Income Taxes (Tables)

12 Months Ended

Dec. 31, 2017

Components of Earnings Before Income Taxes and Provision for Income Taxes

Significant components of earnings before income taxes and the provision for income taxes are as follows (in millions):


	Year Ended December 31,
	2017			2016			2015
Earnings (losses) before income taxes:
United States	$	278.6		$	351.3		$	345.6
Foreign, principally Australia, Canada, New Zealand and the U.K.		99.5			5.6			(52.1	)

Total earnings before income taxes	$	378.1		$	356.9		$	293.5

Provision (benefit) for income taxes:
Federal:
Current	$	16.4		$	45.9		$	43.9
Deferred		(160.4	)		(146.7	)		(139.4	)

		(144.0	)		(100.8	)		(95.5	)

State and local:
Current		6.7			8.4			18.9
Deferred		1.4			(0.3	)		(3.3	)

		8.1			8.1			15.6

Foreign:
Current		29.1			22.4			22.9
Deferred		(14.3	)		(17.8	)		(38.6	)

		14.8			4.6			(15.7	)

Total benefit for income taxes	$	(121.1	)	$	(88.1	)	$	(95.6	)

Reconciliation of Provision for Income Taxes with Federal Statutory Income Tax Rate

A reconciliation of the provision for income taxes with the U.S. Federal statutory income tax rate is as follows (in millions, except percentages):


	Year Ended December 31,
	2017						2016						2015
	Amount			% of Pretax Earnings			Amount			% of Pretax Earnings			Amount			% of Pretax Earnings
Federal statutory rate	$	132.4			35.0		$	124.9			35.0		$	102.7			35.0
State income taxes - net of
Federal benefit		5.3			1.4			5.3			1.5			10.2			3.5
Differences related to non U.S. operations		(48.5	)		(12.8	)		(34.1	)		(9.6	)		(22.6	)		(7.7	)
Alternative energy, foreign and other tax credits		(230.1	)		(60.9	)		(194.4	)		(54.5	)		(181.3	)		(61.8	)
Other permanent differences		(10.6	)		(2.8	)		(4.8	)		(1.3	)		(4.9	)		(1.7	)
U.S. repatriation tax		36.8			9.7			—			—			—			—
Stock-based compensation		(15.1	)		(4.0	)		—			—			—			—
Changes in unrecognized tax benefits		(0.9	)		(0.2	)		2.2			0.6			3.0			1.0
Change in valuation allowance		12.3			3.3			14.0			3.9			1.7			0.6
Change in U.S. and U.K. tax rates		(2.2	)		(0.6	)		(1.5	)		(0.4	)		(4.2	)		(1.4	)
Other		(0.5	)		(0.1	)		0.3			0.1			(0.2	)		(0.1	)

Benefit for income taxes	$	(121.1	)		(32.0	)	$	(88.1	)		(24.7	)	$	(95.6	)		(32.6	)

Gross Unrecognized Tax Benefits

A reconciliation of the beginning and ending balances of the total amounts of gross unrecognized tax benefits is as follows (in millions):


	December 31,
	2017			2016
Gross unrecognized tax benefits at January 1	$	14.5		$	15.7
Increases in tax positions for current year		1.6			2.4
Settlements		(1.8	)		(1.4	)
Lapse in statute of limitations		(0.7	)		(1.8	)
Increases in tax positions for prior years		0.6			1.8
Decreases in tax positions for prior years		(3.3	)		(2.2	)

Gross unrecognized tax benefits at December 31	$	10.9		$	14.5

Deferred Tax Assets and Liabilities

purposes and the amounts used for income tax purposes. Significant components of our deferred tax assets and liabilities are as follows (in millions):


	December 31,
	2017			2016
Deferred tax assets:
Alternative minimum tax and other credit carryforwards	$	683.3		$	477.9
Accrued and unfunded compensation and employee benefits		143.2			219.0
Amortizable intangible assets		45.8			38.8
Compensation expense related to stock options		13.4			16.9
Accrued liabilities		28.9			31.7
Accrued pension liability		14.8			22.9
Investments		1.1			7.7
Net operating loss carryforwards		30.5			20.4
Capital loss carryforwards		12.9			16.0
Deferred rent liability		4.8			8.1
Other		5.5			3.9

Total deferred tax assets		984.2			863.3
Valuation allowance for deferred tax assets		(79.1	)		(66.8	)

Deferred tax assets		905.1			796.5

Deferred tax liabilities:
Nondeductible amortizable intangible assets		273.8			310.2
Investment-related partnerships		17.6			34.5
Depreciable fixed assets		26.5			18.2
Hedging instruments		3.8			4.1
Other prepaid items		10.3			4.1

Total deferred tax liabilities		332.0			371.1

Net deferred tax assets	$	573.1		$	425.4