XML 32 R15.htm IDEA: XBRL DOCUMENT
v3.25.0.1

Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2024
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes Components of Income Tax Expense Components of earnings before income taxes are as follows:
Years ended December 31 | 2024 |  | 2023 |  | 2022
United States | $ | 1,705 |  |  | $ | 1,744 |  |  | $ | 1,312 |
Other nations | 267 |  |  | 402 |  |  | 203 |
| $ | 1,972 |  |  | $ | 2,146 |  |  | $ | 1,515 |
Components of income tax expense are as follows:
Years ended December 31 | 2024 |  | 2023 |  | 2022
United States Federal | $ | 434 |  |  | $ | 269 |  |  | $ | 240 |
Other nations | 38 |  |  | 125 |  |  | 159 |
States (U.S.) | 133 |  |  | 70 |  |  | 83 |
Current income tax expense | 605 |  |  | 464 |  |  | 482 |
United States Federal | (221) |  |  | (30) |  |  | (179) |
Other nations | 40 |  |  | (9) |  |  | (118) |
States (U.S.) | (34) |  |  | 7 |  |  | (37) |
Deferred income tax benefit | (215) |  |  | (32) |  |  | (334) |
Total income tax expense | $ | 390 |  |  | $ | 432 |  |  | $ | 148 |
Differences between income tax expense computed at the U.S. federal statutory tax rate of 21% and income tax expense as reflected in the Consolidated Statements of Operations are as follows:
Years ended December 31 | 2024 |  | 2023 |  | 2022
Income tax expense at statutory rate | $ | 414 |  | 21.0 | % |  | $ | 450 |  | 21.0 | % |  | $ | 318 |  | 21.0 | %
State income taxes, net of federal benefit | 66 |  | 3.3 | % |  | 71 |  | 3.3 | % |  | 76 |  | 5.0 | %
Non-U.S. tax expense on non-U.S. earnings | 24 |  | 1.2 | % |  | 15 |  | 0.7 | % |  | 1 |  | 0.1 | %
U.S. tax expense (benefit) on undistributed non-U.S. earnings | (27) |  | (1.4) | % |  | (44) |  | (2.1) | % |  | (43) |  | (2.8) | %
IP reorganization | (171) |  | (8.7) | % |  | — |  | — | % |  | (77) |  | (5.1) | %
Extinguishment of Silver Lake convertible debt | 148 |  | 7.5 | % |  | — |  | — | % |  | — |  | — | %
Stock compensation | (45) |  | (2.3) | % |  | (33) |  | (1.5) | % |  | (68) |  | (4.5) | %
Valuation allowances | 5 |  | 0.3 | % |  | (13) |  | (0.6) | % |  | (51) |  | (3.4) | %
Research credits | (24) |  | (1.2) | % |  | (19) |  | (0.9) | % |  | (16) |  | (1.1) | %
Reserve for uncertain tax positions | (6) |  | (0.3) | % |  | (3) |  | (0.1) | % |  | (6) |  | (0.4) | %
Other tax expense (benefit) | 6 |  | 0.3 | % |  | 8 |  | 0.4 | % |  | 14 |  | 0.9 | %
| $ | 390 |  | 19.8 | % |  | $ | 432 |  | 20.1 | % |  | $ | 148 |  | 9.8 | %
The effective tax rate for 2024 was below the current U.S. federal statutory rate of 21% primarily due to the tax benefit recognized upon the Company's decision to implement a business initiative in 2024 which allows for additional utilization of foreign tax credit carryforwards and a higher federal derived intangible income deduction on its 2023 U.S. tax return, the recognition of excess tax benefits on share-based compensation, the 2024 estimated foreign derived intangible income deduction, and generation of research and development credits, partially offset by the non-tax deductible loss on the extinguishment of the Silver Lake Convertible Debt and 2024 estimated U.S. state income taxes. In 2021, the Organization of Economic Cooperation and Development ("OECD") introduced its Pillar Two Framework Model Rules ("Pillar 2"), that was supported by over 130 countries worldwide, which is designed to impose a 15% global minimum tax on adjusted financial results. Certain aspects of Pillar 2 took effect on January 1, 2024, while other aspects go into effect on January 1, 2025. The Company continues to evaluate the potential impact of Pillar 2 on its business, as the countries in which it operates continue to enact legislation implementing Pillar 2. While many aspects of the application of Pillar 2 continue to be clarified, Pillar 2 did not materially impact the Company's 2024 tax liability, and is not expected to have a material impact in future years. Deferred tax balances that were recorded within Accumulated other comprehensive loss in the Company’s Consolidated Balance Sheet, rather than Income tax expense, are the result of retirement benefit adjustments and currency translation adjustments. The adjustments were charges of $16 million for the year ended December 31, 2024, benefits of $14 million for the year ended December 31, 2023, and charges of $2 million for