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INCOME TAXES | 12 Months Ended
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Dec. 31, 2019
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES The components of income before income taxes were as follows:
|  | Year Ended December 31,
|  | 2019 |  | 2018 |  | 2017
U.S. |  | $ | 237,296 |  |  | $ | 255,088 |  |  | $ | 213,171 |
Non-U.S. |  | 131,197 |  |  | 113,572 |  |  | 153,065 |
Total |  | $ | 368,493 |  |  | $ | 368,660 |  |  | $ | 366,236 |
The components of income tax expense (benefit) were as follows:
|  | Year Ended December 31,
|  | 2019 |  | 2018 |  | 2017
Current: |  |  |  |  |  |
Federal |  | $ | 25,063 |  |  | $ | 45,521 |  |  | $ | 89,182 |
Non-U.S. |  | 26,540 |  |  | 28,894 |  |  | 25,746 |
State and local |  | 9,064 |  |  | 10,515 |  |  | 7,640 |
|  | 60,667 |  |  | 84,930 |  |  | 122,568 |
Deferred: |  |  |  |  |  |
Federal |  | 6,971 |  |  | (691 | ) |  | (4,391 | )
Non-U.S. |  | 6,513 |  |  | (3,121 | ) |  | (82 | )
State and local |  | 1,259 |  |  | 549 |  |  | 666 |
|  | 14,743 |  |  | (3,263 | ) |  | (3,807 | )
Total |  | $ | 75,410 |  |  | $ | 81,667 |  |  | $ | 118,761 |
The differences between total income tax expense and the amount computed by applying the statutory federal income tax rate to income before income taxes for the three years ended December 31, 2019 were as follows:
|  | Year Ended December 31,
|  | 2019 |  | 2018 |  | 2017
Statutory rate applied to pre-tax income |  | $ | 77,384 |  |  | $ | 77,419 |  |  | $ | 128,182 |
State and local income taxes, net of federal tax benefit |  | 8,830 |  |  | 8,844 |  |  | 5,671 |
Excess tax benefits resulting from exercises of stock-based compensation |  | (3,451 | ) |  | (1,094 | ) |  | (6,276 | )
Net impact of the U.S. Tax Act |  | — |  |  | 4,823 |  |  | 21,949 |
Foreign withholding taxes |  | — |  |  | (4,424 | ) |  | 6,667 |
Resolution and settlements to uncertain tax positions |  | (9,432 | ) |  | (457 | ) |  | 2,216 |
Foreign Derived Intangible Income Deduction |  | (4,315 | ) |  | (2,647 | ) |  | — |
Foreign rate variance |  | 7,023 |  |  | (4,560 | ) |  | (13,929 | )
Bargain purchase gain |  | — |  |  | — |  |  | (17,556 | )
Valuation allowances |  | 3,198 |  |  | 5,596 |  |  | 102 |
Manufacturing deduction |  | — |  |  | — |  |  | (5,922 | )
Research and development credit |  | (4,786 | ) |  | (3,859 | ) |  | (2,688 | )
Other |  | 959 |  |  | 2,026 |  |  | 345 |
Total |  | $ | 75,410 |  |  | $ | 81,667 |  |  | $ | 118,761 |
Effective tax rate |  | 20.5 | % |  | 22.2 | % |  | 32.4 | %
The 2019 effective tax rate is impacted by the reduced corporate income tax rate associated with the U.S. Tax Act beginning in 2018. The 2019 effective tax rate was lower than 2018 primarily due to income tax benefits for the settlement of tax items as well as tax deductions associated with excess tax benefits resulting from exercises of stock based compensation, offset by the geographic mix of earnings and taxes at higher rates in foreign jurisdictions. Total income tax payments, net of refunds, were $42,880 in 2019, $85,805 in 2018 and $81,691 in 2017. Deferred Taxes Significant components of deferred tax assets and liabilities at December 31, 2019 and 2018, were as follows:
|  | December 31,
|  | 2019 |  | 2018
Deferred tax assets: |  |  |  |
Tax loss and credit carry-forwards |  | $ | 64,712 |  |  | $ | 60,756 |
Inventory |  | 3,442 |  |  | 3,544 |
Other accruals |  | 13,048 |  |  | 13,172 |
Employee benefits |  | 24,532 |  |  | 22,963 |
Pension obligations |  | 11,561 |  |  | 12,122 |
Other |  | 3,401 |  |  | 3,739 |
Deferred tax assets, gross |  | 120,696 |  |  | 116,296 |
Valuation allowance |  | (71,546 | ) |  | (69,400 | )
Deferred tax assets, net |  | 49,150 |  |  | 46,896 |
Deferred tax liabilities: |  |  |  |
Property, plant and equipment |  | 39,583 |  |  | 28,606 |
Intangible assets |  | 16,695 |  |  | 10,950 |
Inventory |  | 6,427 |  |  | 4,814 |
Pension obligations |  | 25,171 |  |  | 19,346 |
Other |  | 11,285 |  |  | 8,770 |
Deferred tax liabilities |  | 99,161 |  |  | 72,486 |
Total deferred taxes |  | $ | (50,011 | ) |  | $ | (25,590 | )
