XML 27 R13.htm IDEA: XBRL DOCUMENT
v3.6.0.2

Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2016
Income Taxes |
Income Taxes | Note 6—Income Taxes A summary of pre‑tax income from U.S. and non U.S. operations is as follows:
(in millions) |  | 2016 |  | 2015 |  | 2014
Continuing operations |  |  |  |  |  |  |  |  |
U.S. domestic |  | $ | 319.0 |  | $ | 393.8 |  | $ | 318.9
Foreign |  |  | 91.5 |  |  | 74.1 |  |  | 57.2
Total pre-tax income from continuing operations |  |  | 410.5 |  |  | 467.9 |  |  | 376.1
Discontinued operations |  |  |  |  |  |  |  |  |
U.S. domestic |  |  | (1.1) |  |  | 0.1 |  |  | (3.2)
Foreign |  |  | - |  |  | - |  |  | 1.1
Total pre-tax income (loss) from discontinued operations |  |  | (1.1) |  |  | 0.1 |  |  | (2.1)
Total pre-tax income |  | $ | 409.4 |  | $ | 468.0 |  | $ | 374.0
The provision for income taxes from continuing operations is as follows:
(in millions) |  | 2016 |  | 2015 |  | 2014
Current expense |  |  |  |  |  |  |  |  |
Federal and State |  | $ | 155.5 |  | $ | 140.1 |  | $ | 118.4
Foreign |  |  | 29.2 |  |  | 24.0 |  |  | 16.1
Total current expense |  |  | 184.7 |  |  | 164.1 |  |  | 134.5
Deferred expense (benefit) |  |  |  |  |  |  |  |  |
Federal and State |  |  | (15.5) |  |  | (12.7) |  |  | (8.5)
Foreign |  |  | (9.5) |  |  | (3.1) |  |  | (1.6)
Total deferred expense (benefit) |  |  | (25.0) |  |  | (15.8) |  |  | (10.1)
Total tax expense |  | $ | 159.7 |  | $ | 148.3 |  | $ | 124.4
A reconciliation of the tax provision for continuing operations computed at the U.S. federal statutory rate to the actual tax provision is as follows:
(in millions) |  | 2016 |  | 2015 |  | 2014
Taxes at the 35% U.S. statutory rate |  | $ | 143.7 |  | $ | 163.8 |  | $ | 131.6
State and local taxes, net of federal income tax benefit |  |  | 8.6 |  |  | 1.9 |  |  | 7.4
Benefit of foreign earnings taxed at lower rates |  |  | (8.1) |  |  | (7.9) |  |  | (5.2)
Benefit for domestic manufacturing deduction |  |  | (12.6) |  |  | (11.5) |  |  | (8.7)
Tax credits |  |  | (10.7) |  |  | - |  |  | -
Tax impact of impairment of goodwill |  |  | 41.2 |  |  | - |  |  | -
Other, net |  |  | (2.4) |  |  | 2.0 |  |  | (0.7)
Tax expense |  | $ | 159.7 |  | $ | 148.3 |  | $ | 124.4
Effective income tax rate on continuing operations |  |  | 38.9% |  |  | 31.7% |  |  | 33.1%
Cash payments for income taxes, net of refunds, were $192.3 million, $123.0 million, and $138.5 million, in 2016, 2015, and 2014, respectively. Deferred tax assets (liabilities) at December 31 related to the following:
(in millions) |  | 2016 |  | 2015
Deferred revenue |  | $ | 26.9 |  | $ | 25.3
Warranty reserves |  |  | 7.1 |  |  | 5.6
Inventory reserves |  |  | 12.1 |  |  | 10.9
Allowance for doubtful accounts |  |  | 4.5 |  |  | 4.6
Employee benefits |  |  | 45.2 |  |  | 41.5
Foreign loss carryforwards |  |  | 2.9 |  |  | 1.9
Federal tax credit carryovers |  |  | 6.6 |  |  | -
Deferred state tax attributes |  |  | 14.6 |  |  | 16.2
Other, net |  |  | 5.3 |  |  | (1.4)
Gross deferred assets |  |  | 125.2 |  |  | 104.6
Valuation allowances |  |  | (1.3) |  |  | (4.3)
Deferred tax assets after valuation allowances |  | $ | 123.9 |  | $ | 100.3
Depreciation |  |  | (42.4) |  |  | (46.5)
Amortization |  |  | (60.7) |  |  | (55.1)
Acquired identifiable intangibles |  |  | (134.7) |  |  | (142.4)
Gross deferred liabilities |  |  | (237.8) |  |  | (244.0)
Net deferred tax liabilities |  | $ | (113.9) |  | $ | (143.7)
As of December 31, 2016, the Company had no deferred tax assets related to net operating loss (“NOL”) carryforwards for U.S. federal tax purposes but had a deferred tax asset for state NOL carryforwards and credits of approximately $11 million (expiring 2017 2036) and deferred tax assets related to NOL carryforwards in foreign jurisdictions of approximately $2.9 million (expiring 2017 2024). The Company believes that it is likely that certain of the state attributes will expire unused and therefore has established a valuation allowance of approximately $1.3 million against the deferred tax assets associated with these attributes. The Company believes that substantially all of the foreign NOLs will be utilized before expiration and therefore has not established a valuation allowance against the deferred tax assets associated with these NOL carryforwards. Approximately $2.3 million of the valuation allowance with respect to state attributes that was recorded on December 31, 2015 was released during 2016 due to management’s change in judgement regarding the portion of the attributes that was likely to expire unused. The change in judgment occurred as predictions of future taxable income in certain state jurisdictions were increased due to the various restructuring actions that occurred during the year. As of December 31, 2016, the Company has $6.6 million of federal foreign tax credit carryover (expiring in 2026). The Company believes that substantially all of the foreign tax credits will be utilized before expiration and therefore has not established a valuation allowance. Although realization is not assured for the remaining deferred tax assets, the Company believes that the timing and amount of the reversal of taxable temporary differences, expected future taxable income and tax planning strategies will generate sufficient income to be fully realized. However, deferred tax assets could be reduced in the future if our estimates of the timing and amount of the reversal of taxable temporary differences, expected future taxable income during the carryforward period are significantly reduced or tax planning strategies are no longer viable. Deferred tax assets and liabilities are classified as long term. Foreign deferred tax assets and (liabilities) are grouped separately from U.S. domestic assets and liabilities and are analyzed on a jurisdictional basis. Deferred tax assets and (liabilities) are included in the Consolidated Balance Sheet as follows:
