Whole Earth Brands, Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

INCOME TAXES (Tables)

INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2023

Components of Income Tax (Benefit) Provision

Components of the income tax provision (benefit) were as follows (in thousands):


	Year Ended
	December 31, 2023		December 31, 2022		December 31, 2021
Current:
Federal	$	1,912	$	(364)	$	916
State and local	725		419		283
Foreign	4,746		6,190		3,957
	7,383		6,245		5,156
Deferred:
Federal	(1,082)		(2,944)		(6,498)
State and local	(70)		(581)		(2,801)
Foreign	98		3,069		(3,001)
	(1,054)		(456)		(12,300)
Total provision (benefit) for income taxes	$	6,329	$	5,789	$	(7,144)

Schedule of Effective Income Tax Rate Reconciliation

The following is a reconciliation of income tax provision (benefit) computed at the U.S. federal statutory rate to income tax provision (benefit) in the consolidated statements of operations (in thousands):


	Year Ended
	December 31, 2023		December 31, 2022		December 31, 2021
(Loss) income before income taxes:
Domestic	$	(43,041)	$	(86,952)	$	(36,205)
Foreign	11,274		33,989		29,144
Total (loss) income before income taxes	$	(31,767)	$	(52,963)	$	(7,061)

Federal income tax rate	21.0%		21.0%		21.0%
Federal income taxes	$	(6,671)	$	(11,122)	$	(1,483)
State and local taxes	(1,449)		(1,666)		(3,572)
Foreign rate differential	(325)		(545)		(1,431)
Change in tax rates	(5)		295		225
Change in uncertain tax positions	9		6		(1,005)
Change in valuation allowance	12,480		4,588		2,657
Goodwill impairment	1,531		9,765		—
U.S. effects of international operations	3,263		5,603		3,041
Tax credits	(3,667)		(3,250)		(2,763)
Section 162(m) limitation	475		87		206
Transaction costs	—		31		385
Stock-based compensation	929		422		502
Switzerland tax ruling	—		—		(4,057)
Foreign withholding taxes	128		1,043		350
Other	(369)		532		(199)
Total provision (benefit) for income taxes	$	6,329	$	5,789	$	(7,144)

Effective tax rate	(19.9)%		(10.9)%		101.2%

Schedule of Deferred Tax Assets and Liabilities

Significant components of the Company’s net deferred tax assets and liabilities were as follows (in thousands):


	December 31, 2023		December 31, 2022
Deferred tax assets:
Accounts receivable	$	354	$	441
Accrued expenses	5,442		4,938
Inventory	3,450		4,112
Deferred rent	24		—
Other assets	1,690		1,184
Pension asset	2,466		2,320
Hedging	275		—
Capitalized research and development expense	979		445
Lease accounting	5,695		5,458
U.S. and foreign net operating losses	19,568		19,150
Deferred interest expense	21,280		11,241
Tax credits	1,028		887
Total deferred tax assets	62,251		50,176
Less valuation allowance	(27,747)		(16,592)
Net deferred tax assets	$	34,504	$	33,584
Deferred tax liabilities:
Property, plant and equipment	(6,714)		(6,270)
Operating lease right-of-use asset	(4,971)		(4,621)
Intangible assets	(43,477)		(45,964)
Deferred rent	—		(63)
Unremitted earnings	(2,447)		(2,295)
Other liabilities	(7,974)		(6,417)
Total deferred tax liabilities	(65,583)		(65,630)
Net deferred tax liability	$	(31,079)	$	(32,046)