the year ended December 31, 2022. The Company evaluates its permanent reinvestment assertions with respect to foreign earnings at each reporting period and generally, except for certain earnings that the Company intends to reinvest indefinitely due to the capital requirements of the foreign subsidiaries or due to local country restrictions, accrues for the U.S. federal and foreign income tax applicable to the earnings. As a result of the 2017 U.S. Tax Cuts and Jobs Act ("the Tax Act"), dividends from foreign subsidiaries are now exempt or the earnings have been previously subject to U.S. tax. As a result, the tax accrual for undistributed foreign earnings is limited primarily to foreign withholding taxes and tax on inherent capital gains that would result from distribution of foreign earnings which are not permanently reinvested, and such earnings may be distributed without an additional charge. Undistributed foreign earnings that the Company intends to reinvest indefinitely amounted to, in the aggregate, $2.0 billion at December 31, 2024. It is impracticable to determine the exact amount of unrecognized deferred tax liabilities on such earnings; however, due to the above-mentioned changes made under the Tax Act, the Company believes that the additional U.S. or foreign income tax charge with respect to such earnings, if distributed, would be immaterial. Gross deferred tax assets were $2.4 billion and $2.1 billion for December 31, 2024 and December 31, 2023, respectively. Deferred tax assets, net of valuation allowances, were $2.4 billion and $2.0 billion at December 31, 2024 and December 31, 2023, respectively. Gross deferred tax liabilities were $1.2 billion and $1.0 billion at December 31, 2024 and December 31, 2023, respectively. Significant components of deferred tax assets (liabilities) are as follows:
December 31 | 2024 |  | 2023
Inventory | $ | 30 |  |  | $ | 30 |
Accrued liabilities and allowances | 87 |  |  | 77 |
Employee benefits | 221 |  |  | 270 |
Capitalized items | 391 |  |  | 146 |
Tax basis differences on investments | 2 |  |  | 4 |
Depreciation tax basis differences on fixed assets | (31) |  |  | (2) |
Undistributed non-U.S. earnings | (23) |  |  | (28) |
Tax attribute carryforwards | 98 |  |  | 115 |
Business reorganization | 7 |  |  | 9 |
Warranty and customer liabilities | 24 |  |  | 22 |
Deferred revenue and costs | 420 |  |  | 406 |
Valuation allowances | (62) |  |  | (63) |
Operating lease assets | (128) |  |  | (120) |
Operating lease liabilities | 134 |  |  | 129 |
Other | 24 |  |  | 10 |
| $ | 1,194 |  |  | $ | 1,005 |
At December 31, 2024 and December 31, 2023, the Company had valuation allowances of $62 million and $63 million, respectively, against its deferred tax assets, including $42 million and $44 million, respectively, relating to deferred tax assets for non-U.S. subsidiaries. The Company’s U.S. valuation allowance increased $1 million during 2024 primarily due to a capital loss generated in 2024 for which the Company does not have sufficient capital gains in the carryback period nor for which it expects to generate sufficient capital gains in the near future. The Company's Non-U.S. valuation allowance decreased $2 million during 2024 primarily due to the expiration of tax attributes. The Company believes that the remaining deferred tax assets are more-likely-than-not to be realizable based on estimates of future taxable income and the implementation of tax planning strategies. Tax attribute carryforwards are as follows:
December 31, 2024 | Gross Tax Loss |  | Tax Effected |  | Expiration Period
United States: |  |  |  |  |
U.S. tax losses | $ | 127 |  |  | $ | 27 |  |  | 2025-2037
General business credits | — |  |  | 1 |  |  | 2030-2036
State tax losses | — |  |  | 8 |  |  | 2027-2044
State tax credits | — |  |  | 3 |  |  | 2025-2043
Non-U.S. subsidiaries: |  |  |  |  |
United Kingdom tax losses | 143 |  |  | 36 |  |  | Unlimited
Canada tax losses | 17 |  |  | 5 |  |  | 2034-2044
Canada tax credits | — |  |  | 5 |  |  | 2038-2044
Other subsidiaries tax losses | 66 |  |  | 13 |  |  | Various
|  |  | $ | 98 |  |  |
The Company had unrecognized tax benefits of $42 million and $32 million at December 31, 2024 and December 31, 2023, respectively, of which approximately $40 million and $27 million, if recognized, would have affected the effective tax rate for 2024 and 2023, respectively. A roll-forward of unrecognized tax benefits is as follows:
