

(in millions)	2018		2017		2016
Continuing operations:
U.S. domestic	$	352.2	$	356.5	$	288.2
Foreign	93.7		72.5		91.0
Income from continuing operations before income taxes	445.9		429.0		379.2

Discontinued operations:
U.S. domestic	299.8		39.1		29.7
Foreign	0.3		0.5		0.5
Income from discontinued operations before income taxes	300.1		39.6		30.2

Total income before income taxes	$	746.0	$	468.6	$	409.4



(in millions)	2018			2017			2016
Current provision:
Federal and State	$	62.0		$	116.5		$	144.4
Foreign	25.9			28.4			29.2
Total current provision	87.9			144.9			173.6

Deferred provision (benefit):
Federal and State	7.9			(62.7		)	(16.0		)
Foreign	(8.5		)	6.2			(9.5		)
Total deferred (benefit) provision	(0.6		)	(56.5		)	(25.5		)

Total provision for income taxes	$	87.3		$	88.4		$	148.1



(in millions)	2018			2017			2016
Taxes at U.S. statutory rate	$	93.6		$	150.1		$	132.8
State and local taxes, net of federal income tax benefit	10.8			9.5			7.5
Foreign earnings taxed at different rates	1.1			(6.7		)	(8.1		)
Change in unrecognized tax benefit	(7.8		)	0.9			(2.5		)
Benefit for domestic manufacturing deduction	—			(9.7		)	(12.1		)
Tax credits	(3.0		)	(2.3		)	(10.7		)
Tax impact of impairment of goodwill	—			—			41.2
Impact of U.S. tax reform	(3.3		)	(57.7		)	—
Change in investment assertion on foreign earnings	—			5.1			—
Other, net	(4.1		)	(0.8		)	—
Provision for income taxes	$	87.3		$	88.4		$	148.1
Effective income tax rate on continuing operations	19.6		%	20.6		%	39.1		%



(in millions)	December 31, 2018			December 31, 2017
Deferred revenue	$	21.1		$	20.1
Warranty reserves	4.6			4.7
Inventory reserves	7.6			7.7
Allowance for doubtful accounts	2.5			3.1
Employee benefits	27.6			30.2
Foreign loss carryforwards	5.1			3.8
Federal tax credit carryovers	—			3.1
Deferred state tax attributes	11.9			11.9
Other, net	—			1.7
Gross deferred assets	80.4			86.3
Valuation allowances	(1.3		)	(4.3		)
Deferred tax assets after valuation allowances	79.1			82.0

Undistributed foreign earnings	(11.0		)	(7.9		)
Depreciation	(47.2		)	(36.7		)
Amortization	(43.7		)	(37.4		)
Carryover intangible basis of acquirees	(128.8		)	(155.0		)
Other, net	(0.4		)	—
Gross deferred liabilities	(231.1		)	(237.0		)

Net deferred tax liabilities	$	(152.0	)	$	(155.0	)

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.

As of December 31, 2018, 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 $7.0 million (expiring 2019 through 2038). The Company also has deferred tax assets related to NOL carryforwards in foreign jurisdictions of approximately $5.1 million, which begin to expire in 2022. 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.

As a result of the deemed mandatory repatriation provisions in the Tax Cuts and Jobs Act (the "Tax Act"), the Company included undistributed earnings in income subject to U.S. tax at reduced tax rates in 2017. In addition, the Company recognized in income global intangible low-taxed income (“GILTI”) reduced by foreign tax credits for 2018 as part of the changes from the Tax Act. As a result, the Company does not have material basis differences related to cumulative unremitted earnings for US tax purposes. The Company has determined that an amount approximately equal to foreign cash balances and other certain assets is not permanently reinvested for local country purposes, which results in an accrual of $11.0 million related to foreign withholding taxes. It is not practicable to calculate deferred tax balances on other basis differences.

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.



(in millions)	2018			2017			2016
Balance as of January 1	$	37.4		$	24.6		$	27.7
Additions based on tax positions related to current year	3.3			3.0			0.6
Additions related to acquired uncertain tax positions	—			12.6			—
Adjustments for tax positions of prior years	—			1.5			—
Reductions due to statute of limitations	(12.0		)	(3.3		)	(2.1		)
Reductions due to settlements	(1.2		)	(1.7		)	(1.4		)
Adjustments due to foreign exchange rates	(0.2		)	0.7			(0.2		)
Balance as of December 31	$	27.3		$	37.4		$	24.6

If the unrecognized tax benefits as of December 31, 2018, were to be recognized, approximately $30.1 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 Income 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 2018, 2017 and 2016 were $5.1 million, $5.9 million and $4.7 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 worked with the IRS to complete its compliance assurance process for the 2017 tax year. The Company is also currently working with the IRS to complete its compliance assurance audit for the 2018 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 2013. 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 2009. 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, the Company believes that within the next 12 months it is reasonably possible that previously unrecognized tax benefits could decrease by approximately $4.0 million to $5.0 million. These previously unrecognized tax benefits relate to a variety of tax issues including tax matters relating to prior acquisitions and various state matters.

On December 22, 2017, the U.S. enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act included significant changes to existing tax law including, among other things, a reduction to the U.S. federal corporate income tax rate from 35% to 21% and a one-time tax on deferred foreign income ("Transition Tax") in 2017.

The changes included in the Tax Act are broad and complex. As such, on December 22, 2017, the Securities and Exchange Commission (“SEC”) issued SAB 118. SAB 118 expresses views of the SEC regarding ASC Topic 740, Income Taxes in the reporting period that includes the enactment date of the Tax Act. The SEC staff issuing SAB 118 recognized that a registrant’s review of certain income tax effects of the Tax Act may be incomplete at the time financial statements are issued for the reporting period that includes the enactment date, including interim periods therein. If a company does not have the necessary information available, prepared or analyzed for certain income tax effects of the Tax Act, SAB 118 allows a company to report provisional numbers and adjust those amounts during the measurement period not to extend beyond one year. In the fourth quarter of 2018, the Company completed the accounting for the relevant aspects of the Tax Act based on available information and have recorded a benefit in the year of $3.3 million.

While the Tax Act provides for a territorial tax system, beginning in 2018, it includes the GILTI provision. The Company elected to account for GILTI tax in the period in which it is incurred, which is not material in 2018.

The deemed repatriation transition tax (the “Transition Tax”) is a tax on certain previously untaxed accumulated and current earnings and profits (“E&P”) of the Company's foreign subsidiaries. The Company was able to reasonably estimate the Transition Tax and recorded an initial provision Transition Tax obligation of $32.5 million for the year ended December 31, 2017. On the basis of revised E&P and taxes paid computation that were calculated during the reporting period, as well as additional guidance provided by taxing authorities, the Company recognized an additional measurement-period beneficial adjustment of $4.6 million to income tax expense during the fourth quarter 2018. The effect of the measurement period adjustment on the 2018 effective tax rate was approximately 1.0%.