tax regime. The effects of OBBBA are reflected in the consolidated financial statements for the year ended December 31, 2025.
The following table presents income tax expense (benefit) related to amounts presented in other comprehensive income (loss):
|
|
Year Ended December 31, |
|
|||||||||
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Foreign currency translation |
|
$ |
2.4 |
|
|
$ |
(2.3 |
) |
|
$ |
(2.9 |
) |
Defined benefit plans |
|
|
(0.8 |
) |
|
|
(0.1 |
) |
|
|
(0.3 |
) |
Total |
|
$ |
1.6 |
|
|
$ |
(2.4 |
) |
|
$ |
(3.2 |
) |
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 26, 2026 | Showing above |
| 2024 | Feb 26, 2025 | |
| 2023 | Feb 29, 2024 | |
| 2022 | Feb 23, 2023 | |
| 2021 | Feb 17, 2022 | |
| 2020 | Feb 17, 2021 | |
| 2019 | Feb 20, 2020 | |
| 2018 | Feb 21, 2019 | |
| 2017 | Feb 15, 2018 | |
| 2016 | Feb 23, 2017 | |
| 2015 | Feb 19, 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.