(in millions) | 2024 |  | 2023
Balance at January 1 | $ | 32 |  |  | $ | 35 |
Additions based on tax positions related to current year | 1 |  |  | 1 |
Additions for tax positions of prior years | 18 |  |  | 1 |
Reductions for tax positions of prior years | (1) |  |  | (1) |
Settlements and agreements | (5) |  |  | — |
Lapse of statute of limitations | (3) |  |  | (4) |
Balance at December 31 | $ | 42 |  |  | $ | 32 |
The Company recorded $39 million and $26 million of unrecognized tax benefits in Other liabilities at December 31, 2024 and December 31, 2023, respectively. The Company has several U.S. state and non-U.S. audits pending. A summary of open tax years by major jurisdiction is presented below:
Jurisdiction | Tax Years
United States | 2021-2024
Australia | 2020-2024
Canada | 2020-2024
Germany | 2018-2024
India | 1997-2024
Israel | 2019-2024
Poland | 2019-2024
Malaysia | 2017-2024
United Kingdom | 2022-2024
Although the final resolution of the Company’s global tax disputes is uncertain, based on current information, in the opinion of the Company’s management, the ultimate disposition of these matters will not have a material adverse effect on the Company’s consolidated financial position or liquidity. However, an unfavorable resolution of the Company’s global tax disputes could have a material adverse effect on the Company’s results of operations in the periods, and as of the dates, on which the matters are ultimately resolved. Based on the potential outcome of the Company’s global tax examinations, the expiration of the statute of limitations for specific jurisdictions, or the continued ability to satisfy tax incentive obligations, it is reasonably possible that the unrecognized tax benefits will change within the next twelve months. The associated net tax impact on the effective tax rate, exclusive of valuation allowance changes, is estimated to be up to a $9 million tax benefit. At December 31, 2024, the Company had $30 million accrued for interest and $23 million accrued for penalties on unrecognized tax benefits. At December 31, 2023, the Company had $23 million and $12 million accrued for interest and penalties, respectively, on unrecognized tax benefits. The Company's policy is to classify the interest and penalty as a component of interest expense and other expense, respectively.

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for income tax. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-12 Reference 2: http://www.xbrl.org/2003/role/exampleRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 55 -Paragraph 231 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482663/740-10-55-231 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12C -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-12C Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12B -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-12B Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 270 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Publisher FASB -URI https://asc.fasb.org/1943274/2147477891/740-270-50-1 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SAB Topic 6.I.5.Q1) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479360/740-10-S99-1 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 946 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 13 -Publisher FASB -URI https://asc.fasb.org/1943274/2147480990/946-20-50-13 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 235 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -Publisher FASB -URI https://asc.fasb.org/1943274/2147480678/235-10-S99-1 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/740/tableOfContent Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 14 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-14 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 21 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-21 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 17 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-17 Reference 13: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479360/740-10-S99-2 Reference 14: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 30 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482603/740-30-50-2 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration