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Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2020
Income Tax Disclosure [Abstract] |
Income Taxes |
16) | Income Taxes
A reconciliation of the Company’s effective tax rate to the U.S. federal statutory rate is as follows:
|  | Years Ended December 31, |
|  | 2020 |  |  | 2019 |  |  | 2018 |
U.S. federal income tax statutory rate |  |  | 21.0 | % |  |  | 21.0 | % |  |  | 21.0 | %
Federal tax credits |  |  | (1.5 | ) |  |  | (2.9 | ) |  |  | (0.7 | )
State income taxes, net of federal benefit |  |  | 1.1 |  |  |  | 2.3 |  |  |  | 1.3 |
Effect of foreign operations taxed at various rates |  |  | (5.0 | ) |  |  | (4.4 | ) |  |  | (1.3 | )
Executive compensation |  |  | 1.1 |  |  |  | 5.8 |  |  |  | — |
Gain on intercompany sale of assets |  |  | — |  |  |  | 2.9 |  |  |  | — |
Utilization of a capital loss |  |  | — |  |  |  | (1.2 | ) |  |  | — |
Foreign derived intangible income deduction |  |  | (1.5 | ) |  |  | (3.8 | ) |  |  | (2.1 | )
Global intangible low taxed income, net of foreign tax credits |  |  | 0.9 |  |  |  | 2.6 |  |  |  | 0.4 |
Transition tax, net of foreign tax credits |  |  | — |  |  |  | — |  |  |  | (0.1 | )
Revaluation of deferred income taxes |  |  | — |  |  |  | (1.4 | ) |  |  | (0.3 | )
Revaluation of prepaid taxes |  |  | — |  |  |  | — |  |  |  | 1.6 |
Stock-based compensation |  |  | (0.7 | ) |  |  | (0.3 | ) |  |  | (1.3 | )
Deferred tax asset valuation allowance |  |  | 0.6 |  |  |  | 0.1 |  |  |  | — |
Release of income tax reserves (including interest) |  |  | — |  |  |  | (0.8 | ) |  |  | (0.4 | )
Foreign dividends, net of foreign tax credits |  |  | 0.7 |  |  |  | 0.6 |  |  |  | (1.0 | )
Other |  |  | 0.5 |  |  |  | 0.6 |  |  |  | 1.2 |
|  |  | 17.2 | % |  |  | 21.1 | % |  |  | 18.3 | %
The components of income from operations before income taxes and the related provision for income taxes consist of the following:
|  | Years Ended December 31, |
|  | 2020 |  |  | 2019 |  |  | 2018 |
Income before income taxes: |  |  |  |  |  |  |  |  |  |  |  |
United States |  | $ | 132.0 |  |  | $ | 2.3 |  |  | $ | 287.3 |
Foreign |  |  | 291.0 |  |  |  | 175.5 |  |  |  | 193.6 |
|  | $ | 423.0 |  |  | $ | 177.8 |  |  | $ | 480.9 |
Current taxes: |  |  |  |  |  |  |  |  |  |  |  |
United States |  | $ | 29.2 |  |  | $ | 6.8 |  |  | $ | 41.4 |
State |  |  | 6.1 |  |  |  | 2.0 |  |  |  | 8.1 |
Foreign |  |  | 44.7 |  |  |  | 32.8 |  |  |  | 58.0 |
|  |  | 80.0 |  |  |  | 41.6 |  |  |  | 107.5 |
Deferred taxes: |  |  |  |  |  |  |  |  |  |  |  |
United States |  |  | (7.9 | ) |  |  | (1.7 | ) |  |  | (2.5 | )
State and Foreign |  |  | 0.8 |  |  |  | (2.5 | ) |  |  | (16.9 | )
|  |  | (7.1 | ) |  |  | (4.2 | ) |  |  | (19.4 | )
Provision for income taxes |  | $ | 72.9 |  |  | $ | 37.4 |  |  | $ | 88.1 |
The significant components of the deferred tax assets and deferred tax liabilities are as follows:
|  | Years Ended December 31, |
|  | 2020 |  |  | 2019 |
Deferred tax assets: |  |  |  |  |  |  |  |
Carry-forward losses and credits |  | $ | 54.2 |  |  | $ | 59.2 |
Inventory and warranty reserves |  |  | 32.4 |  |  |  | 29.7 |
Accrued expenses and other reserves |  |  | 14.5 |  |  |  | 12.6 |
Stock-based compensation |  |  | 5.1 |  |  |  | 8.6 |
Executive supplemental retirement benefits |  |  | 1.8 |  |  |  | 1.6 |
Lease liability |  |  | 48.7 |  |  |  | 15.3 |
Unrealized net loss |  |  | 4.0 |  |  |  | 2.7 |
Other |  |  | 2.7 |  |  |  | 2.3 |
Total deferred tax assets |  | $ | 163.4 |  |  | $ | 132.0 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Acquired intangible assets and goodwill |  | $ | (116.2 | ) |  | $ | (128.1 | )
Depreciation and amortization |  |  | (14.5 | ) |  |  | (14.1 | )
Loan costs |  |  | (1.8 | ) |  |  | (2.3 | )
Right-of-use asset |  |  | (46.4 | ) |  |  | (14.4 | )
Foreign withholding taxes |  |  | (3.2 | ) |  |  | (5.0 | )
Total deferred tax liabilities |  |  | (182.1 | ) |  |  | (163.9 | )
Valuation allowance |  |  | (30.6 | ) |  |  | (27.4 | )
Net deferred tax liabilities |  | $ | (49.3 | ) |  | $ | (59.3 | )
As of December 31, 2020, the Company had federal, state and foreign gross research and other tax credit carry-forwards of $58.9. Included in the total carry-forward are $13.7 of credits that can be carried forward indefinitely while the remaining credits expire at various dates through 2037. The Company also had federal, state and foreign gross net operating loss and capital loss carry-forwards of $97.0. Included in the total carry-forward are $50.9 of losses that can be carried forward indefinitely while the remaining losses expire at various dates through 2037. Although the Company believes that its tax positions are consistent with applicable U.S. federal, state and international laws, it maintains certain tax reserves as of December 31, 2020 in the event its tax positions were to be challenged by the applicable tax authority and additional tax assessed upon audit. A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows:
|  | Years Ended December 31, |
|  | 2020 |  |  | 2019 |  |  | 2018 |
Balance at beginning of year |  | $ | 43.5 |  |  | $ | 32.7 |  |  | $ | 27.3 |
Increases for prior years |  |  | 1.1 |  |  |  | 9.3 |  |  |  | 0.9 |
Increases for the current year |  |  | 6.8 |  |  |  | 3.2 |  |  |  | 6.1 |
Reductions related to expiration of statutes of limitations and audit settlements |  |  | (4.4 | ) |  |  | (1.7 | ) |  |  | (1.6 | )
Balance at end of year |  | $ | 47.0 |  |  | $ | 43.5 |  |  | $ | 32.7 |
The net increase in gross unrecognized tax benefits was primarily attributable to the addition of a reserve related to executive compensation, partially offset by a release of income tax reserves related to the expiration of the statutes of limitations. The Company accrues interest and, if applicable, penalties for any uncertain tax positions. Interest and penalties are classified as a component of income tax expense. As of December 31, 2020, 2019 and 2018, the Company accrued interest on unrecognized tax benefits of approximately $0.7, $0.5 and $0.6, respectively. Over the next 12 months it is reasonably possible that the Company may recognize approximately $4.3 of previously net unrecognized tax benefits, excluding interest and penalties, related to various U.S. federal, state and foreign tax positions, primarily due to the expiration of statutes of limitations. The Company is subject to examination by U.S. federal, state and foreign tax authorities. The U.S. federal statute of limitations remains open for tax years 2017 through the present. The statute of limitations for the Company’s tax filings in other jurisdictions varies between fiscal years 2015 through present. The Company has certain federal credit carry-forwards and state tax loss and credit carry-forwards that are open to examination for tax years 2000 through the present. On a quarterly basis, the Company evaluates both positive and negative evidence that affects the realizability of net deferred tax assets and assesses the need for a valuation allowance. The future benefit to be derived from its deferred tax assets is dependent upon its ability to generate sufficient future taxable income to realize the assets. During 2020, the Company increased its valuation allowance by $3.3, primarily related to certain foreign net operating loss carry-forward amounts. During 2019, the Company increased its valuation allowance by $9.4. This increase was primarily attributable to the addition of historical valuation allowances for ESI and its subsidiaries which were included as a result of the ESI Merger during the quarter ended March 31, 2019. During 2018, the Company increased its valuation allowance by $4.3, primarily related to certain tax credit and net operating loss carry-forward amounts. No provision has been made for deferred taxes related to remaining historical outside basis differences in certain of the Company’s non-US subsidiaries. The Company continues to assert indefinite reinvestment with respect to certain outside basis differences as of December 31, 2020. Determination of the amount of unrecognized deferred tax liability on such outside basis differences is not practicable because the amount of such liability, if any, is dependent upon various circumstances and factors, including availability of tax planning. Certain of the Company’s subsidiaries have obtained tax rate reductions or tax holidays under government-sponsored incentive programs. For example, a Singapore subsidiary of the Company obtained a tax holiday in Singapore. The benefits of the holiday were approximately $1.7 ($0.03 per share) in 2020 and $2.2 ($0.04 per share) in 2019. The tax holiday in Singapore expires in June 2021.

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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/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=116825942&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=116825942&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 + Details
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