(in millions) |  | 2016 |  | 2015
Other long-term assets |  | $ | 1.1 |  | $ | 0.3
Other long-term liabilities |  |  | (115.0) |  |  | (144.0)
Net deferred tax liabilities |  | $ | (113.9) |  | $ | (143.7)
The Company is not required to provide income taxes on the excess of the amount for financial reporting over the tax basis of investments in foreign subsidiaries that are essentially permanent in duration. The Company’s excess of financial reporting over the tax basis of investments in foreign subsidiaries is approximately equal to the cumulative unremitted earnings and cumulative translation adjustments of its foreign subsidiaries. The Company reconsiders this assertion quarterly. The Company’s cumulative unremitted earnings and cumulative translation adjustments at December 31, 2016 were approximately $515 million. At December 31, 2016, the Company intends to permanently reinvest abroad substantially all of the earnings of its foreign subsidiaries. The Company has identified appropriate long term uses for such earnings outside the United States, considers the unremitted earnings to be indefinitely reinvested, and accordingly has made no significant provision for income or withholding taxes that would be due upon distribution of such earnings. The calculation of the deferred tax liability on the excess of the amount for financial reporting over the tax basis of investments in foreign subsidiaries is not practicable due to the complexity of calculating earnings and profits and taxes through multiple tiers of entities, the impact of local country withholding and income taxes, the impact of tax elections, the characterization of income for purposes of the foreign tax credit and limitations, and foreign currency effects. Unrecognized tax benefits reflect the difference between the tax benefits of positions taken or expected to be taken on income tax returns and the tax benefits that meet the criteria for current recognition in the financial statements. The Company periodically assesses its unrecognized tax benefits. A summary of the movement in gross unrecognized tax benefits (before estimated interest and penalties) is as follows:
(in millions) |  | 2016 |  | 2015 |  | 2014
Balance at January 1 |  | $ | 27.7 |  | $ | 23.8 |  | $ | 10.2
Additions based on tax positions related to current year |  |  | 0.6 |  |  | 0.9 |  |  | 1.8
Additions related to purchase accounting |  |  | - |  |  | 3.0 |  |  | 13.6
Adjustments for tax positions of prior years |  |  | - |  |  | 1.3 |  |  | (0.1)
Reductions due to statute of limitations |  |  | (2.1) |  |  | (1.2) |  |  | (1.2)
Reductions due to settlements |  |  | (1.4) |  |  | - |  |  | (0.4)
Adjustments due to foreign exchange rates |  |  | (0.2) |  |  | (0.1) |  |  | (0.1)
Balance at December 31 |  | $ | 24.6 |  | $ | 27.7 |  | $ | 23.8
If the unrecognized tax benefits as of December 31, 2016 were to be recognized, approximately $26 million would impact the Company’s effective tax rate. The amount impacting the Company’s effective rate is calculated by adding accrued interest and penalties to the gross unrecognized tax benefit and subtracting the tax benefit associated with state taxes and interest. The Company classifies and reports interest and penalties associated with unrecognized tax benefits as a component of the income tax provision on the Consolidated Statements of Earnings, and as a long‑term liability on the Consolidated Balance Sheets. The total amount of such interest and penalties accrued, but excluded from the table above, at the years ending 2016, 2015, and 2014 were $4.7 million, $4.9 million, and $3.8 million, respectively. The Company is subject to U.S. federal income tax as well as income tax in multiple state and foreign jurisdictions. During the year the Company is working with the IRS to complete its compliance assurance process for the 2015 tax year. The Company is also currently working with the IRS to complete its compliance assurance audit for the 2016 tax year and expects conclusion of the process within the next twelve months. Generally, state income tax returns are subject to examination for a period of three to five years after filing. Substantially all material state tax matters have been concluded for tax years through 2011. Various state income tax returns for subsequent years are in the process of examination. At this stage the outcome is uncertain; however, the Company believes that contingencies have been adequately provided for. Statutes of limitation vary among the foreign jurisdictions in which the Company operates. Substantially all foreign tax matters have been concluded for tax years through 2008. The Company believes that foreign tax contingencies associated with income tax examinations underway or open tax years have been provided for adequately. Based on the outcome of certain examinations or as a result of the expiration of statutes of limitations for certain jurisdictions, we believe that within the next 12 months it is reasonably possible that our previously unrecognized tax benefits could decrease by approximately $5 to $6 million. These previously unrecognized tax benefits relate to a variety of tax issues including tax matters relating to prior acquisitions and various state matters.

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration