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Income Taxes | 12 Months Ended
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Dec. 31, 2019
Income Tax Disclosure [Abstract] |
Income Taxes | Note 16: Income Taxes The Company's geographic sources of income (loss) before income taxes and non-controlling interest are as follows (in millions):
| Year ended December 31, |  |  |  |
| 2019 |  | 2018 |  | 2017
United States | $ | (308.2) |  |  | $ | (181.8) |  |  | $ | (270.1) |
Foreign | 584.8 |  |  | 936.8 |  |  | 817.6 |
| $ | 276.6 |  |  | $ | 755.0 |  |  | $ | 547.5 |
The Company's provision (benefit) for income taxes is as follows (in millions):
| Year ended December 31, |  |  |  |
| 2019 |  | 2018 |  | 2017
Current: |  |  |  |  |
Federal | $ | 1.2 |  |  | $ | (2.0) |  |  | $ | 26.3 |
State and local | — |  |  | (2.2) |  |  | 0.2 |
Foreign | 48.5 |  |  | 55.3 |  |  | 53.1 |
| 49.7 |  |  | 51.1 |  |  | 79.6 |
Deferred: |  |  |  |  |
Federal | (5.0) |  |  | 99.4 |  |  | (356.3) |
State and local | — |  |  | — |  |  | 0.4 |
Foreign | 18.0 |  |  | (25.4) |  |  | 10.8 |
| 13.0 |  |  | 74.0 |  |  | (345.1) |
Total provision (benefit) | $ | 62.7 |  |  | $ | 125.1 |  |  | $ | (265.5) |
On December 22, 2017, the U.S. enacted comprehensive tax legislation, (the "Tax Act"). The Tax Act reduced the U.S. federal corporate tax rate from 35% to 21%, and required companies to pay a one-time mandatory repatriation tax on earnings of certain foreign subsidiaries that were previously tax deferred and created new taxes on certain future foreign earnings. In December 2017, the SEC staff issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (“SAB 118”), which allowed the Company to record provisional amounts during a measurement period not to extend beyond one year of the enactment date. As of December 31, 2017, the Company had not completed its accounting for the tax effects of the enactment of the Tax Act; however, in certain cases, specifically as follows, the Company had made a reasonable estimate of (i) the effects on its existing deferred tax balances and (ii) the effects of the one-time mandatory repatriation tax. The Company had recognized a provisional tax benefit of $449.9 million in the year ended December 31, 2017 associated with the items it could reasonably estimate as described in the reconciliation of the U.S. federal statutory income tax rate to the Company’s effective income tax rate table. The Company completed its accounting for the provisions of the Tax Act as of December 22, 2018, which marked the end of the measurement period pursuant to SAB 118. With respect to (i) the effects on its existing deferred tax asset balances, the Company recognized an additional tax expense of $31.8 million related to the Company's deferred tax liability for undistributed prior years' earnings of the Company's foreign subsidiaries and $1.8 million for the impact to deferred taxes related to an increase in the limitation on deductibility of prior years’ executive compensation. With respect to (ii) the tax effects of the one-time mandatory repatriation tax, the Company recognized an additional expense of $1.5 million. The Company has concluded on the policy to record Global Intangible Low Tax Income (“GILTI”) as a period cost. The Company has also concluded on the policy of tax law ordering for reflecting the realization of the net operating losses related to GILTI as a permanent adjustment. A reconciliation of the U.S. federal statutory income tax rate to the Company's effective income tax rate is as follows:
|  | Year ended December 31, |  |  |  |  |
|  | 2019 |  | 2018 |  | 2017 |
U.S. federal statutory rate |  | 21.0 | % |  | 21.0 | % |  | 35.0 | % |
Increase (decrease) resulting from: |  |  |  |  |  |  |
State and local taxes, net of federal tax benefit |  | (2.6) |  |  | (1.0) |  |  | 2.2 |  |
Impact of U.S. Tax Reform and related effects (1) |  | — |  |  | 4.7 |  |  | (82.2) |  |
Impact of foreign operations |  | 3.8 |  |  | (1.2) |  |  | (1.5) |  |
Impact of U.S. tax method changes (2) |  | — |  |  | (6.4) |  |  | — |  |
Change in valuation allowance and related effects (3) (4) |  | 1.8 |  |  | 0.6 |  |  | 0.4 |  |
Non-deductible share-based compensation costs |  | (0.5) |  |  | (0.5) |  |  | (1.6) |  |
U.S. federal R&D credit |  | (3.7) |  |  | (1.1) |  |  | (1.5) |  |
Nondeductible officer compensation |  | 1.5 |  |  | 0.4 |  |  | 0.8 |  |
Other |  | 1.4 |  |  | 0.1 |  |  | (0.1) |  |
Total |  | 22.7 | % |  | 16.6 | % |  | (48.5) | % |
(1) For the year ended December 31, 2018, this primarily included expense of $31.8 million, or 4.2%, related to the recognition of the Company's deferred tax liability for undistributed prior years' earnings of the Company's foreign subsidiaries, $1.8 million, or 0.3% related to the limitation on deductibility of prior years’ executive compensation, and $1.5 million, or 0.2% related to the impact of the mandatory repatriation tax. These adjustments were made pursuant to SAB 118. For the year ended December 31, 2017, this included the benefit of $744.1 million, or 135.9% for the reduction in the Company's deferred tax liability for undistributed current and prior years' earnings of the Company's foreign subsidiaries and the benefit of $33.0 million, or 6.0% for the release of valuation allowance on federal foreign