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Taxes | 12 Months Ended
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Dec. 31, 2019
Income Tax Disclosure [Abstract] |
Income Tax Disclosure | TAXES The sources of the Company’s earnings before taxes were as follows for the years ended December 31:
| 2019 |  | 2018 |  | 2017
United States | $ | 102,262 |  |  | $ | 60,043 |  |  | $ | 45,105 |
Non-United States | 579,132 |  |  | 591,815 |  |  | 529,117 |
Earnings before taxes | $ | 681,394 |  |  | $ | 651,858 |  |  | $ | 574,222 |
The provision for taxes consist of:
| Current |  | Deferred |  | Total
Year ended December 31, 2019: |  |  |  |  |
United States federal | $ | 3,033 |  |  | $ | (2,622 | ) |  | $ | 411 |
United States state and local | (996 | ) |  | (1,950 | ) |  | (2,946 | )
Non-United States | 122,878 |  |  | (58 | ) |  | 122,820 |
Total | $ | 124,915 |  |  | $ | (4,630 | ) |  | $ | 120,285 |
Year ended December 31, 2018: |  |  |  |  |  |  |  |
United States federal | $ | 3,422 |  |  | $ | (4,699 | ) |  | $ | (1,277 | )
United States state and local | 5,073 |  |  | (161 | ) |  | 4,912 |
Non-United States | 128,450 |  |  | 7,162 |  |  | 135,612 |
Total | $ | 136,945 |  |  | $ | 2,302 |  |  | $ | 139,247 |
Year ended December 31, 2017: |  |  |  |  |  |  |  |
United States federal | $ | 55,660 |  |  | $ | 10,173 |  |  | $ | 65,833 |
United States state and local | 361 |  |  | 3,471 |  |  | 3,832 |
Non-United States | 144,974 |  |  | (16,389 | ) |  | 128,585 |
Total | $ | 200,995 |  |  | $ | (2,745 | ) |  | $ | 198,250 |
The provision for tax expense differed from the amounts computed by applying the United States federal income tax rate of 21% for the years ended December 31, 2019 and 2018 and 35% for the year ended December 31, 2017 to earnings before taxes as a result of the following:
| 2019 |  | 2018 |  | 2017
Expected tax | $ | 143,092 |  |  | $ | 136,890 |  |  | $ | 200,978 |
United States state and local income taxes, net of federal income tax benefit | 499 |  |  | 2,787 |  |  | 376 |
Net effect of Swiss tax reform (see below) | (15,833 | ) |  | — |  |  | — |
Net effect of U.S. tax reform (see below) | — |  |  | 3,597 |  |  | 71,982 |
Non-United States income taxes at other than U.S. federal rate | 18,546 |  |  | 12,710 |  |  | (43,691 | )
Excess tax benefits from stock option exercises | (28,279 | ) |  | (13,836 | ) |  | (35,171 | )
Effect of Biotix contingent consideration settlement | — |  |  | (4,394 | ) |  | — |
Other, net | 2,260 |  |  | 1,493 |  |  | 3,776 |
Total provision for taxes | $ | 120,285 |  |  | $ | 139,247 |  |  | $ | 198,250 |
The Company's reported effective tax rate was 17.7% in 2019, 21.4% in 2018, and 34.5% in 2017. As discussed below, the provision for income taxes included a net benefit of $15.8 million in 2019 related to Swiss tax reform, and charges of $3.6 million in 2018 and $72 million in 2017 related to the Tax Cuts and Jobs Act (the "Act"), which had the effect of reducing the Company's effective tax rate by 2.3% in 2019, and increased the Company's effective rate by 0.6% and 12.5% in 2018 and 2017, respectively. The 2018 effective tax rate also included a benefit of 0.7% associated with the one-time gain related to the settlement of the Biotix contingent consideration. In May 2019, a public referendum was held in Switzerland that approved Swiss federal tax reform proposals previously approved by Swiss Parliament. Additional changes in Swiss cantonal law, changes were enacted in October 2019 (collectively "Swiss Tax Reform"). The changes in Swiss federal tax had an immaterial effect on our financial statements. As a result of the enactment of the cantonal law the Company recognized a deferred tax asset of $48.1 million less a valuation allowance of $31.9 million in the fourth quarter of 2019. The amount primarily related to deferred benefits associated with an allowed step-up of intangible assets for tax purposes. The rate impact of Swiss Tax Reform is effective January 1, 2020 and is not expected to have a material impact on the Company's consolidated effective tax rate. On December 22, 2017, the Act significantly revised U.S. corporate income tax law. The Act included, among other things, a reduction in the U.S. federal corporate income tax rate from 35% to 21% effective for taxable years beginning after December 31, 2017, and the implementation of a modified territorial tax system that included a one-time transition tax on deemed repatriated earnings of foreign subsidiaries ("Transition Tax") that is payable over a period of up to eight years. The Company recorded charges of $3.6 million in 2018 and $72 million in 2017 relating to the Act. Of these amounts, $62 million is expected to be payable over a period of up to eight years of which $46 million is included as a component of other non-current liabilities, $8 million is included in deferred tax liabilities, $4 million is included in taxes payable, and approximately $8 million has been paid. The components of the Company's charges included:
• | Cash charges of $62 million for un-repatriated foreign earnings due to the estimated Transition Tax of $54 million, and $8 million of foreign withholding taxes, and U.S. federal, state, and local taxes related to the reassessment of planned repatriation of certain foreign earnings that were previously determined to be permanently reinvested. All other undistributed earnings were considered permanently reinvested.
• | A non-cash charge of $13 million primarily related to changes in the treatment of certain deferred tax items and other non-cash items. The effect of remeasuring the U.S. net deferred tax balances resulting from the reduction of the U.S. income tax rate from 35% to 21% was immaterial.
The Company's accounting for the above items was based upon reasonable estimates of the tax effects of the Act, and its evaluation of regulatory guidance. During the fourth quarter of 2018, additional regulatory guidance was issued which clarified, among other things, the definition of cash equivalents used in the computation of the transition tax. As a result, the Company recorded a charge of $3.6 million during the year ended December 31, 2018 that primarily related to an increase in the Transition Tax obligation. The increased Transition Tax is payable over a period of eight years beginning in 2018. The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are presented below at December 31:
| 2019 |  | 2018
Deferred tax assets: |  |  |  |  |
Inventory | $ | 15,756 |  |  | $ | 15,078 |
Lease liability, accrued and other liabilities | 85,590 |  |  | 65,879 |
Accrued post-retirement benefit and pension costs | 53,078 |  |  | 50,496 |
Net operating loss and tax credit carryforwards | 30,647 |  |  | 30,696 |
Swiss tax reform intangible assets | 48,062 |  |  | — |
Other | 11,918 |  |  | 17,397 |
Total deferred tax assets | 245,051 |  |  | 179,546 |
Less valuation allowance | (50,853 | ) |  | (15,084 | )
Total deferred tax assets less valuation allowance | 194,198 |  |  | 164,462 |
Deferred tax liabilities: |  |  |  |  |
Inventory | 5,952 |  |  | 4,890 |
Lease right-of-use assets and other assets | 27,268 |  |  | — |
Property, plant, and equipment | 51,298 |  |  | 47,451 |
Acquired intangibles amortization | 63,451 |  |  | 66,386 |
Prepaid post-retirement benefit and pension costs | 28,542 |  |  | 31,473 |
International earnings | 24,137 |  |  | 18,680 |
Unrealized currency gains | 1,839 |  |  | 9,334 |
Total deferred tax liabilities | 202,487 |  |  | 178,214 |
Net deferred tax (liability) asset | $ | (8,289 | ) |  | $ | (13,752 | )
The Company continues to record valuation allowances related to certain of its deferred income tax assets due to the uncertainty of the ultimate realization of future benefits from such assets. The potential decrease or increase of the valuation allowance in the near term is dependent on the future ability of the Company to realize the deferred tax assets that are affected by the future profitability of operations in the respective/relevant jurisdictions. A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows:
| 2019 |  | 2018
Unrecognized tax benefits at beginning of year | $ | 25,676 |  |  | $ | 24,090 |
Increases related to current tax positions | 6,215 |  |  | 7,638 |
Decreases related to prior year tax positions | (116 | ) |  | (605 | )
Decreases relating to taxing authority settlements | — |  |  | (4,454 | )
Decreases resulting from a lapse of the applicable statute of limitations | (1,748 | ) |  | (505 | )
Other, net | (93 | ) |  | (488 | )
Unrecognized tax benefits at end of year | $ | 29,934 |  |  | $ | 25,676 |
Included in the balance of unrecognized tax benefits at December 31, 2019 and 2018 were $29.9 million and $25.7 million, respectively, of tax benefits that if recognized would reduce the Company’s effective tax rate. The Company recognizes accrued amounts of interest and penalties related to its uncertain tax positions as part of its income tax expense within its consolidated statement of operations. The amount of accrued interest and penalties included within other non-current liabilities within the Company’s consolidated balance sheet as of December 31, 2019 and 2018 was $4.5 million and $3.7 million, respectively. The Company believes that it is reasonably possible that the unrecognized tax benefit balance could change over the next twelve months, primarily related to potential disputes raised by the taxing authorities over income and expense recognition. The Company does not expect a change would have a material impact on its financial position, results of operations, or cash flows. The Company plans to repatriate earnings from China, Switzerland, Germany, the United Kingdom, and certain other countries in future years and believes that there will be no additional tax costs associated with the repatriation of such foreign earnings other than non-U.S. withholding taxes, certain state taxes, and U.S. taxes on currency gains, if any, for which a deferred tax liability has been recognized. All other undistributed earnings and any additional outside basis difference inherent in these entities and the contributed capital of our foreign subsidiaries are considered to be permanently reinvested on which no U.S. deferred income taxes or foreign withholding taxes have been provided. It is not practicable to estimate the amount of deferred tax liability related to these undistributed earnings and additional outside basis differences in these entities due to the complexity of the calculation and the uncertainty regarding assumptions necessary to compute the tax. As of December 31, 2019, the major jurisdictions for which the Company is subject to examinations are: Germany for years after 2014; the United States after 2015; France after 2017; Switzerland after 2016; the United Kingdom after 2016; and China after 2017. Additionally, the Company is currently under examination in various taxing jurisdictions in which it conducts business operations. While the Company has not yet received any material assessments from these taxing authorities, the Company believes that adequate amounts of taxes and related interest and penalties have been provided for any adverse adjustments as a result of these examinations and that the ultimate outcome of these examinations will not result in a material impact on the Company’s consolidated results of operations or financial position.

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- 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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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