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Income Taxes | 12 Months Ended
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Dec. 31, 2020
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The sources of income before income taxes and equity in net earnings of affiliates were as follows for the years ended December 31, 2020, 2019 and 2018 (in millions):
| 2020 |  | 2019 |  | 2018
United States | $ | (73.4) |  |  | $ | (53.1) |  |  | $ | (126.0) |
Foreign | 635.4 |  |  | 314.2 |  |  | 486.3 |
Income before income taxes and equity in net earnings of affiliates | $ | 562.0 |  |  | $ | 261.1 |  |  | $ | 360.3 |
The provision for income taxes by location of the taxing jurisdiction for the years ended December 31, 2020, 2019 and 2018 consisted of the following (in millions):
| 2020 |  | 2019 |  | 2018
Current: |  |  |  |  |
United States: |  |  |  |  |
Federal | $ | 1.0 |  |  | $ | (6.5) |  |  | $ | (9.1) |
State | 3.1 |  |  | 2.1 |  |  | 1.2 |
Foreign | 180.2 |  |  | 170.1 |  |  | 133.5 |
| 184.3 |  |  | 165.7 |  |  | 125.6 |
Deferred: |  |  |  |  |
United States: |  |  |  |  |
Federal | 1.3 |  |  | 1.3 |  |  | — |
State | — |  |  | — |  |  | — |
Foreign | 2.1 |  |  | 13.8 |  |  | (14.7) |
| 3.4 |  |  | 15.1 |  |  | (14.7) |
| $ | 187.7 |  |  | $ | 180.8 |  |  | $ | 110.9 |
On March 27, 2020, the CARES Act (the “Act”) was enacted in the United States in response to the COVID-19 pandemic to, among other things, provide tax relief to businesses. Tax provisions of the Act include the deferral of certain payroll taxes, relief for retaining employees and other provisions. Other governments around the world have also enacted similar measures and may enact further measures in the future. To date, the Act and other similar worldwide measures have not had a material impact to the Company’s results of operations or financial condition. Swiss tax reform was enacted during 2019 and eliminated certain preferential tax items as well as implemented new tax rates at both the federal and cantonal levels. During the three months ended December 31, 2019, the Company recognized a one-time income tax gain of approximately $21.8 million associated with the changing of Swiss federal and cantonal tax rates as well as recognition of a deferred tax asset associated with the estimated value of a tax basis step-up of the Company’s Swiss subsidiary’s assets. On December 22, 2017, The Tax Cuts and Jobs Act (“the 2017 Tax Act”) was enacted in the United States. The primary provisions of the 2017 Tax Act affecting the Company in 2018 were a reduction to the corporate tax rate from 35% to 21%, and a transition from a worldwide corporate tax system to a primarily territorial tax system. Beginning in 2018, the Company was also subject to additional provisions of the 2017 Tax Act. The main provisions include a tax on global intangible low-taxed income (“GILTI”) and a limitation on the deductibility of certain executive compensation. The combined effect of these and other provisions did not have a material effect on the Company’s provision for income taxes in 2020 or 2019. During the three months ended December 31, 2018, the Company finalized its calculations related to the 2017 Tax Act’s one-time transition tax associated with the mandatory deemed repatriation of unremitted foreign earnings, and recorded an income tax benefit of approximately $8.4 million. A reconciliation of income taxes computed at the United States federal statutory income tax rate (21% for 2020, 2019, and 2018 (from 35% for 2017)) to the provision for income taxes reflected in the Company’s Consolidated Statements of Operations for the years ended December 31, 2020, 2019 and 2018 is as follows (in millions):
| 2020 |  | 2019 |  | 2018
Provision for income taxes at United States federal statutory rate | $ | 118.0 |  |  | $ | 54.8 |  |  | $ | 75.7 |
State and local income taxes, net of federal income tax effects | (3.5) |  |  | (2.5) |  |  | (6.0) |
Taxes on foreign income which differ from the United States statutory rate | 13.9 |  |  | 6.7 |  |  | (0.3) |
Tax effect of permanent differences | 13.4 |  |  | 63.9 |  |  | 26.7 |
Change in valuation allowance | 16.3 |  |  | 84.6 |  |  | 24.6 |
Change in tax contingency reserves | 37.2 |  |  | 3.2 |  |  | 8.5 |
Research and development tax credits | (9.0) |  |  | (7.1) |  |  | (8.5) |
Impacts related to changes in tax laws | — |  |  | (21.8) |  |  | (8.4) |
Other | 1.4 |  |  | (1.0) |  |  | (1.4) |
| $ | 187.7 |  |  | $ | 180.8 |  |  | $ | 110.9 |
The significant components of the deferred tax assets and liabilities at December 31, 2020 and 2019 were as follows (in millions):
| 2020 |  | 2019
Deferred Tax Assets: |  |  |
Net operating loss carryforwards | $ | 62.9 |  |  | $ | 72.0 |
Sales incentive discounts | 50.8 |  |  | 61.9 |
Inventory valuation reserves | 35.9 |  |  | 41.1 |
Pensions and postretirement health care benefits | 55.8 |  |  | 51.6 |
Warranty and other reserves | 126.3 |  |  | 128.5 |
Research and development tax credits | 12.9 |  |  | 17.3 |
Foreign tax credits | 5.9 |  |  | 6.4 |
Other | 10.4 |  |  | 17.2 |
Total gross deferred tax assets | 360.9 |  |  | 396.0 |
Valuation allowance | (181.0) |  |  | (169.1) |
Total deferred tax assets | 179.9 |  |  | 226.9 |
Deferred Tax Liabilities: |  |  |
Tax over book depreciation and amortization | 167.5 |  |  | 164.3 |
Investment in affiliates | 33.1 |  |  | 50.3 |
Other | 14.1 |  |  | 25.5 |
Total deferred tax liabilities | 214.7 |  |  | 240.1 |
Net deferred tax liabilities | $ | (34.8) |  |  | $ | (13.2) |
Amounts recognized in Consolidated Balance Sheets: |  |  |
Deferred tax assets - noncurrent | $ | 77.6 |  |  | $ | 93.8 |
Deferred tax liabilities - noncurrent | (112.4) |  |  | (107.0) |
| $ | (34.8) |  |  | $ | (13.2) |