tax credit carryforwards which were utilized against the mandatory repatriation tax. These benefits were offset by the expense for the mandatory repatriation tax, net of unrecognized tax benefits, of $207.1 million, or 37.8% and expense related to the change in the federal rate from 35% to 21% of $120.1 million, or 21.9% on the Company's remaining net federal deferred tax asset balances. (2) For the year ended December 31, 2018, this included a one-time benefit of $48.2 million, or 6.4%, related to U.S. tax method changes made during the year that impacted the Company’s GILTI inclusion. (3) For the year ended December 31, 2019, this included an expense of $11.2 million, or 4.0%, primarily related to the write-off of Hong Kong net operating loss (“NOL") and expiration of Japan NOL, netted with the offsetting benefit of $11.2 million, or 4.0%, primarily for the decrease in related valuation allowance for those same Hong Kong and Japan net operating losses. For the year ended December 31, 2018, this included an expense of $135.2 million, or 17.9%, primarily related to the expiration of Japan net operating losses, netted with the offsetting benefit of $135.2 million, or 17.9%, primarily for the decrease in the related valuation allowance for those same Japan net operating losses. (4) For the year ended December 31, 2017, the Company included the benefit related to the change in valuation allowance on federal foreign tax credits which were previously set to expire unutilized but were utilized against the expense related to the mandatory repatriation tax of $33.0 million or 6.0%, in the line “Impact of U.S. Tax Reform and related effects” The Company’s effective tax rate for 2019 was 22.7%, which differs from the U.S. federal income tax rate of 21.0%, primarily due to foreign taxes for which the Company will not receive a U.S. tax credit as well as period costs related to the Company's GILTI inclusion. The Company's effective tax rate for 2018 was 16.6%, which differs from the U.S. federal statutory income tax rate of 21% primarily due to a one-time benefit of U.S. tax method changes made during the year that impacted the Company's GILTI inclusion. The Company's effective tax rate for 2017 was a benefit of 48.5%, which differs from the U.S. federal statutory income tax rate of 35% primarily due to impact of the U.S. tax reform codified under the Tax Act. The tax effects of temporary differences in the recognition of income and expense for tax and financial reporting purposes that give rise to significant portions of the net deferred tax asset (liability) are as follows (in millions):
|  | As of December 31, |  |
|  | 2019 |  | 2018
Net operating loss and tax credit carryforwards |  | $ | 612.9 |  |  | $ | 584.9 |
163 (j) interest expense carryforward |  | 49.3 |  |  | — |
Tax-deductible goodwill and amortizable intangibles |  | (48.6) |  |  | (29.4) |
Capitalization of research and development expenses |  | 42.7 |  |  | — |
Reserves and accruals |  | 27.5 |  |  | 57.4 |
Property, plant and equipment |  | (81.2) |  |  | (63.5) |
Inventories |  | 22.0 |  |  | 20.2 |
Undistributed earnings of foreign subsidiaries |  | (63.7) |  |  | (48.7) |
Share-based compensation |  | 10.3 |  |  | 7.7 |
Pension |  | 26.3 |  |  | 24.3 |
Other |  | 8.0 |  |  | 6.0 |
Deferred tax assets and liabilities before valuation allowance |  | 605.5 |  |  | 558.9 |
Valuation allowance |  | (357.9) |  |  | (347.5) |
Net deferred tax asset |  | $ | 247.6 |  |  | $ | 211.4 |
As of December 31, 2019 and 2018, the Company had approximately $521.9 million and $768.9 million, respectively, of federal NOL carryforwards, before reduction for unrecognized tax benefits, which are subject to annual limitations prescribed in Section 382 of the Internal Revenue Code. The decrease is due to current year utilization. If not utilized, a portion of the NOLs will expire in varying amounts from 2024 to 2036; however, a small portion of the NOL that was generated after December 31, 2017 is carried forward indefinitely. As of December 31, 2019 and 2018, the Company had approximately $134.5 million and $83.7 million, respectively, of federal credit carryforwards, before consideration of valuation allowance or reduction for unrecognized tax benefits, which are subject to annual limitations prescribed in Section 383 of the Internal Revenue Code. If not utilized, the credits will expire in varying amounts from 2028 to 2039. As of December 31, 2019 and 2018, the Company had approximately $825.8 million and $801.0 million, respectively, of state NOL carryforwards, before consideration of valuation allowance or reduction for unrecognized tax benefits. If not utilized, a portion of the NOLs will expire in varying amounts starting in 2020. Certain states have adopted the federal rule allowing unlimited NOL carryover for NOLs generated in tax years beginning after December 31, 2017. Therefore, a portion of the state NOLs generated after 2017 carry forward indefinitely. As of December 31, 2019 and 2018, the Company had $138.6 million and $115.8 million, respectively, of state credit carryforwards before consideration of valuation allowance or reduction for unrecognized tax benefits. If not utilized, a portion of the credits will begin to expire in varying amounts starting in 2020. As of December 31, 2019 and 2018, the Company had approximately $757.1 million and $734.4 million, respectively, of foreign NOL carryforwards, before consideration of valuation allowance. If not utilized, a portion of the NOLs will begin to expire in varying amounts starting in 2020. A significant portion of these NOLs will expire by 2025. As of December 31, 2019 and 2018, the Company had $76.8 million and $68.8 million, respectively, of foreign credit carryforwards before consideration of valuation allowance. If not utilized, the majority of these credits will expire by 2026. The Company continues to maintain a valuation allowance of $186.3 million on a portion of its Japan NOLs, which expire in varying amounts from 2020 to 2024. In addition to the valuation allowance mentioned above on Japan NOLs, the Company continues to maintain a full valuation allowance on its U.S. state deferred tax assets, and a valuation allowance on foreign NOLs and tax credits in certain other foreign jurisdictions. At December 31, 2019, 2018 and 2017, respectively, the Company was not indefinitely reinvested with respect to the earnings of its foreign subsidiaries and has therefore accrued withholding taxes that would be owed upon future distributions of such earnings. The Company maintains liabilities for unrecognized tax benefits. These liabilities involve considerable judgment and estimation and are continuously monitored by management based on the best information available, including changes in tax regulations, the outcome of relevant court cases, and other information. The Company is currently under examination by various taxing authorities. Although the outcome of any tax audit is uncertain, the Company believes that it has adequately provided in its consolidated financial statements for any additional taxes that the Company may be required to pay as a result of such examinations. If the payment ultimately proves not to be necessary, the reversal of these tax liabilities would result in tax benefits being recognized in the period the Company determines such liabilities are no longer necessary. However, if an ultimate tax assessment exceeds the Company's estimate of tax liabilities, additional tax expense will be recorded. The impact of such adjustments could have a material impact on the Company's results of operations in future periods. The activity for unrecognized gross tax benefits is as follows (in millions):
| 2019 |  | 2018 |  | 2017
Balance at beginning of year | $ | 112.2 |  |  | $ | 114.8 |  |  | $ | 136.7 |
Acquired balances | 15.5 |  |  | — |  |  | — |
Additions for tax benefits related to the current year | 9.4 |  |  | 7.4 |  |  | 23.6 |
Additions for tax benefits of prior years | 8.0 |  |  | 2.8 |  |  | 4.7 |
Reductions for tax benefits of prior years | (0.2) |  |  | (1.9) |  |  | (1.6) |
Lapse of statute | (8.2) |  |  | (10.9) |  |  | (16.3) |
Settlements | (6.7) |  |  | — |  |  | (4.9) |
Change in rate due to U.S. Tax Reform | — |  |  | — |  |  | (27.4) |
Balance at end of year | $ | 130.0 |  |  | $ | 112.2 |  |  | $ | 114.8 |
Included in the December 31, 2019 balance of $130.0 million is $97.2 million related to unrecognized tax benefits that, if recognized, would impact the annual effective tax rate. Also included in the balance of unrecognized tax benefits as of December 31, 2019 is $32.8 million of benefit that, if recognized, would result in adjustments to other tax accounts, primarily deferred taxes. Although the Company cannot predict the timing of resolution with taxing authorities, if any, the Company believes it is reasonably possible that its unrecognized tax benefits will be reduced by $1.5 million in the next 12 months due to settlement with tax authorities or expiration of the applicable statute of limitations. The Company did not recognize any additional tax benefit or expense for interest and penalties during the year ended December 31, 2019. The Company recognized approximately $0.8 million of tax benefit and $1.5 million of tax expense for interest and penalties during the years ended December 31, 2018 and 2017, respectively. The Company had approximately $5.1 million, $5.1 million, and $5.9 million of accrued interest and penalties at December 31, 2019, 2018, and 2017, respectively. The Company recognizes interest and penalties accrued in relation to unrecognized tax benefits in tax expense. Tax years prior to 2016 are generally not subject to examination by the IRS except for items involving tax attributes that have been carried forward to tax years whose statute of limitations remains open. The Company is not currently under IRS examination. For state returns, the Company is generally not subject to income tax examinations for years prior to 2015. The Company is also subject to routine examinations by various foreign tax jurisdictions in which it operates. With respect to jurisdictions outside the United States, the Company's subsidiaries are generally no longer subject to income tax audits for years prior to 2009. The Company is currently under audit in the following jurisdictions including, but not limited to, Canada, China, the Czech Republic, the Philippines, Singapore and the United Kingdom.

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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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