v3.25.4
Income Taxes
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Our income from continuing operations before income taxes was subject to taxes in the following jurisdictions for the following periods (in millions):
Years Ended December 31,
202520242023
United States$17.6 $42.0 $65.8 
Foreign70.0 69.5 63.7 
Total$87.6 $111.5 $129.5 
The provision (benefit) for income taxes allocated to continuing operations is comprised of (in millions):
Years Ended December 31,
202520242023
Current tax provision:
Federal$13.7 $18.9 $29.0 
State3.3 2.5 3.8 
Foreign12.9 8.6 7.0 
29.9 30.0 39.8 
Deferred tax provision (benefit):
Federal17.6 (10.9)(12.5)
State3.5 0.7 (0.2)
Foreign(2.2)(1.7)2.9 
18.9 (11.9)(9.8)
Income tax provision (benefit)$48.8 $18.1 $30.0 
Significant components of our deferred tax assets and liabilities as of December 31, 2025 and 2024 are as follows (in millions):
December 31,
20252024
Deferred tax assets:
Tax loss and interest expense carryforwards$109.1 $50.1 
Tax credit carryforwards87.7 65.6 
Lease liabilities403.8 412.0 
Deemed landlord financing326.7 297.2 
Other deferred tax assets113.7 108.5 
Total deferred tax assets1,041.0 933.4 
Valuation allowance for deferred tax assets(143.4)(31.3)
Deferred tax assets, net of valuation allowance897.6 902.1 
Deferred tax liabilities:
Basis difference related to fixed assets(238.9)(235.7)
Basis difference related to intangible assets with an indefinite life(185.9)(241.9)
Lease right-of-use assets(359.1)(371.3)
Other deferred tax liabilities(6.3)(6.8)
Total deferred tax liabilities(790.2)(855.7)
Net deferred tax assets (liabilities) are shown on the accompanying consolidated balance sheets as follows:
Balance Sheet Location
Non-current deferred tax assetsOther assets, net109.2 48.6 
Non-current deferred tax liabilities Other long-term liabilities(1.8)(2.2)
Deferred tax assets, net$107.4 $46.4 
The net change in net deferred taxes in 2025 of $61.0 million is primarily due to an increase in tax loss and tax credit carryforwards. As described in Note 4, we divested Jack Wolfskin entirely and of 60% of Topgolf in May 2025 and January 2026, respectively. Due to the 2026 timing for the latter sale, certain Topgolf deferred tax assets and liabilities included above will be derecognized from our consolidated balance sheets during the first quarter of 2026. We do not expect the impact from the derecognition of those net deferred tax assets and deferred tax liabilities will be significant.
The valuation allowance on our deferred tax assets as of December 31, 2025 and 2024 of $143.4 million and $31.3 million, respectively, relate primarily to U.S. federal and state net operating loss carryforwards, foreign and business tax credits, and capital loss carryforward.
As of December 31, 2025, we had U.S. federal and state income tax credit carryforwards of $73.5 million and $35.9 million, respectively, which will expire if unused at various dates beginning on December 31, 2028. Such carryforwards expire as follows (in millions):
U.S. foreign tax credit$3.5 2028-2035
U.S. business tax credits$70.0 2037-2045
State business tax credits - indefinite lived$27.9 Do not expire
State business tax credits - definite lived$8.0 2032-2048
As of December 31, 2025, we had U.S. federal net operating loss (“NOLs”), capital loss, and interest expense carryforwards of $65.9 million, $352.1 million and $19.8 million, respectively. Such carryforwards expire as follows (in millions):
U.S. net operating loss carryforwards - definite lived$11.9  2028-2035
U.S. capital loss carryforwards - definite lived$352.1 2030
U.S. interest expense carryforwards - indefinite lived$19.8  Do not expire
U.S. net operating loss carryforwards - indefinite lived$54.0  Do not expire
Our ability to utilize the U.S. NOLs and tax credits to offset future taxable income may be deferred or limited significantly if we were to experience an “ownership change” as defined in Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”). In general, an ownership change will occur if there is a cumulative change in ownership of our stock by “5-percent shareholders” (as defined in the Code) that exceeds 50 percentage points over a rolling three-year period. We determined that no ownership change has occurred for purposes of Section 382 for the period ended December 31, 2025. Any ownership changes that have occurred for periods prior to 2025 are not expected to have a material impact on our ability to utilize U.S. NOLs and tax credits.
A reconciliation of the effective tax rate on our 2025 income from continuing operations and the U.S. federal statutory tax rate is as follows (dollar amounts in millions):
Year Ended December 31, 2025
DollarsPercentages
Pre-tax income$87.6 
U.S. federal statutory income tax rate18.4 21.0 %
Domestic federal
Tax credits
Research and development credits(1.7)(1.9)%
Nontaxable and nondeductible items
Nondeductible compensation5.5 6.3 %
Other nontaxable and nondeductible items0.4 0.5 %
Cross-border tax laws
Global intangible low-taxed income, net of foreign tax credit2.5 2.9 %
Foreign-derived intangible income deduction(0.4)(0.5)%
Other cross-border tax laws0.2 0.2 %
Changes in valuation allowances24.0 27.4 %
Other adjustments(0.8)(0.9)%
Domestic state and local income taxes, net of federal effect (1)
5.3 6.0 %
Foreign tax effects
China
Statutory income tax rate differential1.8 2.1 %
Income excluded from corporate income tax(10.5)(12.0)%
Hong Kong
Global minimum tax3.7 4.2 %
Japan
Statutory income tax rate differential1.0 1.1 %
Other (0.2)(0.2)%
Other foreign jurisdictions0.2 0.2 %
Worldwide changes in unrecognized tax benefits(0.6)(0.7)%
Income tax provision and effective tax rate$48.8 55.7 %
(1) The majority (greater than 50%) of the income tax effect within this category was from the following state and local jurisdictions: California, Illinois, New Jersey, New York, Pennsylvania, and Texas.
A reconciliation of the effective tax rate on our 2024 and 2023 income from continuing operations and the U.S. federal statutory tax rate is as follows:
Years ended December 31,
20242023
Statutory U.S. tax rate21.0 %21.0 %
State income taxes, net of U.S. tax benefit2.3 %2.2 %
Foreign income taxed at other than U.S. statutory rate(7.0)%(3.6)%
Federal tax credits(4.7)%(3.6)%
Other non-deductible expenses1.3 %0.8 %
Non-deductible compensation4.0 %3.7 %
U.S. Foreign tax inclusion1.4 %1.4 %
Foreign derived intangible income deduction(2.7)%(2.7)%
Impact of uncertain tax positions0.8 %1.5 %
Change in deferred tax valuation allowance(0.1)%— %
Other(0.1)%2.5 %
Effective tax rate16.2 %23.2 %
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in millions):
202520242023
Balance at January 1$27.7 $29.3 $26.2 
Additions based on tax positions related to the current year0.7 2.1 1.8 
Additions for tax positions of prior years— — 2.0 
Reductions for tax positions of prior years(1.3)(0.8)— 
Settlement of tax audits(6.1)(1.1)— 
Current year dispositions(2.2)— — 
Reductions due to lapsed statute of limitations(0.4)(1.8)(0.7)
Balance at December 31$18.4 $27.7 $29.3 
As of December 31, 2025, the gross liability for income taxes associated with uncertain tax benefits was $18.4 million. This liability could be reduced by $0.1 million of offsetting tax benefits associated with the correlative effects of potential transfer pricing adjustments, which was recorded as a long-term income tax receivable. Of the net amount, $11.4 million, if recognized, would affect our financial statements and favorably affect our effective income tax rate.
We recognize interest and penalties related to income tax matters in the income tax provision. We recognized a tax expense (benefit) of $(2.2) million, $0.3 million and $0.1 million, for the years ended December 31, 2025, 2024 and 2023, respectively. As of December 31, 2025 and 2024, the gross amount of accrued interest and penalties included in income taxes payable in the accompanying consolidated balance sheets was $0.4 million and $2.6 million, respectively.
We or one of our subsidiaries file income tax returns in the U.S. federal jurisdiction and various U.S. states and foreign jurisdictions. We are generally no longer subject to income tax examinations by tax authorities in our major jurisdictions as follows:
Major Tax JurisdictionYears No Longer Subject to Audit
U.S. Federal2009 and prior
Japan2019 and prior
South Korea2021 and prior
United Kingdom2020 and prior
Our undistributed foreign earnings were deemed repatriated on December 31, 2017 from a U.S. federal income tax perspective, and a significant amount of our foreign earnings that have been accumulated through December 31, 2025 are not expected to be subject to U.S. income tax upon repatriation. We have not recognized deferred tax liabilities for foreign withholding taxes nor for U.S. state and local income taxes on the undistributed foreign earnings from our non-U.S. subsidiaries that we intend to reinvest indefinitely. Furthermore, we expect future earnings generated within the U.S. will be sufficient to meet our future domestic cash needs. With respect to our non-U.S. subsidiaries’ earnings for which we do not expect to reinvest indefinitely, we expect the net impact from such future repatriations on our overall tax liability to be insignificant.
Income taxes paid, net of refunds received, during 2025 by jurisdiction were (in millions):
Year Ended December 31,
2025
U.S. federal$1.0 
U.S. state and local
Texas1.4 
Other7.5 
Foreign
Canada1.4 
China2.5 
Japan5.0 
Other4.1 
Total income taxes paid, net$22.9 
Income taxes paid, net of refunds received, during the years ended December 31, 2024 and 2023 were $20.9 million and $21.5 million, respectively.