At December 31, 2019, certain subsidiaries had net operating loss carry-forwards of approximately $51,129 that expire in various years from 2020 through 2034, plus $213,724 for which there is no expiration date. In assessing the realizability of deferred tax assets, the Company assesses whether it is more-likely-than-not that a portion or all of the deferred tax assets will not be realized. The Company considers the scheduled reversal of deferred tax liabilities, tax planning strategies and projected future taxable income in making this assessment. At December 31, 2019, a valuation allowance of $71,546 was recorded against certain deferred tax assets based on this assessment. The Company believes it is more-likely-than-not that the tax benefit of the remaining net deferred tax assets will be realized. The amount of net deferred tax assets considered realizable could be increased or reduced in the future if the Company's assessment of future taxable income or tax planning strategies changes. The Company determined it will repatriate earnings for certain non-U.S. subsidiaries, which are subject to foreign withholding taxes. The Company has estimated the associated tax to be $1,697. The Company considers remaining earnings and outside basis in all other non-U.S. subsidiaries to be indefinitely reinvested and has not recorded any deferred taxes as such estimate is not practicable. Unrecognized Tax Benefits Liabilities for unrecognized tax benefits related to uncertain tax positions are classified as Other liabilities unless expected to be paid in one year. Additionally, to the extent a position would not result in a cash tax liability, those amounts are generally recorded to Deferred income taxes to offset tax attributes. The Company recognizes interest and penalties related to unrecognized tax benefits in Income taxes. Current income tax expense included benefits of $1,957 for the year ended December 31, 2019 and benefits of $1,277 for the year ended December 31, 2018 for interest and penalties. For those same years, the Company's accrual for interest and penalties related to unrecognized tax benefits totaled $4,512 and $6,655, respectively. The following table summarizes the activity related to unrecognized tax benefits:
|  | 2019 |  | 2018
Balance at beginning of year |  | $ | 28,804 |  |  | $ | 28,449 |
Increase related to current year tax provisions |  | 1,204 |  |  | 1,431 |
Increase/(decrease) related to prior years' tax positions |  | (101 | ) |  | 4,917 |
Decrease related to settlements with taxing authorities |  | (3,567 | ) |  | (111 | )
Resolution of and other decreases in prior years' tax liabilities |  | (5,692 | ) |  | (1,501 | )
Other |  | (63 | ) |  | (4,381 | )
Balance at end of year |  | $ | 20,585 |  |  | $ | 28,804 |
The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate was $17,552 at December 31, 2019 and $25,069 at December 31, 2018. The Company files income tax returns in the U.S. and various state, local and foreign jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal, state and local or non-U.S. income tax examinations by tax authorities for years before 2015. The Company is currently subject to various state audits and non-U.S. income tax audits. The Company is generally not able to precisely estimate the ultimate settlement amounts or timing until after the close of an audit. The Company evaluates its tax positions and establishes liabilities for unrecognized tax benefits related to uncertain tax positions that may be challenged by local authorities and may not be fully sustained. Unrecognized tax benefits are reviewed on an ongoing basis and are adjusted for changing facts and circumstances, including management’s judgment in the interpretation of applicable tax law, regulation or tax ruling, the progress of tax audits and closing of statutes of limitations. Based on information currently available, management believes that additional audit activity could be completed and/or statutes of limitations may close relating to existing unrecognized tax benefits. It is reasonably possible there could be a further reduction of $2,971 in prior years' unrecognized tax benefits in 2020.

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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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