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Income Taxes (Notes) | 12 Months Ended
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Dec. 31, 2017
Income Tax Disclosure [Abstract] |
Income Tax Disclosure [Text Block] | Income Taxes Public Law 115-97, commonly referred to as the Tax Cuts and Jobs Act (the "Tax Act"), was enacted on December 22, 2017. The Tax Act legislated many new tax provisions which have impacted our operations, including the reduction of the U.S. federal income tax rate from 35.0% to 21.0%, effective in 2018, a current tax on the deemed repatriation of unremitted foreign earnings and a U.S tax exemption for future distributions of certain foreign earnings. U.S. GAAP requires the income tax accounting effect of a change in tax law, including the effects on current and deferred income taxes, to be reflected in the period in which such law is enacted. The SEC issued Staff Accounting Bulletin No. 118 ("SAB 118") on December 22, 2017, which acknowledges that the information necessary to determine such income tax effects may not be sufficiently available, prepared or analyzed in reasonable detail to complete the accounting under U.S. GAAP. SAB 118 allows for the reporting of provisional amounts for those specific tax effects for which a reasonable estimate can be made, and for no amounts to be recorded where a reasonable estimate cannot be made. Any subsequent adjustments to reported amounts will be made over the measurement period, which begins in the reporting period that includes the Tax Act's enactment date and ends when an entity has obtained, prepared and analyzed the information that is needed in order to complete the accounting requirements under U.S. GAAP, not to exceed one year from the enactment date. We have reasonably estimated the tax effect of re-measuring our deferred tax balances and reserves at year end to reflect the tax effect of the reversal of such deferred tax balances in future periods during which the U.S. federal income tax rate will be 21.0%. We have recorded a decrease related to deferred tax assets and deferred tax liabilities, with a corresponding provisional net benefit to our deferred income taxes of $104.7. The Tax Act’s various changes to the treatment of fixed assets and deferred compensation are sufficiently complex to conclude that an adjustment may be necessary. The Tax Act also imposes a tax on certain unremitted foreign earnings at various tax rates. We have reasonably estimated the tax effect of this deemed repatriation of unremitted foreign earnings and have recorded tax expense of $62.3 as a provisional amount due to the fact that necessary information could not be attained, prepared or analyzed on a timely basis to be able to complete the calculations. The complexity of the rules and the comprehensive data requirements will likely result in some adjustment to the provisional amount. The Company expects to pay this amount over the next eight years, as allowed by the Tax Act. Additionally, the Tax Act imposes a new tax on certain foreign earnings generated in 2018 and forward. We are continuing to evaluate these global intangible low-taxed income ("GILTI") tax rules, which are extremely complex. U.S. GAAP allows us to choose between an accounting policy which treats the U.S. tax under GILTI provisions as either a current expense, as incurred, or as a component of the Company’s measurement of deferred taxes. We are not able to reasonably estimate the effect of the GILTI rules due to the significant complexity of the rules and the fact that the information necessary could not be attained, prepared or analyzed on a timely basis. Therefore, we have not made any adjustment related to the potential GILTI tax and have not made a policy decision regarding whether to record deferred taxes thereon. Finally, as per interpretive guidance issued by the U.S. Treasury on February 13, 2018, a tax benefit of $31.2, which was recorded during the third quarter of 2017, was reversed during the fourth quarter of 2017 due to the enactment of the Tax Act. The components of income before income taxes are listed below.
| Years ended December 31,
| 2017 |  | 2016 |  | 2015
Domestic | $ | 528.2 |  |  | $ | 504.7 |  |  | $ | 461.0 |
Foreign | 347.8 |  |  | 325.5 |  |  | 301.2 |
Total | $ | 876.0 |  |  | $ | 830.2 |  |  | $ | 762.2 |
The provision for income taxes is listed below.
| Years ended December 31,
| 2017 |  | 2016 |  | 2015
U.S. federal income taxes (including foreign withholding taxes): |  |  |  |  |
Current | $ | 154.1 |  |  | $ | 54.3 |  |  | $ | 117.8 |
Deferred | (32.2 | ) |  | 36.6 |  |  | 46.9 |
| 121.9 |  |  | 90.9 |  |  | 164.7 |
State and local income taxes: |  |  |  |  |
Current | 18.8 |  |  | 8.2 |  |  | 15.1 |
Deferred | 20.4 |  |  | (1.5 | ) |  | 13.0 |
| 39.2 |  |  | 6.7 |  |  | 28.1 |
Foreign income taxes: |  |  |  |  |
Current | 107.9 |  |  | 89.8 |  |  | 100.4 |
Deferred | 12.9 |  |  | 10.6 |  |  | (10.4 | )
| 120.8 |  |  | 100.4 |  |  | 90.0 |
Total | $ | 281.9 |  |  | $ | 198.0 |  |  | $ | 282.8 |
A reconciliation of the effective income tax rate as reflected in our Consolidated Statements of Operations to the U.S. federal statutory income tax rate is listed below.
| Years ended December 31,
| 2017 |  | 2016 |  | 2015
U.S. federal statutory income tax rate | 35.0 | % |  | 35.0 | % |  | 35.0 | %
Income tax provision at U.S. federal statutory rate | $ | 306.6 |  |  | $ | 290.6 |  |  | $ | 266.8 |
State and local income taxes, net of U.S. federal income tax benefit | 23.5 |  |  | 4.3 |  |  | 18.3 |
Impact of foreign operations, including withholding taxes | (6.7 | ) |  | (23.9 | ) |  | 14.7 |
Change in net valuation allowance 1 | 1.4 |  |  | (13.4 | ) |  | (20.6 | )
Divestitures | 1.1 |  |  | 9.7 |  |  | 11.9 |
U.S. federal tax credits | (1.7 | ) |  | (44.6 | ) |  | 0.0 |
Stock compensation | (15.3 | ) |  | (9.0 | ) |  | 0.0 |
Increase/(decrease) in unrecognized tax benefits | 7.0 |  |  | (22.2 | ) |  | (6.5 | )
Net impact of the Tax Act | (36.0 | ) |  | 0.0 |  |  | 0.0 |
Statutory tax rate changes | 0.0 |  |  | 11.4 |  |  | 1.4 |
Other | 2.0 |  |  | (4.9 | ) |  | (3.2 | )
Provision for income taxes | $ | 281.9 |  |  | $ | 198.0 |  |  | $ | 282.8 |
Effective income tax rate on operations | 32.2 | % |  | 23.8 | % |  | 37.1 | %
1 | Reflects changes in valuation allowances that impacted the effective income tax rate for each year presented.
In 2017, our effective income tax rate of 32.2% was positively impacted by a net benefit of $36.0 as a result of the Tax Act, the primary impacts of which are discussed above, and excess tax benefits on employee share-based payments, partially offset by losses in certain foreign jurisdictions where we receive no tax benefit due to 100% valuation allowances. In 2016, our effective income tax rate of 23.8% was positively impacted by a benefit of $44.6 related to refunds to be claimed on future amended U.S. federal returns for tax years 2014 and 2015 primarily related to foreign tax credits and, to a lesser extent, research and development credits based on the conclusion of multi-year studies; the settlement of 2011 and 2012 income tax audits, which included the recognition of certain previously unrecognized tax benefits of $23.4; the reversal of valuation allowances of $12.2 as a consequence of the disposition of certain businesses in Continental Europe; excess tax benefits on employee share-based payments; and various changes in state income tax laws as well as the recognition of previously unrecognized state tax benefits as a result of a lapse in statute of limitations. The positive impacts to our tax rates were partially offset by a revaluation of deferred tax assets as a result of a statutory tax rate change in Continental Europe, losses in certain foreign jurisdictions where we receive no tax benefit due to 100% valuation allowances and by losses on sales of businesses for which we did not receive a full tax benefit. In 2015, our effective income tax rate of 37.1% was negatively impacted primarily by losses in certain foreign jurisdictions where we receive no tax benefit due to 100% valuation allowances and from the losses on sales of businesses for which we did not receive a full tax benefit. The negative impacts to our tax rates were partially offset by the recognition of previously unrecognized tax benefits as a result of the reversal of valuation allowances in Continental Europe and the settlement of a 2010 income tax audit. The components of deferred tax assets and liabilities are listed below.
| December 31,
| 2017 |  | 2016
Postretirement/post-employment benefits | $ | 19.5 |  |  | $ | 23.1 |
Deferred compensation | 91.7 |  |  | 192.4 |
Pension costs | 27.6 |  |  | 36.6 |
Basis differences in fixed assets | (52.0 | ) |  | (80.2 | )
Rent | 27.5 |  |  | 41.7 |
Interest | 45.8 |  |  | 58.9 |
Accruals and reserves | 18.4 |  |  | 17.2 |
Allowance for doubtful accounts | 10.2 |  |  | 13.3 |
Basis differences in intangible assets | (281.3 | ) |  | (405.0 | )
Investments in equity securities | (3.3 | ) |  | (6.3 | )
Tax loss/tax credit carry forwards | 357.9 |  |  | 354.6 |
Prepaid expenses | (1.7 | ) |  | (2.9 | )
Deferred revenue | (38.2 | ) |  | (32.0 | )
Other | 44.7 |  |  | 44.3 |
Total deferred tax assets, net | 266.8 |  |  | 255.7 |
Valuation allowance | (243.3 | ) |  | (255.6 | )
Net deferred tax assets | $ | 23.5 |  |  | $ | 0.1 |
As a result of the Tax Act, we have re-measured our deferred tax assets and liabilities to reflect the tax effect of the reversal of such balances in future periods during which the U.S. federal income tax rate will be 21.0%, resulting in a provisional net benefit to our deferred income taxes of $104.7. However, the Tax Act’s various changes to the treatment of fixed assets and deferred compensation are sufficiently complex to conclude that an adjustment may be necessary. We evaluate the realizability of our deferred tax assets on a quarterly basis. The realization of our deferred tax assets is primarily dependent on future earnings. The amount of the deferred tax assets considered realizable could be reduced or increased in the near future if estimates of future taxable income are lower or greater than anticipated. A valuation allowance is established when it is “more likely than not” that all or a portion of deferred tax assets will not be realized. In circumstances where there is negative evidence, establishment of a valuation allowance is considered. The factors used in assessing valuation allowances include all available evidence, such as past operating results, estimates of future taxable income and the feasibility of tax planning strategies. We believe that cumulative losses in the most recent three-year period represent significant negative evidence, and as a result, we determined that certain of our deferred tax assets required the establishment of a valuation allowance. The deferred tax assets for which an allowance was recognized relate primarily to state and foreign tax loss carryforwards. The change in the valuation allowance is listed below.
