Matthews International Corporation Annual report pursuant to Section 13 and 15(d)

INCOME TAXES (Tables)

12 Months Ended

Sep. 30, 2023

The income tax provision (benefit) consisted of the following:

The reconciliation of the federal statutory tax rate to the consolidated effective tax rate was as follows:


	2023		2022		2021
Federal statutory tax rate	21.0	%	21.0	%	21.0	%
Effect of state income taxes, net of federal deduction	3.8	%	0.2	%	37.5	%
Foreign statutory taxes compared to federal statutory rate	(0.7)	%	1.6	%	(18.6)	%
Share-based compensation	3.6	%	(1.1)	%	24.5	%
Termination of SERP	—	%	—	%	28.6	%
Tax credits	(7.0)	%	1.2	%	(26.6)	%



Sale of SERP-related investments	—	%	—	%	23.8	%


Goodwill write-down	—	%	(11.2)	%	—	%
Tax rate differential on net operating loss carryback	—	%	—	%	(21.4)	%
Nontaxable income	(7.5)	%	0.8	%	(9.9)	%
Utilization of foreign losses with valuation allowance	(5.6)	%	—	%	—	%
Other *	(3.3)	%	(8.3)	%	10.1	%
Effective tax rate	4.3	%	4.2	%	69.0	%

* In Fiscal 2022, "Other" primarily consists of foreign net operating losses that had a full valuation allowance.

The components of deferred tax assets and liabilities at September 30, 2023 and 2022 are as follows:


	2023		2022
Deferred tax assets:
Pension and postretirement benefits	$	5,544	$	9,051
Accruals and reserves not currently deductible	11,158		10,909
Income tax credit carryforward	4,970		5,796
Operating and capital loss carryforwards	59,956		54,875
Stock options	8,007		7,103
Research and development capitalization	11,028		—
Other	3,016		50
Total deferred tax assets	103,679		87,784
Valuation allowances	(22,506)		(27,552)
Net deferred tax assets	81,173		60,232

Deferred tax liabilities:
Depreciation	(23,547)		(27,317)
Unrealized gains and losses	(2,969)		(2,793)
Goodwill and intangible assets	(97,415)		(98,715)
Revenue recognized over time	(21,226)		(10,847)
Other	(5,002)		(9,539)
Total deferred tax liabilities	(150,159)		(149,211)

Net deferred tax liability	$	(68,986)	$	(88,979)

Changes in the total amount of gross unrecognized tax benefits (excluding penalties and interest) are as follows:


	2023		2022		2021
Balance, beginning of year	$	4,123	$	2,807	$	10,483

Increases for tax positions of prior years	100		1,393		—
Decreases for tax positions of prior years	—		(200)		(288)
Increases based on tax positions related to the current year	769		551		628

Decreases due to lapse of statute of limitation	(1,213)		(428)		(8,016)
Balance, end of year	$	3,779	$	4,123	$	2,807

As of September 30, 2023, the tax years that remain subject to examination by major jurisdiction generally are: