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Income Taxes | 12 Months Ended
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Dec. 31, 2018
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes: Our Provision for income taxes from continuing operations consisted of the following (in millions):
| For the Years Ended December 31,
| 2018 |  | 2017 |  | 2016
Current: |  |  |  |  |
Federal | $ | 59.5 |  |  | $ | 86.1 |  |  | $ | 106.0 |
State | 17.8 |  |  | 12.5 |  |  | 14.5 |
Foreign | 4.6 |  |  | 15.0 |  |  | 9.7 |
Total current | 81.9 |  |  | 113.6 |  |  | 130.2 |
Deferred: |  |  |  |  |
Federal | 23.2 |  |  | 43.8 |  |  | (4.5 | )
State | 1.0 |  |  | 0.9 |  |  | (1.2 | )
Foreign | 1.5 |  |  | (1.4 | ) |  | (0.4 | )
Total deferred | 25.7 |  |  | 43.3 |  |  | (6.1 | )
Total provision for income taxes | $ | 107.6 |  |  | $ | 156.9 |  |  | $ | 124.1 |
Income from continuing operations before income taxes was comprised of the following (in millions):
| For the Years Ended December 31,
| 2018 |  | 2017 |  | 2016
Domestic | $ | 428.7 |  |  | $ | 402.5 |  |  | $ | 374.8 |
Foreign | 39.2 |  |  | 61.5 |  |  | 27.9 |
Total | $ | 467.9 |  |  | $ | 464.0 |  |  | $ | 402.7 |
The difference between the income tax provision from continuing operations computed at the statutory federal income tax rate and the financial statement Provision for income taxes is summarized as follows (in millions):
| For the Years Ended December 31,
| 2018 |  | 2017 |  | 2016
Provision at the U.S. statutory rate of 21% (35% for 2017, 2016) | $ | 98.3 |  |  | $ | 162.4 |  |  | $ | 141.0 |
Increase (reduction) in tax expense resulting from: |  |  |  |  |
State income tax, net of federal income tax benefit | 15.5 |  |  | 9.2 |  |  | 12.8 |
Domestic manufacturing deduction | — |  |  | (9.6 | ) |  | (9.2 | )
Tax credits, net of unrecognized tax benefits | (2.5 | ) |  | (8.6 | ) |  | (27.9 | )
Change in unrecognized tax benefits | 0.4 |  |  | (0.1 | ) |  | (0.3 | )
Change in valuation allowance | 5.0 |  |  | 6.4 |  |  | (4.3 | )
Foreign taxes at rates other than U.S. statutory rate | (3.2 | ) |  | (9.0 | ) |  | (1.3 | )
Deemed inclusions | 3.9 |  |  | 0.3 |  |  | 16.9 |
Change in rates from the Tax Act & other law changes | 1.9 |  |  | 31.8 |  |  | (0.6 | )
Excess tax benefits from stock-based compensation | (10.5 | ) |  | (23.6 | ) |  | — |
Miscellaneous other | (1.2 | ) |  | (2.3 | ) |  | (3.0 | )
Total provision for income taxes | $ | 107.6 |  |  | $ | 156.9 |  |  | $ | 124.1 |
The SEC staff issued Staff Accounting Bulletin No. 118 (“SAB 118”), which provided guidance on the provisional accounting for the tax effects of the Tax Act in fiscal 2017. Our accounting for the following elements of the Tax Act was completed in fiscal 2018.
• | The Tax Act reduced the corporate tax rate to 21 percent, effective January 1, 2018. For our net federal deferred tax assets (“DTA”), we recorded a provisional decrease of $32.1 million, with a corresponding net adjustment to deferred income tax expense of $32.1 million for the year ended December 31, 2017. This adjustment was based on a reasonable estimate of the impact of the reduction in the corporate tax rate on our DTA’s as of December 22, 2017. Due to the Tax Act, several applications for changes in accounting method were filed with the IRS to accelerate deductions into the 2017 U.S. federal income tax return. Primarily on the basis of finalized calculations for accounting method changes that were completed during the reporting period, we recognized a deferred income tax benefit of $4.5 million for the year ended December 31, 2018.
• | The Deemed Repatriation Transition Tax (Transition Tax) is a tax on previously untaxed accumulated and current earnings and profits “(E&P)” of certain of our foreign subsidiaries. To assess the amount of the Transition Tax, we must determine, in addition to other factors, the amount of post-1986 E&P of the relevant subsidiaries, as well as the amount of non-U.S. income taxes paid on such earnings. We were able to make a reasonable estimate of the Transition Tax and determined that we would not have a Transition Tax obligation for the year ended December 31, 2017. However, on the basis of revised E&P computations that were completed during the reporting period, we recognized an additional measurement-period adjustment of $2.8 million of Transition Tax obligation for federal and state taxes. The Transition Tax has now been determined to be complete.
• | For the year ended December 31, 2017, we were able to reasonably assess whether our valuation allowance analyses were affected by various aspects of the Tax Act (e.g., deemed repatriation of deferred foreign income, global intangible low-taxed income (“GILTI”) inclusions, new categories of foreign tax credits (“FTCs”), and share-based compensation) and recorded provisional amounts related to certain portions of the Tax Act. Due to the limitation on the utilization of future foreign tax credits, we recorded a provisional valuation allowance against our FTC carryforwards of $4.3 million. On the basis of finalized calculations that were completed during the reporting period and 2018 divestiture activity, it is now expected that the foreign tax credits will be realized and no valuation allowance is needed. For the year ended December 31, 2018, the FTC carryforward valuation allowance is zero.
• | Based on the intent to fully expense all qualifying depreciable asset expenditures allowed under the Tax Act, we recorded a provisional benefit of $4.1 million for the year ended December 31, 2017. This resulted in a decrease of approximately $1.4 million to our current income tax payable and a corresponding increase in our deferred tax liabilities (“DTLs”) of approximately $0.9 million (after considering the effects of the reduction in income tax rates). On the basis of finalized computations that were completed during the reporting period, we recognized an additional measurement-period adjustment of $0.1 million decrease in our DTL.
The Tax Act makes broad and complex changes to the U.S. tax code, including, but not limited to, the new global intangible low-taxed income (“GILTI”) tax rules. Under U.S. GAAP, we are allowed to make an accounting policy choice of either (1) treating taxes due on future U.S. inclusions in taxable income related to GILTI as a current-period expense when incurred (the “period cost method”) or (2) factoring such amounts into a company’s measurement of its deferred taxes (the “deferred method”). For the year ended December 31, 2017, we were not able to reasonably estimate the effect of the new GILTI tax rules on future U.S. inclusions in taxable income as the expected future impact of this provision of the Tax Act depends on our current structure and business. Therefore, we did not make any adjustments related to potential GILTI tax in our financial statements and did not make a policy decision regarding whether to record deferred taxes on GILTI. Based, in part, on the analysis completed during the recording period of our global income and whether we expect to have future U.S. inclusions in taxable income related to GILTI, we have chosen to treat taxes due on future U.S. inclusions in taxable income related to GILTI as a current period expense when incurred (the “period cost method”). During the year ended December 31, 2017, the effect of the tax rate change for items originally recognized in other comprehensive income was properly recorded in tax expense from continuing operations. This resulted in stranded tax effects in accumulated other comprehensive income at December 31, 2017. On February 14, 2018, the FASB issued ASU No. 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which permits companies to reclassify stranded tax effects caused by 2017 tax reform between accumulated other comprehensive loss (“AOCL”) and retained earnings. We elected to adopt ASU 2018-02 to reclassify the income tax effects of the 2017 Act from AOCL to retained earnings for the period ending March 31, 2018. Accordingly, we recorded a $22.7 million increase to opening retained earnings in the period ending March 31, 2018 to reclassify the effect of the change in the U.S. federal corporate income tax rate, including the reduction in the federal benefit associated with state taxes, on the gross deferred tax amounts and related valuation allowances at the date of enactment of the Tax Cuts and Jobs Act related to items remaining in AOCL. On October 24, 2016, the FASB issued ASU No. 2016-16, Accounting for Income Taxes: Intra-Entity Asset Transfers of Assets Other than Inventory, which requires companies to recognize the income tax effects of intercompany sales and transfers of assets other than inventory in the period in which the transfer occurs. Prior to ASU 2016-16, companies were required to defer the income tax effects of intercompany transfers of assets until the asset had been sold to an outside party or otherwise recognized. The new guidance is effective for public business entities for annual periods beginning after December 15, 2017 and interim periods within those annual periods. The guidance requires companies to apply a modified retrospective approach with a cumulative catch-up adjustment to opening retained earnings in the period of adoption. Accordingly, we recorded a $5.1 million decrease to opening retained earnings in the period ending March 31, 2018. Deferred income taxes reflect the tax consequences on future years of temporary differences between the tax basis of assets and liabilities and their financial reporting basis and depending on the classification of the asset or liability generating the deferred tax. The deferred tax provision for the periods shown represents the effect of changes in the amounts of temporary differences during those periods. Deferred tax assets (liabilities) were comprised of the following (in millions):
| As of December 31,
| 2018 |  | 2017
Gross deferred tax assets: |  |  |
Warranties | $ | 27.8 |  |  | $ | 27.3 |
Loss carryforwards (foreign, U.S. and state) | 23.1 |  |  | 21.0 |
Post-retirement and pension benefits | 21.3 |  |  | 23.3 |
Inventory reserves | 9.3 |  |  | 7.5 |
Receivables allowance | 3.4 |  |  | 3.5 |
Compensation liabilities | 7.9 |  |  | 11.1 |
Insurance liabilities | 2.9 |  |  | 5.1 |
Legal reserves | 7.4 |  |  | 7.6 |
Tax credits, net of federal effect | 11.0 |  |  | 21.3 |
Other | 8.1 |  |  | 8.2 |
Total deferred tax assets | 122.2 |  |  | 135.9 |
Valuation allowance | (25.4 | ) |  | (24.9 | )
Total deferred tax assets, net of valuation allowance | 96.8 |  |  | 111.0 |
Gross deferred tax liabilities: |  |  |
Depreciation | (22.1 | ) |  | (5.9 | )
Intangibles | (5.4 | ) |  | (4.9 | )
Other | (2.3 | ) |  | (5.8 | )
Total deferred tax liabilities | (29.8 | ) |  | (16.6 | )
Net deferred tax assets | $ | 67.0 |  |  | $ | 94.4 |
As of December 31, 2018 and 2017, we had $0.6 million and $0.8 million in tax-effected state net operating loss carryforwards, respectively, and $12.6 million and $19.8 million in tax-effected foreign net operating loss carryforwards, respectively. The state and foreign net operating loss carryforwards began expiring in 2014. The deferred tax asset valuation allowance relates primarily to the operating loss carryforwards in European tax jurisdictions. In addition, we have $9.0 million of valuation allowance related to federal capital loss carryforwards that will expire in 2023. The remainder of the valuation allowance relates to state tax credits. In assessing whether a deferred tax asset will be realized, we consider whether it is more likely than not that some portion or all of the deferred tax asset will not be realized. We consider the reversal of existing taxable temporary differences, projected future taxable income and tax planning strategies in making this assessment. Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, we believe it is more likely than not we will realize the benefits of these deductible differences, net of the existing valuation allowances, as of December 31, 2018. No provision was made for income taxes which may become payable upon distribution of our foreign subsidiaries’ earnings. These earnings were approximately $27.1 million as of December 31, 2018. An actual repatriation in the future from our non-U.S. subsidiaries could still be subject to foreign withholding taxes and U.S. state taxes. We are currently under examination for our U.S. federal income taxes for 2018 and 2017 and are subject to examination by numerous other taxing authorities in the U.S. and foreign jurisdictions. We are generally no longer subject to U.S., state and local or non-U.S. income tax examinations by taxing authorities for years before 2011.

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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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