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Income Taxes | 12 Months Ended
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Dec. 31, 2021
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, 2021, 2020 and 2019 (in millions):
| 2021 |  | 2020 |  | 2019
United States | $ | 46.8 |  |  | $ | (73.4) |  |  | $ | (53.1) |
Foreign | 897.5 |  |  | 635.4 |  |  | 314.2 |
Income before income taxes and equity in net earnings of affiliates | $ | 944.3 |  |  | $ | 562.0 |  |  | $ | 261.1 |
The provision for income taxes by location of the taxing jurisdiction for the years ended December 31, 2021, 2020 and 2019 consisted of the following (in millions):
| 2021 |  | 2020 |  | 2019
Current: |  |  |  |  |
United States | $ | 3.4 |  |  | $ | 4.1 |  |  | $ | (4.4) |
Foreign | 222.9 |  |  | 180.2 |  |  | 170.1 |
| 226.3 |  |  | 184.3 |  |  | 165.7 |
Deferred: |  |  |  |  |
United States | (70.0) |  |  | 1.3 |  |  | 1.3 |
Foreign | (47.9) |  |  | 2.1 |  |  | 13.8 |
| (117.9) |  |  | 3.4 |  |  | 15.1 |
| $ | 108.4 |  |  | $ | 187.7 |  |  | $ | 180.8 |
The Company’s income tax provision as of December 31, 2021 includes the benefit of the reversals of approximately $67.8 million and $55.6 million related to valuation allowances previously established against the Company’s net deferred tax assets in the United States and Brazil, respectively. The Company recorded the reversal of a portion of the United States valuation allowance during the three months ended June 30, 2021, and the reversal of a portion of its Brazilian valuation allowance during the three months ended December 31, 2021. Improvements in income in the United States and Brazil during 2020 and 2021, along with updated future projected income levels, supported the reversal of both valuation allowances during those respective periods in 2021. 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. 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. A reconciliation of income taxes computed at the United States federal statutory income tax rate (21% for 2021, 2020, and 2019) to the provision for income taxes reflected in the Company’s Consolidated Statements of Operations for the years ended December 31, 2021, 2020 and 2019 is as follows (in millions):
| 2021 |  | 2020 |  | 2019
Provision for income taxes at United States federal statutory rate | $ | 198.3 |  |  | $ | 118.0 |  |  | $ | 54.8 |
State and local income taxes, net of federal income tax effects | 2.2 |  |  | (3.5) |  |  | (2.5) |
Taxes on foreign income which differ from the United States statutory rate | 16.2 |  |  | 13.9 |  |  | 6.7 |
Tax effect of permanent differences | (6.4) |  |  | 13.4 |  |  | 63.9 |
Change in valuation allowance | (130.8) |  |  | 16.3 |  |  | 84.6 |
Change in tax contingency reserves | 36.6 |  |  | 37.2 |  |  | 3.2 |
Research and development tax credits | (7.4) |  |  | (9.0) |  |  | (7.1) |
Impacts related to changes in tax laws | — |  |  | — |  |  | (21.8) |
Other | (0.3) |  |  | 1.4 |  |  | (1.0) |
| $ | 108.4 |  |  | $ | 187.7 |  |  | $ | 180.8 |
The significant components of the deferred tax assets and liabilities at December 31, 2021 and 2020 were as follows (in millions):
| 2021 |  | 2020
Deferred Tax Assets: |  |  |
Net operating loss carryforwards | $ | 69.5 |  |  | $ | 62.9 |
Sales incentive discounts | 40.1 |  |  | 50.8 |
Inventory valuation reserves | 33.6 |  |  | 35.9 |
Pensions and postretirement health care benefits | 18.5 |  |  | 55.8 |
Warranty and other reserves | 102.9 |  |  | 126.3 |
Research and development tax credits | 3.8 |  |  | 12.9 |
Foreign tax credits | 9.4 |  |  | 5.9 |
Other | 14.0 |  |  | 10.4 |
Total gross deferred tax assets | 291.8 |  |  | 360.9 |
Valuation allowance | (47.4) |  |  | (181.0) |
Total deferred tax assets | 244.4 |  |  | 179.9 |
Deferred Tax Liabilities: |  |  |
Tax over book depreciation and amortization | 159.3 |  |  | 167.5 |
Investment in affiliates | 24.4 |  |  | 33.1 |
Other | 8.3 |  |  | 14.1 |
Total deferred tax liabilities | 192.0 |  |  | 214.7 |
Net deferred tax assets (liabilities) | $ | 52.4 |  |  | $ | (34.8) |
Amounts recognized in Consolidated Balance Sheets: |  |  |
Deferred tax assets - noncurrent | $ | 169.3 |  |  | $ | 77.6 |
Deferred tax liabilities - noncurrent | (116.9) |  |  | (112.4) |
| $ | 52.4 |  |  | $ | (34.8) |
As reflected in the preceding table, the Company recorded a net deferred tax asset of $52.4 million as of December 31, 2021 and a net deferred tax liability of $34.8 million as of December 31, 2020, and had a valuation allowance against its gross deferred tax assets of approximately $47.4 million and $181.0 million as of December 31, 2021 and 2020, respectively. The Company maintains a valuation allowance to reserve a portion of 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 may not be realized. The Company assessed the likelihood that its deferred tax assets would be recovered from estimated future taxable income and the current economic climate, as well as available tax planning strategies, and determined that all adjustments to the valuation allowance were appropriate. 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 $235.6 million as of December 31, 2021, with expiration dates as follows: 2022 - $14.2 million; 2023 - $23.9 million; 2024 and thereafter - $51.0 million and unlimited - $146.5 million. The net operating loss carryforwards of $235.6 million are entirely in tax jurisdictions outside of the United States. The amount of the Company's U.S. state net operating loss carryforwards is not material. The Company paid income taxes of $247.3 million, $181.4 million and $144.4 million for the years ended December 31, 2021, 2020 and 2019, 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, 2021 and 2020, the Company had $246.4 million and $227.9 million, respectively, of unrecognized income tax benefits, all of which would affect the Company’s effective tax rate if recognized. At December 31, 2021 and 2020, the Company had approximately $40.1 million and $57.1 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 $4.8 million and $7.1 million of interest and penalties related to unrecognized tax benefits in its provision for income taxes during 2021 and 2020, respectively. At December 31, 2021 and 2020, the Company had accrued interest and penalties related to unrecognized tax benefits of $32.7 million and $39.4 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, 2021 and 2020 is as follows (in millions):
| 2021 |  | 2020
Gross unrecognized income tax benefits at the beginning of the year | $ | 227.9 |  |  | $ | 210.7 |
Additions for tax positions of the current year | 43.0 |  |  | 32.0 |
Additions for tax positions of prior years | 8.4 |  |  | 9.4 |
Reductions for tax positions of prior years for: |  |  |
Changes in judgments | 3.2 |  |  | 9.1 |
Settlements during the year | (19.1) |  |  | (52.9) |
Lapses of applicable statute of limitations | (0.6) |  |  | (0.2) |
Foreign currency translation and other | (16.4) |  |  | 19.8 |
Gross unrecognized income tax benefits at the end of the year | $ | 246.4 |  |  | $ | 227.9 |
The reconciliation of gross unrecognized income tax benefits above for 2021 and 2020 excludes certain indirect favorable effects that relate to other tax jurisdictions of approximately $70.2 million and $64.1 million, respectively. The change in certain indirect favorable effects between 2021 and 2020 includes approximately $9.9 million related to additions and reductions for tax positions of current and prior years, changes in judgments and lapses of statutes of limitations. In addition, the gross unrecognized income tax benefits as of December 31, 2021 exclude certain deposits made in a foreign jurisdiction of approximately $6.7 million associated with an ongoing audit. 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, 2021, 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 are either statutory expirations or the Company’s settlement expectations such that approximately $40.1 million could be concluded within the next 12 months. Although there are ongoing examinations in various federal and state jurisdictions, the 2017 through 2021 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 2016 through 2021 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 12).

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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=121826272&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=122134291&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=121826272&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=122134291&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=121826272&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 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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