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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

Source of pre-tax income and components of income tax expense

The source of pre-tax income and the components of income tax expense are as follows:

			Year Ended December 31,
(in millions)			2022						2021						2020
Income (loss) components:
Domestic			$	90					$	45					$	(33)
Foreign			350						466						318
Total pre-tax income			$	440					$	511					$	285
Income tax expense components:
Current:
Domestic – federal			$	77					$	16					$	24
Domestic – state and local			16						5						5
Foreign			56						53						33
Total Current			149						74						62
Deferred:
Domestic – federal			$	(43)					$	(2)					$	(21)
Domestic – state and local			(12)						—						(8)
Foreign			(9)						12						(2)
Total Deferred			(64)						10						(31)
Total income tax provision			$	85					$	84					$	31
Effective income tax rate			19.2		%				16.3		%				10.9		%

Schedule of effective income tax rate reconciliation

Reconciliations between taxes at the U.S. federal income tax rate and taxes at our effective income tax rate on earnings before income taxes are as follows:

			Year Ended December 31,
			2022						2021						2020
Tax provision at U.S. statutory rate			21.0		%				21.0		%				21.0		%
Increase (decrease) in tax rate resulting from:
State income taxes			1.2						0.8						0.7
Uncertain tax positions			(1.2)						(0.1)						(3.9)
U.S. foreign derived intangible income tax benefit			(1.3)						(0.6)						(1.0)
Net interest deductions			(1.8)						(2.4)						(4.5)
Tax on Distribution of Foreign Earnings			1.4						(0.2)						(0.2)
U.S. tax on foreign earnings			2.7						2.2						5.3
Tax incentives			(4.4)						(5.5)						(7.4)
Rate change			(0.6)						0.9						(1.3)
Goodwill impairment			—						—						2.9
Federal R&D tax credit			(0.7)						(0.7)						(1.3)
Stock compensation			0.1						(0.6)						(2.4)
Other—net			2.8						1.5						3.0
Effective income tax rate			19.2		%				16.3		%				10.9		%

Components of net deferred tax assets and liabilities

The following is a summary of the components of the net deferred tax assets and liabilities recognized in the Consolidated Balance Sheets:

			December 31,
(in millions)			2022						2021
Deferred tax assets:
Employee benefits			$	58					$	111
Accrued expenses			36						35
Loss and other tax credit carryforwards			245						250
R&D capitalization			32						—
Inventory			5						6
Lease Liabilities			68						70
Other			7						8
			451						480
Valuation allowance			(204)						(201)
Net deferred tax asset			$	247					$	279
Deferred tax liabilities:
Intangibles			$	155					$	155
Investment in foreign subsidiaries			5						4
Property, plant and equipment			65						77
Lease right-of-use assets			67						69
Hedging Instruments			20						—
Other			11						35
Total deferred tax liabilities			$	323					$	340

Reconciliation of Deferred Tax Asset Valuation Allowance

A reconciliation of the change in valuation allowance on deferred tax assets is as follows:

(in millions)			2022						2021						2020
Valuation allowance — January 1			$	201					$	217					$	191
Change in assessment (a)			1						—						1
Current year operations			3						4						4
Other comprehensive income			—						(4)						3
Foreign currency and other (b)			(1)						(16)						18
Valuation allowance — December 31			$	204					$	201					$	217

(a)    Increase in assessment in 2022 is primarily attributable to loss positions in various jurisdictions.

(b) Decrease in assessment in 2021 is primarily attributable to foreign exchange movement impacting foreign balances. Increase in assessment in 2020 is primarily attributable to loss positions in various jurisdictions and foreign exchange movement impacting foreign balances.

Deferred taxes classification

Deferred taxes are classified in the Consolidated Balance Sheets as follows:

			December 31,
(in millions)			2022						2021
Non-current assets			$	146					$	226
Non-current liabilities			(222)						(287)
Total net deferred tax liabilities			$	(76)					$	(61)

Tax attributes available to reduce future taxable income

Tax attributes available to reduce future taxable income begin to expire as follows:

(in millions)			December 31, 2022						First Year of Expiration
U.S. net operating loss			$	5					December 31, 2025
State net operating loss			97						December 31, 2024
State excess interest expense			19						Indefinite
State tax credits			1						Indefinite
Foreign net operating loss			992						December 31, 2023
Foreign tax credits			4						December 31, 2030

Reconciliation of the beginning and ending amount of unrecognized tax benefits

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

(in millions)			2022						2021						2020
Unrecognized tax benefits — January 1			$	111					$	114					$	129
Gross Increases - Current year tax positions			—						—						—
Gross Increases - Prior year tax positions			3						—						—
Gross Decreases - Prior year tax positions			(8)						(1)						(3)
Settlements			(1)						—						(12)
Lapse of Statute of Limitations			(2)						(1)						—
Currency Translation Adjustment			(1)						(1)						—
Unrecognized tax benefits — December 31			$	102					$	111					$	114

Earliest open tax years by major jurisdiction

The following table summarizes our earliest open tax years by major jurisdiction:

Jurisdiction						Earliest Open Year
Italy						2016
Luxembourg						2017
Sweden						2013
Germany						2016
United Kingdom						2015
United States						2017
Switzerland						2019

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