As reflected in the preceding table, the Company recorded a net deferred tax liability of $34.8 million and $13.2 million as of December 31, 2020 and December 31, 2019, respectively, and had a valuation allowance against its gross deferred tax assets of approximately $181.0 million and $169.1 million as of December 31, 2020 and 2019, respectively. During the three months ended September 30, 2019, the Company recorded a non-cash deferred income tax charge of approximately $53.7 million to establish a valuation allowance against its Brazilian net deferred income tax assets. In addition, the Company maintains a valuation allowance to fully reserve its net deferred tax assets in the United States and certain foreign jurisdictions. A valuation allowance is established when it is more likely than not that some portion or all of the deferred tax assets will not be realized. The Company assessed the likelihood that its deferred tax assets would be recovered from estimated future taxable income and available tax planning strategies and determined that all adjustments to the valuation allowance were appropriate. In making this assessment, all available evidence was considered including the current economic climate, as well as reasonable tax planning strategies. The Company believes it is more likely than not that it will realize its remaining net deferred tax assets, net of the valuation allowance, in future years. The Company had net operating loss carryforwards of $219.7 million as of December 31, 2020, with expiration dates as follows: 2021 - $24.0 million; 2022 - $15.0 million; 2023 - $46.7 million and thereafter or unlimited - $134.0 million. The net operating loss carryforwards of $219.7 million are entirely in tax jurisdictions outside of the United States. The Company does not have any material U.S. state net operating loss carryforwards. The Company paid income taxes of $181.4 million, $144.4 million and $101.6 million for the years ended December 31, 2020, 2019 and 2018, respectively. The Company recognizes income tax benefits from uncertain tax positions only when there is a more than 50% likelihood that the tax positions will be sustained upon examination by the taxing authorities based on the technical merits of the positions. At December 31, 2020 and 2019, the Company had $227.9 million and $210.7 million, respectively, of unrecognized income tax benefits, all of which would affect the Company’s effective tax rate if recognized. At December 31, 2020 and 2019, the Company had approximately $57.1 million and $51.0 million, respectively, of accrued or deferred taxes related to uncertain income tax positions connected with ongoing income tax audits in various jurisdictions that it expects to settle or pay in the next 12 months. The Company accrued approximately $7.1 million and $1.8 million of interest and penalties related to unrecognized tax benefits in its provision for income taxes during 2020 and 2019, respectively. At December 31, 2020 and 2019, the Company had accrued interest and penalties related to unrecognized tax benefits of $39.4 million and $28.4 million, respectively. A reconciliation of the beginning and ending balances of the total amounts of gross unrecognized tax benefits as of and during the years ended December 31, 2020 and 2019 is as follows (in millions):
| 2020 |  | 2019
Gross unrecognized income tax benefits at the beginning of the year | $ | 210.7 |  |  | $ | 166.1 |
Additions for tax positions of the current year | 32.0 |  |  | 32.8 |
Additions for tax positions of prior years | 9.4 |  |  | 20.7 |
Reductions for tax positions of prior years for: |  |  |
Changes in judgments | 9.1 |  |  | (4.6) |
Settlements during the year | (52.9) |  |  | (0.7) |
Lapses of applicable statute of limitations | (0.2) |  |  | (0.8) |
Foreign currency translation and other | 19.8 |  |  | (2.8) |
Gross unrecognized income tax benefits at the end of the year | $ | 227.9 |  |  | $ | 210.7 |
The reconciliation of gross unrecognized tax benefits above for 2020 and 2019 excludes certain indirect favorable effects that relate to other tax jurisdictions of approximately $64.1 million and $44.9 million, respectively. The change in certain indirect favorable effects between 2020 and 2019 includes approximately $13.1 million related to additions and reductions for tax positions of current and prior years, changes in judgments and lapses of statutes of limitations. The Company and its subsidiaries file income tax returns in the United States and in various state, local and foreign jurisdictions. The Company and its subsidiaries are routinely examined by tax authorities in these jurisdictions. As of December 31, 2020, a number of income tax examinations in foreign jurisdictions, as well as the United States, were ongoing. It is possible that certain of these ongoing examinations may be resolved within 12 months. Due to the potential for resolution of federal, state and foreign examinations, and the expiration of various statutes of limitation, it is reasonably possible that the Company’s gross unrecognized income tax benefits balance may materially change within the next 12 months. In certain foreign jurisdictions, there is either statutory expirations or the Company’s settlement expectations such that approximately $57.1 million could be concluded within the next 12 months. Although there are ongoing examinations in various federal and state jurisdictions, the 2017 through 2020 tax years generally remain subject to examination in the United States by applicable authorities. In the Company’s significant foreign jurisdictions, primarily the United Kingdom, France, Germany, Switzerland, Finland and Brazil, the 2015 through 2020 tax years generally remain subject to examination by their respective tax authorities. In Brazil, the Company is contesting disallowed deductions related to amortization of certain goodwill amounts (see Note 11).

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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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