| Years ended December 31,
| 2017 |  | 2016 |  | 2015
Balance at beginning of period | $ | 255.6 |  |  | $ | 275.1 |  |  | $ | 332.2 |
Reversed to costs and expenses | (4.6 | ) |  | (15.4 | ) |  | (20.8 | )
(Reversed) charged to gross tax assets and other accounts 1 | (27.0 | ) |  | 9.5 |  |  | (9.2 | )
Foreign currency translation | 19.3 |  |  | (13.6 | ) |  | (27.1 | )
Balance at end of period | $ | 243.3 |  |  | $ | 255.6 |  |  | $ | 275.1 |
1 | Primarily represents changes to the valuation allowance related to the change of a corresponding deferred tax asset.
In 2017, 2016, and 2015, amounts reversed to costs and expenses primarily related to decreases in valuation allowances in Continental Europe for existing deferred tax assets. As of December 31, 2017, there were $1,186.8 of loss carryforwards. These loss carryforwards were all non-U.S. tax loss carryforwards, of which $656.6 have unlimited carryforward periods and $530.2 have expiration periods from 2018 to 2037. As of December 31, 2017, the Company also had $45.0 in deferred tax assets for state net operating loss carryforwards and tax credit carryforwards, which will expire between 2018 and 2037. As of December 31, 2017 and 2016, we had $2,774.8 and $2,622.4, respectively, of undistributed earnings attributable to foreign subsidiaries. The Company has historically asserted that its unremitted foreign earnings are permanently reinvested, and therefore, has not recorded deferred taxes on such amounts. The Tax Act provides a U.S. tax exemption for dividends of certain foreign earnings. The Tax Act may provide additional flexibility in the Company’s tax-efficient access to global cash, but is expected to have limited impact to net domestic liquidity. The Company is still evaluating whether to continue its indefinite reinvestment assertion, in light of the Tax Act. Any change to the assertion will be accounted for as part of the change in tax law, as permitted by SAB 118. The table below summarizes the activity related to our unrecognized tax benefits.
| Years ended December 31,
| 2017 |  | 2016 |  | 2015
Balance at beginning of period | $ | 246.7 |  |  | $ | 226.9 |  |  | $ | 238.0 |
Increases as a result of tax positions taken during a prior year | 6.3 |  |  | 65.0 |  |  | 5.2 |
Decreases as a result of tax positions taken during a prior year | (8.1 | ) |  | (47.5 | ) |  | (19.7 | )
Settlements with taxing authorities | (0.8 | ) |  | (4.6 | ) |  | (4.1 | )
Lapse of statutes of limitation | (3.3 | ) |  | (11.8 | ) |  | (3.8 | )
Increases as a result of tax positions taken during the current year | 31.1 |  |  | 18.7 |  |  | 11.3 |
Balance at end of period | $ | 271.9 |  |  | $ | 246.7 |  |  | $ | 226.9 |
Included in the total amount of unrecognized tax benefits of $271.9 as of December 31, 2017, is $249.2 of tax benefits that, if recognized, would impact the effective income tax rate. The total amount of accrued interest and penalties as of December 31, 2017 and 2016 is $27.9 and $20.9, respectively, of which a detriment of $7.0 and $0.7 is included in our 2017 and 2016 Consolidated Statements of Operations, respectively. In accordance with our accounting policy, interest and penalties accrued on unrecognized tax benefits are classified as income taxes in our Consolidated Statements of Operations. We have various tax years under examination by tax authorities in the U.S., in various countries, and in various states, such as New York, in which we have significant business operations. It is not yet known whether these examinations will, in the aggregate, result in our paying additional taxes. We believe our tax reserves are adequate in relation to the potential for additional assessments in each of the jurisdictions in which we are subject to taxation. We regularly assess the likelihood of additional tax assessments in those jurisdictions and, if necessary, adjust our reserves as additional information or events require. With respect to all tax years open to examination by U.S. federal, various state and local, and non-U.S. tax authorities, we currently anticipate that total unrecognized tax benefits will decrease by an amount between $28.0 and $38.0 in the next twelve months, a portion of which will affect our effective income tax rate, primarily as a result of the settlement of tax examinations and the lapsing of statutes of limitations. This net decrease is related to various items of income and expense, primarily transfer pricing adjustments. We are effectively settled with respect to U.S. federal income tax audits through 2012, with the exception of 2009. With limited exceptions, we are no longer subject to state and local income tax audits for years prior to 2007 or non-U.S. income tax audits for years prior to 2006.

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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://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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