XML 46 R21.htm IDEA: XBRL DOCUMENT v3.25.0.1
INCOME TAXES
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
The sources of income before taxes, classified between domestic and foreign entities, are as follows:
Year Ended December 31,
202420232022
Domestic$629.7 $504.0 $1,097.9 
Foreign329.8 64.9 139.5 
Total pre-tax income$959.5 $568.9 $1,237.4 
The components of income tax expense attributable to continuing operations are as follows:
 Year Ended December 31,
 202420232022
Current tax expense:   
Federal$125.9 $183.1 $150.8 
State46.2 38.9 25.4 
Foreign60.4 44.6 34.0 
 $232.5 $266.6 $210.2 
Deferred tax (benefit) expense:
   
Federal$(6.3)$(63.1)$15.8 
State(11.1)(31.6)0.6 
Foreign(2.7)16.6 7.3 
 (20.1)(78.1)23.7 
 Total income tax expense$212.4 $188.5 $233.9 
The effective tax rates on earnings before income taxes are reconciled to statutory U.S. income tax rates as follows:
 Year Ended December 31,
 202420232022
Statutory U.S. rate21.0 %21.0 %21.0 %
State and local income taxes, net of U.S. federal income tax effect2.8 4.0 4.2 
Foreign earnings taxed at lower rates than the statutory U.S. rate(1.7)(2.2)(0.7)
Tax credits(2.5)(3.8)(5.4)
Impairment of assets— 10.8 3.7 
Limitation of officer compensation0.7 1.7 1.2 
Worthless stock loss— (2.6)— 
Deferred tax adjustments0.9 4.6 (2.6)
Remeasurement of deferred taxes1.3 (1.1)(0.1)
Change in valuation allowance(2.4)(1.6)0.2 
Other2.0 2.3 (2.6)
Effective rate22.1 %33.1 %18.9 %
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are as follows:
December 31,
20242023
Deferred tax assets:  
Accounts receivable$33.7 $27.9 
Employee compensation and benefits70.8 81.7 
Operating lease liability199.3 191.4 
Acquisition and restructuring reserves8.9 9.2 
Capitalized research and design costs194.7 142.9 
Tax loss carryforwards224.0 246.9 
Other108.6 95.1 
  Total gross deferred tax assets840.0 795.1 
Less: valuation allowance(127.2)(150.2)
Deferred tax assets, net of valuation allowance$712.8 $644.9 
Deferred tax liabilities:  
Right of use asset$(181.6)$(175.3)
Intangible assets(626.7)(614.8)
Property, plant and equipment(177.7)(163.5)
Other(71.7)(66.2)
Total gross deferred tax liabilities$(1,057.7)$(1,019.8)
Net deferred tax liabilities$(344.9)$(374.9)
The table below provides a rollforward of the valuation allowance:
Year Ended December 31,
202420232022
Beginning balance$150.2 $151.3 $149.2 
Movements charged to expense(22.8)(8.9)10.2 
Reductions and other adjustments(0.2)7.8 (8.1)
Ending balance$127.2 $150.2 $151.3 
The Company has U.S. federal tax loss carryforwards of approximately $103.0, which expire periodically through 2037, as well as post-2017 carryforwards of $162.5 that are limited to 80% of taxable income and have an indefinite carryforward period. The utilization of tax loss carryforwards is limited due to change of ownership rules; however, at this time, the Company expects to fully utilize substantially all U.S. federal tax loss carryforwards with the exception of approximately $1.9 for which a full valuation allowance has been provided. The Company has U.S. state tax loss carryforwards of $492.6, a portion of which expire annually, and on which a valuation allowance of $210.4 has been provided. In addition to federal and state tax loss carryforwards, the Company has other federal and state attribute carryforwards of $29.1, all of which have indefinite carryforward periods. The Company has foreign tax loss carryforwards of $108.5, the majority of which have indefinite carryforward periods, but a valuation allowance of $7.8 has been provided for jurisdictions where the future tax benefits of the attributes are not more likely than not to be realized. Additionally, the Company has foreign tax loss carryforwards of $444.7 which expire periodically through 2040 that have full valuation allowances and foreign tax loss carryforwards of $10.9 which expire periodically through 2043. In addition to the foreign net operating losses, the Company has a foreign capital loss carryforward of $26.9 with an indefinite carryforward period and a full valuation allowance.
The valuation allowance decreased from $150.2 in 2023 to $127.2 in 2024 primarily due to releases of valuation allowances on certain state capital losses and net operating losses as well as releases of valuation allowances on certain foreign and U.S. net operating losses due to corporate reorganizations.
Unrecognized income tax benefits were $32.2 and $29.9 at December 31, 2024, and 2023, respectively. It is anticipated that the amount of the unrecognized income tax benefits will decrease by $10.4 within the next 12 months due to statute of limitation lapses and the conclusion of various examinations; however, these changes are not expected to have a significant impact on the results of operations, cash flows, or the financial position of the Company.
The Company recognizes interest and penalties related to unrecognized income tax benefits in Provision for income taxes in the Consolidated Statements of Operations. Accrued interest and penalties related to uncertain tax positions totaled $0.2 and $0.1 at December 31, 2024, and 2023, respectively. During the years ended December 31, 2024, 2023, and 2022, the Company recognized $0.1, $0.0 and $0.8, respectively, in interest and penalties expense, which was offset by a benefit from reversing previous accruals for interest and penalties of $0.0, $1.8 and $0.0, respectively.
The following table shows a reconciliation of the unrecognized income tax benefits, excluding interest and penalties, from uncertain tax positions:
Year Ended December 31,
 202420232022
Beginning balance$29.9 $37.5 $39.6 
Increase in reserve for tax positions taken in the current year2.2 1.8 1.8 
Increase in reserve for tax positions taken in a prior period3.8 10.4 10.6 
Decrease in reserve for tax positions taken in a prior period(3.4)(4.0)— 
Decrease in reserve as a result of settlements(0.1)(7.2)(10.4)
Decrease in reserve as a result of lapses in the statute of limitations(0.2)(8.6)(4.1)
Ending balance$32.2 $29.9 $37.5 
At December 31, 2024, 2023, and 2022, there are $32.2, $29.9 and $37.5, respectively, of tax benefits that, if recognized, would favorably impact the effective income tax rate.
The Company has substantially concluded all U.S. federal income tax matters for years through 2018 and is currently under Internal Revenue Service examination for tax years 2019 through 2022. Substantially all material state and local and foreign income tax matters have been concluded through 2017 and 2018, respectively. The Company has various state and foreign income tax examinations ongoing throughout the year. The Company believes adequate provisions have been recorded related to all open tax years.
As a result of the Tax Cuts and Jobs Act (TCJA), the Company was effectively taxed on all of its previously unremitted foreign earnings. The TCJA also enacts a territorial tax system that allows, for the most part, tax-free repatriation of foreign earnings. The Company still considers the earnings of its foreign subsidiaries to be permanently reinvested, but, if repatriation were to occur, the Company would be required to accrue U.S. taxes, if any, and remit applicable withholding taxes as appropriate. The Company has unremitted earnings and profits of $828.7 and $607.6 that are permanently reinvested in its foreign subsidiaries at December 31, 2024, and 2023, respectively. A determination of the amount of the unrecognized deferred tax liability related to these undistributed earnings is not practicable due to the complexity and variety of assumptions necessary based on the manner in which the undistributed earnings would be repatriated.
Pillar Two legislation arising from the Organisation for Economic Co-operation and Development’s base erosion and profit shifting initiative has been enacted or substantively enacted in certain jurisdictions in which the Company operates. The legislation was effective for the Company’s financial year beginning January 1, 2024. The Company is in scope of the enacted or substantively enacted legislation and has performed an assessment of the Company’s potential exposure to Pillar Two income taxes.
The assessment of the potential exposure to Pillar Two income taxes is based on the most recent tax filings, country-by-country reporting, and financial statements for the constituent entities in the Company. Based on the assessment, the Pillar Two effective tax rates in most of the jurisdictions in which the Company operates are above 15%. However, there are a limited number of jurisdictions where the transitional safe harbor relief does not apply, and the Pillar Two effective tax rate is close to 15%. Accordingly, the Company has provisioned for $2.7 of incremental income tax expense attributable to Pillar Two.