XML 42 R26.htm IDEA: XBRL DOCUMENT
v3.10.0.1

Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2018
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The components of income before income taxes were as follows:
| 2018 |  | 2017 |  | 2016
U.S. | $ | 21 |  |  | $ | 10 |  |  | $ | (3 | )
Foreign | 719 |  |  | 819 |  |  | 772 |
| $ | 740 |  |  | $ | 829 |  |  | $ | 769 |
The provision for income taxes consisted of the following:
| 2018 |  | 2017 |  | 2016
Current tax: |  |  |  |  |
U.S. federal | $ | (2 | ) |  | $ | — |  |  | $ | (1 | )
State and foreign | 183 |  |  | 154 |  |  | 171 |
| $ | 181 |  |  | $ | 154 |  |  | $ | 170 |
Deferred tax: |  |  |  |  |
U.S. federal | $ | 31 |  |  | $ | 217 |  |  | $ | 19 |
State and foreign | 4 |  |  | 30 |  |  | (3 | )
| 35 |  |  | 247 |  |  | 16 |
Total | $ | 216 |  |  | $ | 401 |  |  | $ | 186 |
The provision for income taxes differs from the amount of income tax determined by applying the U.S. statutory federal income tax rate to pre-tax income as a result of the following items:
| 2018 |  | 2017 |  | 2016
U.S. statutory rate at 21%, 35% and 35% | $ | 155 |  |  | $ | 290 |  |  | $ | 269 |
Tax on foreign income | 30 |  |  | (126 | ) |  | (119 | )
U.S. taxes on foreign income, net of credits | 24 |  |  | 45 |  |  | 31 |
Valuation allowance changes | (1 | ) |  | 9 |  |  | (14 | )
Tax contingencies | (2 | ) |  | 6 |  |  | 11 |
Tax law changes | 4 |  |  | 174 |  |  | 3 |
Other items, net | 6 |  |  | 3 |  |  | 5 |
Income tax provision | $ | 216 |  |  | $ | 401 |  |  | $ | 186 |
The Company benefits from certain incentives in Brazil which allow it to pay reduced income taxes. The incentives expire at various dates beginning in January 2020. These incentives increased net income attributable to the Company by $14, $14, and $13 in 2018, 2017 and 2016. The Company paid taxes of $177, $154 and $158 in 2018, 2017 and 2016. The Tax Act resulted in significant changes from previous tax law, including reduction of the U.S. corporate tax rate from 35% to 21%, a one-time tax imposed on the unremitted earnings of other non-U.S. subsidiaries (the "transition tax") and a limitation on the tax deduction for interest expense, net of interest income, to 30% of a U.S. corporations adjusted taxable income. As a result of the tax rate reduction, the Company recorded a provisional reduction in net deferred tax assets of $103 as of December 31, 2017 and a corresponding deferred income tax charge. Additionally, as of December 31, 2017, the Company recorded a provisional obligation of $82 for the transition tax, recorded a charge of $25 for the related usage of foreign tax credits and reversed $11 of deferred tax liabilities related to cumulative undistributed foreign earnings. The Company finalized the impact of the Tax Act in 2018 and recorded a net benefit of $2 to adjust its provisional amounts. In 2018, the Company recorded a charge of $24 related to local taxes on the distributions of foreign earnings, which were previously asserted to be indefinitely reinvested. As of December 31, 2018 the Company has not provided deferred taxes on approximately $1,200 of earnings in certain non-U.S. subsidiaries because such earnings are indefinitely reinvested in its international operations. Upon distribution of such earnings in the form of dividends or otherwise, the Company may be subject to incremental foreign tax. It is not practicable to estimate the amount of foreign tax that might be payable. The components of deferred taxes at December 31 are:
| 2018 |  | 2017
| Assets |  | Liabilities |  | Assets |  | Liabilities
Tax loss and credit carryforwards | $ | 531 |  |  | $ | — |  |  | $ | 503 |  |  | $ | — |
Postretirement and postemployment benefits | 39 |  |  | — |  |  | 43 |  |  | — |
Pensions | 193 |  |  | 106 |  |  | 185 |  |  | 105 |
Property, plant and equipment | 20 |  |  | 177 |  |  | 18 |  |  | 151 |
Intangible assets | — |  |  | 431 |  |  | — |  |  | 128 |
Deemed repatriation tax | — |  |  | — |  |  | — |  |  | 57 |
Asbestos | 71 |  |  | — |  |  | 74 |  |  | — |
Accruals and other | 88 |  |  | 73 |  |  | 87 |  |  | 44 |
Valuation allowances | (282 | ) |  | — |  |  | (228 | ) |  | — |
Total | $ | 660 |  |  | $ | 787 |  |  | $ | 682 |  |  | $ | 485 |
Tax loss and credit carryforwards expire as follows:
Year |  | Amount |
2019 |  | $ | 21 |
2020 |  | 27 |
2021 |  | 26 |
2022 |  | 116 |
2023 |  | 12 |
Thereafter |  | 213 |
Unlimited |  | 116 |
Tax loss and credit carryforwards expiring in 2022 includes $101 of U.S. federal foreign tax credits. Tax loss and credit carryforwards expiring after 2023 includes $121 of U.S. state tax loss carryforwards and $17 U.S. federal and state tax loss carryforwards and $61 foreign tax loss carryforwards acquired with Signode. The unlimited category includes $63 of French tax loss carryforwards. Realization of any portion of the Company’s deferred tax assets is dependent upon the availability of taxable income in the relevant jurisdictions. The Company considers all sources of taxable income, including (i) taxable income in any available carry back period, (ii) the reversal of taxable temporary differences, (iii) tax-planning strategies, and (iv) taxable income expected to be generated in the future other than from reversing temporary differences. The Company also considers whether there have been cumulative losses in recent years. The Company records a valuation allowance when it is more likely than not that some portion or all of the deferred tax assets will not be realized. The Company’s valuation allowances at December 31, 2018 include $195 related to the portion of U.S. state tax loss carryforwards that the Company does not believe are more likely than not to be utilized prior to their expiration. The Company’s ability to utilize state tax loss carryforwards is impacted by several factors including taxable income, expiration dates, limitations imposed by certain states on the amount of loss carryforwards that can be used in a given year to offset taxable income and whether the state permits the Company to file a combined return. In 2016, the Company recorded a net benefit of $31 to release the valuation allowance against its net deferred tax assets in Canada. The Company's operations in Canada returned to profitability in part due to benefits from recent restructuring actions and improved cost performance. Based on current projections, the Company believes it is more likely than not that it will realize the deferred tax assets. The Company's loss carryforwards in Canada expire at various dates beginning in 2026. If future changes impact the Company's profitability in Canada, it is possible that the Company may record an additional valuation allowance of up to $12. Management’s estimates of the appropriate valuation allowance in any jurisdiction involve a number of assumptions and judgments, including the amount and timing of future taxable income. Should future results differ from management’s estimates, it is possible there could be future adjustments to the valuation allowances that would result in an increase or decrease in tax expense in the period such changes in estimates are made. A reconciliation of unrecognized tax benefits follows:
| 2018 |  | 2017 |  | 2016
Balance at January 1 | $ | 29 |  |  | $ | 27 |  |  | $ | 28 |
Additions related to acquisitions | 13 |  |  | — |  |  | — |
Additions for prior year tax positions | 1 |  |  | 6 |  |  | 13 |
Reductions to prior period tax positions | — |  |  | (2 | ) |  | — |
Lapse of statute of limitations | (3 | ) |  | — |  |  | (2 | )
Settlements | (2 | ) |  | (4 | ) |  | (12 | )
Foreign currency translation | (1 | ) |  | 2 |  |  | — |
Balance at December 31 | $ | 37 |  |  | $ | 29 |  |  | $ | 27 |
The Company’s unrecognized tax benefits include potential liabilities related to transfer pricing, foreign withholding taxes, and non-deductibility of expenses and exclude $3 of interest and penalties as of December 31, 2018. In 2016, the Spanish tax authorities concluded audits of Mivisa's Spanish tax operations for the years 2009 to 2014. In connection with the audits, the Company recognized a charge of $8 to settle certain tax contingencies. The total interest and penalties recorded in income tax expense was less than $1 in 2018, 2017 and 2016. As of December 31, 2018, unrecognized tax benefits of $37, if recognized, would affect the Company's effective tax rate. The Company’s unrecognized tax benefits are not expected to increase over the next twelve months and are expected to decrease as open tax years lapse or claims are settled. The Company is unable to estimate a range of reasonably possible changes in its unrecognized tax benefits in the next twelve months as it is unable to predict when, or if, the tax authorities will commence their audits, the time needed for the audits, and the audit findings that will require settlement with the applicable tax authorities, if any. The tax years that remained subject to examination by major tax jurisdictions as of December 31, 2018 were, 2006 and subsequent years for the U.K.; 2009 and subsequent years for Spain; 2010 and subsequent years for Germany; 2013 and subsequent years for India and Mexico; 2014 and subsequent years for Brazil, Italy and the U.S.; 2015 and subsequent years for Canada; and 2016 and subsequent years for France. In addition, tax authorities in certain jurisdictions, including France and the U.S., may examine earlier years when tax carryforwards that were generated in those years are subsequently utilized.

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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration