XML 33 R20.htm IDEA: XBRL DOCUMENT
v3.22.4

INCOME TAXES | 12 Months Ended
--- | ---
Dec. 31, 2022
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES The Company is responsible for filing consolidated U.S. federal, foreign and combined, unitary or separate state income tax returns. The Company is responsible for paying the taxes relating to such returns, including any subsequent adjustments resulting from the redetermination of such tax liabilities by the applicable taxing authorities. The components of the income before income taxes for the Company’s domestic and foreign operations for the years ended December 31 are provided below:
|  | For the year ended December 31,
In millions |  | 2022 |  | 2021 |  | 2020
Domestic |  | $ | 372 |  |  | $ | 253 |  |  | $ | 78 |
Foreign |  | 482 |  |  | 484 |  |  | 479 |
Income before income taxes |  | $ | 854 |  |  | $ | 737 |  |  | $ | 557 |
The consolidated provision for income taxes included in the Consolidated Statements of Income consisted of the following:
|  | For the year ended December 31,
In millions |  | 2022 |  | 2021 |  | 2020
Current tax expense (benefit) |  |  |  |  |  |
Federal |  | $ | 37 |  |  | $ | (81) |  |  | $ | 6 |
State |  | 3 |  |  | 27 |  |  | 17 |
Foreign |  | 137 |  |  | 138 |  |  | 93 |
|  | 177 |  |  | 84 |  |  | 116 |
Deferred tax expense (benefit) |  |  |  |  |  |
Federal |  | 29 |  |  | 87 |  |  | 36 |
State |  | — |  |  | 10 |  |  | (2) |
Foreign |  | 7 |  |  | (9) |  |  | (5) |
|  | 36 |  |  | 88 |  |  | 29 |
Total provision |  | $ | 213 |  |  | $ | 172 |  |  | $ | 145 |
A reconciliation of the United States federal statutory income tax rate to the effective income tax rate on operations for the years ended December 31 is provided below:
|  | For the year ended December 31,
In millions |  | 2022 |  | 2021 |  | 2020
U.S. federal statutory rate |  | 21.0 | % |  | 21.0 | % |  | 21.0 | %
State taxes |  | 2.0 |  |  | 0.3 |  |  | 2.6 |
Foreign |  | 3.8 |  |  | 3.3 |  |  | 4.4 |
Research and development credit |  | (0.8) |  |  | (0.8) |  |  | (1.3) |
U.S. net operating loss carryback |  | — |  |  | (3.4) |  |  | — |
Changes in valuation allowance |  | (2.0) |  |  | 3.0 |  |  | (2.0) |
U.S. tax reform provision |  | 0.1 |  |  | 0.7 |  |  | 1.3 |
Other, net |  | 0.9 |  |  | (0.9) |  |  | — |
Effective rate |  | 25.0 | % |  | 23.2 | % |  | 26.0 | %
The increase in effective tax rate from 2021 to 2022 was primarily from the absence of benefit from the 2021 amended federal and state income tax return filing mentioned below and higher foreign taxes, partially offset by the change in valuation allowance. The decrease in the effective tax rate from 2020 to 2021 was primarily the result of filing amended federal and state income tax returns during 2021. The Company amended the 2019 federal tax return to incorporate changes in tax regulations which generated a net operating loss that was carried back to tax years 2014 to 2016, which were at a higher federal tax rate. Other, net includes the impact of amended state returns reflecting changes in apportioned state income. These amendments resulted in a tax benefit during 2021. In addition, there was a decrease in the U.S. tax reform provision resulting from the provisions of the Tax Cut and Jobs Act, a decrease in state tax expense and a decrease in foreign tax expense due to mix of taxable income which were partially offset by an increase in valuation allowances. On August 16, 2022, the Inflation Reduction Act of 2022 was signed into law. This act includes a new book minimum tax on certain large corporations and an excise tax on corporate stock buybacks among other provisions. At this time, the Company does not believe the act will have a material impact on our consolidated financial position, results of operations, or cash flows. Components of deferred tax assets and liabilities were as follows:
|  | December 31,
In millions |  | 2022 |  | 2021
Deferred income tax assets: |  |  |  |
Accrued expenses and reserves |  | $ | 39 |  |  | $ | 44 |
Warranty reserve |  | 49 |  |  | 53 |
Deferred compensation/employee benefits |  | 61 |  |  | 62 |
Right-of-use assets |  | 74 |  |  | 76 |
Pension and postretirement obligations |  | 19 |  |  | 24 |
Inventory |  | 49 |  |  | 46 |
Deferred revenue |  | 52 |  |  | 30 |
Net operating loss carry forwards |  | 102 |  |  | 102 |
Other |  | 37 |  |  | 72 |
Gross deferred income tax assets |  | 482 |  |  | 509 |
Less: Valuation allowance |  | (46) |  |  | (64) |
Total deferred income tax assets |  | 436 |  |  | 445 |
Deferred income tax liabilities: |  |  |  |
Property, plant & equipment |  | 78 |  |  | 85 |
Right-of-use liabilities |  | 72 |  |  | 78 |
Intangible assets |  | 542 |  |  | 503 |
Total deferred income tax liabilities |  | 692 |  |  | 666 |
Net deferred income tax liability |  | $ | 256 |  |  | $ | 221 |
A valuation allowance is recorded when it is more likely than not that some portion or all of the deferred tax assets will not be realized. As of December 31, 2022, the valuation allowance for certain foreign deferred tax asset carryforwards was $46 million, primarily in China, Denmark, France, the Netherlands, South Africa, and the United States. The decrease in valuation allowances in 2022 is primarily related to the utilization of state net operating loss carry-forwards. The Company has net operating loss carry-forwards in the amount of $351 million, of which $203 million are indefinite lived, $81 million expire within ten years and $67 million expire in various periods between December 31, 2033 to December 31, 2042. As of December 31, 2022, the liability for income taxes associated with unrecognized tax benefits was $33 million, of which $20 million, if recognized, would favorably affect the Company’s effective income tax rate. As of December 31, 2021, the liability for income taxes associated with unrecognized tax benefits was $32 million, of which $18 million, if recognized, would favorably affect the Company’s effective income tax rate. A reconciliation of the beginning and ending amount of the gross liability for income taxes associated with unrecognized tax benefits follows:
In millions |  | 2022 |  | 2021 |  | 2020
Balance at beginning of year |  | $ | 32 |  |  | $ | 16 |  |  | $ | 17 |
Unrecognized tax benefits in prior periods |  | 1 |  |  | 19 |  |  | 4 |
Audit settlement during year |  | — |  |  | (1) |  |  | (5) |
Expiration of audit statute of limitations |  | — |  |  | (2) |  |  | — |
Balance at end of year |  | $ | 33 |  |  | $ | 32 |  |  | $ | 16 |
The Company includes interest and penalties related to unrecognized tax benefits in income tax expense. As of December 31, 2022 and 2021, the total interest and penalties accrued was approximately $5 million. An audit of Company’s U.S. federal income tax returns for years 2017-2019 is ongoing and select state and non-U.S. income tax audits are also underway. With limited exception, the Company is no longer subject to examination by various U.S. and foreign taxing authorities for years before 2017. At this time, the Company believes that it is reasonably possible that unrecognized tax benefits of approximately $8 million may change within the next 12 months due to the expiration of statutory review periods and current examinations.

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 taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI https://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI https://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI https://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration