
	December 31,
(DOLLARS IN THOUSANDS)	2020		2019		2018
U.S. loss before taxes	$	(141,428)	$	(110,363)	$	(99,125)
Foreign income before taxes	582,799		667,815		546,882
Total income before taxes	$	441,371	$	557,452	$	447,757


	December 31,
(DOLLARS IN THOUSANDS)	2020		2019		2018
Current tax provision
Federal	$	(8,813)	$	9,979	$	(11,568)
State and local	1,149		429		1,709
Foreign	149,381		146,055		98,433
Total current tax provision	141,717		156,463		88,574
Deferred tax provision
Federal	(7,943)		(41,126)		(8,287)
State and local	(2,057)		7,598		(7,092)
Foreign	(57,718)		(25,751)		34,781
Total deferred tax (benefit) provision	(67,718)		(59,279)		19,402
Total taxes on income	$	73,999	$	97,184	$	107,976


	December 31,
(DOLLARS IN THOUSANDS)	2020		2019		2018
Statutory tax rate	21.0	%	21.0	%	21.0	%
Difference in effective tax rate on foreign earnings and remittances	(6.9)		(6.8)		(6.1)
Tax benefit from supply chain optimization	(5.0)		(1.0)		(3.0)
Unrecognized tax benefit, net of reversals	5.7		3.4		2.9
U.S. tax reform	—		—		(1.8)
Deferred taxes on deemed repatriation	(0.2)		0.8		10.1
Global intangible low-taxed income	5.3		—		1.8
U.S. foreign tax credit - general limitation	(1.9)		(1.2)		(1.1)
Acquisition costs	1.0		0.5		1.3
Establishment (release) of valuation allowance on state deferred	(0.4)		1.7		(1.5)
State and local taxes	(0.6)		(0.8)		0.6
Other, net	(1.2)		(0.2)		(0.1)
Effective tax rate	16.8	%	17.4	%	24.1	%

The effective tax rate reflects the impact of a favorable mix of earnings and lower repatriation costs, partially offset by loss provisions and the cost of global intangible low-taxed income ("GILTI").

On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”) that significantly revised the U.S. tax code effective January 1, 2018. The Tax Act created significant international tax provisions, including GILTI. The Company has elected to treat GILTI as a current period cost if and when incurred. This tax position resulted in a net $23.3 million income tax expense for the year ended December 31, 2020, which includes a provision to return adjustment.

The U.S. consolidated group has historically generated taxable income after the inclusion of foreign dividends which has allowed the Company to realize its federal deferred tax assets. Foreign dividends are subject to a 100% dividends received deduction under the Tax Act and do not serve as a source of federal taxable income. However, as of December 31, 2020 the U.S. consolidated group is in a cumulative income position, and is expected to continue to be in a cumulative income position principally due to the inclusion of global intangible low-taxed income and expects to realize tax benefits for the reversal of temporary differences. The corresponding U.S. federal taxable income is sufficient to realize $127.3 million in deferred tax assets as of December 31, 2020.

Further, as of December 31, 2020 the Company has maintained a valuation allowance of $12.6 million on certain state tax attributes based on a state taxable income forecast. The main inputs into the forecast are the 2020 taxable income projections. Changes in the performance of the North American business, the Company’s transfer pricing policies and adjustments to the Company’s U.S. tax profile could impact the estimate.


	December 31,
(DOLLARS IN THOUSANDS)	2020		2019
Employee and retiree benefits	$	108,119	$	87,924
Credit and net operating loss carryforwards	270,699		220,156
Intangible assets	9,759		8,477
Amortizable R&D expenses	30,027		15,477
Gain on foreign currency translation	46,071		3,285
Interest limitation	50,978		39,867
Inventory	14,384		14,396
Lease obligations	53,339		53,751
Other, net	21,806		14,351
Gross deferred tax assets	605,182		457,684

Property, plant and equipment, net	(59,727)		(49,158)
Intangible assets	(585,635)		(621,044)
Right-of-use assets	(52,605)		(53,555)
Loss on foreign currency translation	(99)		—
Deferred taxes on deemed repatriation	(47,144)		(46,066)
Gross deferred tax liabilities	(745,210)		(769,823)
Valuation allowance	(257,171)		(203,765)
Total net deferred tax liabilities	$	(397,199)	$	(515,904)

Net operating loss carryforwards were $246.1 million and $207.9 million at December 31, 2020 and 2019, respectively. If unused, $42.1 million will expire between 2021 and 2040. The remainder, totaling $204.0 million, may be carried forward indefinitely. Tax credit carryforwards were $27.9 million and $18.5 million at December 31, 2020 and 2019, respectively. If unused, the $27.9 million will expire between 2021 and 2040.

Of the $274.0 million deferred tax asset for net operating loss carryforwards and credits at December 31, 2020, the Company considers it unlikely that a portion of the tax benefit will be realized. Accordingly, a valuation allowance of $225.8 million of net operating loss carryforwards and $10.0 million of tax credits has been established against these deferred tax assets.


	December 31,
(DOLLARS IN THOUSANDS)	2020		2019		2018
Balance of unrecognized tax benefits at beginning of year	$	74,799	$	50,953	$	38,162
Gross amount of increases in unrecognized tax benefits as a result of positions taken during a prior year	10,445		20,361		9,751
Gross amount of decreases in unrecognized tax benefits as a result of positions taken during a prior year	(274)		(2,241)		(5,362)
Gross amount of increases in unrecognized tax benefits as a result of positions taken during the current year	24,400		13,274		14,677
The amounts of decreases in unrecognized benefits relating to settlements with taxing authorities	(1,736)		(3,575)		(4,550)
Reduction in unrecognized tax benefits due to the lapse of applicable statute of limitation	(8,739)		(3,973)		(1,725)
Balance of unrecognized tax benefits at end of year	$	98,895	$	74,799	$	50,953

At December 31, 2020, 2019 and 2018, there were $98.2 million, $73.6 million, and $47.3 million, respectively, of unrecognized tax benefits recorded to Other liabilities and $0.7 million, $1.2 million and $3.6 million recorded to Other current liabilities for 2020, 2019 and 2018, respectively. If these unrecognized tax benefits were recognized, all the benefits and related interest and penalties would be recorded as a benefit to income tax expense.

For the year ended December 31, 2020, the Company increased its liabilities for interest and penalties by $3.4 million, net, increased its liabilities for interest and penalties by $11.0 million, net for the year ended 2019, and reduced its liabilities for interest and penalties by $1.1 million, net for the year ended 2018. At December 31, 2020, 2019 and 2018, the Company had accrued $17.3 million, $14.0 million and $3.0 million, respectively, of interest and penalties classified as Other liabilities, and $0.1 million to Other current liabilities for 2020. No such liabilities were accrued for the year ended December 31, 2019 and 2018.

As of December 31, 2020, the Company’s aggregate provision for unrecognized tax benefits, including interest and penalties, was $116.3 million, associated with various tax positions principally asserted in foreign jurisdictions, none of which is individually material.

Tax benefits credited to Shareholders’ equity were $0.1 million for the years ended December 31, 2020 and 2019, and de minimis for the year ended December 31, 2018 associated with stock option exercises and PRSU dividends.

The Company regularly repatriates earnings from non-U.S. subsidiaries. As the Company repatriates these funds to the U.S. they will be required to pay income taxes in certain U.S. states and applicable foreign withholding taxes during the period when such repatriation occurs. Accordingly, as of December 31, 2020, the Company had a deferred tax liability of $47.1 million for the effect of repatriating the funds to the U.S., attributable to various non-U.S. subsidiaries. There is no deferred tax liability associated with non-U.S. subsidiaries where we intend to indefinitely reinvest the earnings to fund local operations and/or capital projects.

The Company has ongoing income tax audits and legal proceedings which are at various stages of administrative or judicial review, of which the material items are discussed below. In addition, the Company has other ongoing tax audits and legal proceedings that relate to indirect taxes, such as value-added taxes, capital tax, sales and use and property taxes, which are discussed in Note 20.

The Company also has several other tax audits in process and has open tax years with various taxing jurisdictions that range primarily from 2010 to 2019. Based on currently available information, the Company does not believe the ultimate outcome of any of these tax audits and other tax positions related to open tax years, when finalized, will have a material impact on its financial position.