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Income Taxes | 12 Months Ended
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Dec. 31, 2024
Income Tax Disclosure [Abstract] |
Income Taxes | INCOME TAXES The sources of income (loss) before income taxes and equity in net earnings of affiliates were as follows for the years ended December 31, 2024, 2023 and 2022 (in millions):
| 2024 |  | 2023 |  | 2022
United States | $ | (1,314.3) |  |  | $ | (63.5) |  |  | $ | (60.2) |
Foreign | 880.7 |  |  | 1,397.0 |  |  | 1,167.4 |
Income (loss) before income taxes and equity in net earnings of affiliates | $ | (433.6) |  |  | $ | 1,333.5 |  |  | $ | 1,107.2 |
The provision (benefit) for income taxes by location of the taxing jurisdiction for the years ended December 31, 2024, 2023 and 2022 consisted of the following (in millions):
| 2024 |  | 2023 |  | 2022
Current: |  |  |  |  |
United States | $ | (2.3) |  |  | $ | 61.2 |  |  | $ | 26.0 |
Foreign | 203.3 |  |  | 433.6 |  |  | 328.6 |
| 201.0 |  |  | 494.8 |  |  | 354.6 |
Deferred: |  |  |  |  |
United States | (126.6) |  |  | (82.8) |  |  | (55.3) |
Foreign | 24.0 |  |  | (181.6) |  |  | (2.7) |
| (102.6) |  |  | (264.4) |  |  | (58.0) |
| $ | 98.4 |  |  | $ | 230.4 |  |  | $ | 296.6 |
The Company's income tax provision as of December 31, 2023 includes a benefit of $112.3 million related to the recognition of a deferred tax asset of $197.7 million, net of a valuation allowance of $85.4 million, related to the finalization of negotiations surrounding the application of Swiss Tax reform legislation enacted in 2020. The provision also includes a charge of approximately $26.4 million associated with our enrollment in a Brazilian tax amnesty program, “Litigation Zero”, discussed further below. A reconciliation of income taxes computed at the United States federal statutory income tax rate (21% for 2024, 2023 and 2022) to the provision for income taxes reflected in the Company’s Consolidated Statements of Operations for the years ended December 31, 2024, 2023 and 2022 is as follows (in millions):
| 2024 |  | 2023 |  | 2022
Provision for income taxes at United States federal statutory rate | $ | (91.1) |  |  | $ | 280.0 |  |  | $ | 232.5 |
Impairment charges | 108.1 |  |  | — |  |  | — |
State and local income taxes, net of federal income tax effects | (19.8) |  |  | (3.0) |  |  | (2.9) |
Taxes on foreign income which differ from the United States statutory rate(1) | 23.7 |  |  | (193.9) |  |  | 43.6 |
Foreign inclusion, net of foreign tax credits | 42.8 |  |  | 13.5 |  |  | 4.4 |
Tax effect of permanent differences | 13.6 |  |  | (34.0) |  |  | (4.6) |
Change in valuation allowance(1) | 13.1 |  |  | 116.5 |  |  | 0.7 |
Change in tax contingency reserves | 30.1 |  |  | 33.2 |  |  | 25.5 |
Research and development tax credits | (6.4) |  |  | (9.6) |  |  | (6.9) |
Brazil Amnesty Program, net of United States foreign tax credit | — |  |  | 26.4 |  |  | — |
Other, net(2) | (15.7) |  |  | 1.3 |  |  | 4.3 |
| $ | 98.4 |  |  | $ | 230.4 |  |  | $ | 296.6 |
____________________________________ (1) In 2023, a gross deferred tax asset of $197.7 million less a valuation allowance of $85.4 million was recognized to reflect future Swiss tax incentives the Company anticipates it will be able to utilize by 2034 when the incentive expires. (2) In recent decisions, the Brazilian courts have confirmed a favorable tax ruling regarding the taxability of certain state value added tax incentive benefits, which allowed the Company to record a $29.6 million reduction in the provision for income taxes during the year ended December 31, 2024. Further, in 2024, “Other, net” also includes a provision of approximately $12.7 million related to a noncontrolling interest. The significant components of the deferred tax assets and liabilities at December 31, 2024 and 2023 were as follows (in millions):
| 2024 |  | 2023
Deferred Tax Assets: |  |  |
Net operating loss carryforwards | $ | 30.3 |  |  | $ | 42.1 |
Sales incentive discounts | 117.8 |  |  | 102.5 |
Inventory valuation reserves | 48.8 |  |  | 50.0 |
Pension and postretirement health care benefits | 15.4 |  |  | 17.9 |
Warranty and other reserves | 122.0 |  |  | 162.8 |
Research and development tax credits | 0.3 |  |  | 5.1 |
Foreign tax credits | 36.0 |  |  | 33.4 |
Swiss tax basis adjustment | 182.8 |  |  | 197.7 |
Investment in affiliates | 67.5 |  |  | — |
Other | 30.6 |  |  | 22.7 |
Total gross deferred tax assets | 651.5 |  |  | 634.2 |
Valuation allowance | (147.2) |  |  | (149.8) |
Total deferred tax assets | 504.3 |  |  | 484.4 |
Deferred Tax Liabilities: |  |  |
Tax over book depreciation and amortization | 62.3 |  |  | 102.5 |
Investment in affiliates | — |  |  | 3.9 |
Other | 6.0 |  |  | 19.0 |
Total deferred tax liabilities | 68.3 |  |  | 125.4 |
Net deferred tax assets | $ | 436.0 |  |  | $ | 359.0 |
Amounts recognized in Consolidated Balance Sheets: |  |  |
Deferred tax assets - noncurrent | $ | 561.0 |  |  | $ | 481.6 |
Deferred tax liabilities - noncurrent | (125.0) |  |  | (122.6) |
| $ | 436.0 |  |  | $ | 359.0 |
As reflected in the preceding table, the Company recorded a net deferred tax asset of $436.0 million and $359.0 million as of December 31, 2024 and 2023, respectively, and had a valuation allowance against its gross deferred tax assets of approximately $147.2 million and $149.8 million as of December 31, 2024 and 2023, 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. Changes in the valuation allowance during the years ended December 31, 2024, 2023 and 2022 are summarized as follows (in millions):
|  |  |  | Additions |  |  |  |  |  |
Description |  | Balance at Beginning of Period |  | Acquired Businesses |  | Charged (Credited) to Costs and Expenses(1) |  | Deductions(2) |  | Foreign Currency Translation |  | Balance at End of Period
Year ended December 31, 2024 |  |  |  |  |  |  |  |  |  |  |  |
Deferred tax valuation allowance |  | $ | 149.8 |  |  | $ | — |  |  | $ | 13.1 |  |  | $ | (8.7) |  |  | $ | (7.0) |  |  | $ | 147.2 |
Year ended December 31, 2023 |  |  |  |  |  |  |  |  |  |  |  |
Deferred tax valuation allowance |  | $ | 47.3 |  |  | $ | — |  |  | $ | 116.5 |  |  | $ | (16.7) |  |  | $ | 2.7 |  |  | $ | 149.8 |
Year ended December 31, 2022 |  |  |  |  |  |  |  |  |  |  |  |
Deferred tax valuation allowance |  | $ | 47.4 |  |  | $ | — |  |  | $ | 0.7 |  |  | $ | — |  |  | $ | (0.8) |  |  | $ | 47.3 |
____________________________________ (1) The amounts recorded to expense in 2024 are primarily related to China and the amounts recorded to expense in 2023 are primarily related to Switzerland and the U.S. There were no amounts credited or charged through other comprehensive income during 2024, 2023 and 2022. (2) The deductions in 2024 are primarily related to reversal of valuation allowance from the divestiture of the majority of the Company's G&P business. The deductions in 2023 are primarily related to reversal of valuation allowance from the effective utilization of certain tax losses in the Brazil amnesty program. The Company had net operating loss carryforwards of $93.9 million as of December 31, 2024, with expiration dates as follows: 2025 - $0.7 million; 2026 - $0.3 million; 2027 - $4.0 million; 2028 and thereafter - $42.3 million and unlimited - $46.6 million. The net operating loss carryforwards of $93.9 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 $344.0 million, $463.6 million and $304.0 million for the years ended December 31, 2024, 2023 and 2022, 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, 2024 and 2023, the Company had approximately $9.3 million and $9.9 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, reflected in “Other current liabilities” in the Company’s Consolidated Balance Sheets. At December 31, 2024 and 2023, the Company had approximately $378.4 million and $344.2 million, respectively, of accrued taxes reflected in “Other noncurrent liabilities” in the Company’s Consolidated Balance Sheets. The Company accrued approximately $3.6 million and $0.3 million of interest and penalties related to unrecognized tax benefits in its provision for income taxes during 2024 and 2023, respectively. At December 31, 2024 and 2023, the Company had accrued interest and penalties related to unrecognized tax benefits of $30.9 million and $27.9 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, 2024 and 2023 is as follows (in millions):
| 2024 |  | 2023
Gross unrecognized income tax benefits at the beginning of the year | $ | 351.2 |  |  | $ | 281.7 |
Additions for tax positions of the current year | 55.8 |  |  | 67.9 |
Additions for tax positions of prior years | 7.4 |  |  | 5.5 |
Reductions for tax positions of prior years for: |  |  |
Changes in judgments | (0.5) |  |  | 2.8 |
Settlements during the year | — |  |  | (15.4) |
Lapses of applicable statute of limitations | (2.4) |  |  | (2.0) |
Foreign currency translation and other | (24.1) |  |  | 10.7 |
Gross unrecognized income tax benefits at the end of the year | $ | 387.4 |  |  | $ | 351.2 |
At December 31, 2024 and 2023, the Company had $387.4 million and $351.2 million, respectively, of unrecognized income tax benefits, which would affect the Company’s effective tax rate if recognized. The reconciliation of gross unrecognized income tax benefits above for 2024 and 2023 excludes certain indirect favorable effects that relate to other tax jurisdictions of approximately $126.4 million and $103.9 million, respectively. The change in certain indirect favorable effects between 2024 and 2023 includes approximately $30.2 million and $26.7 million, respectively, related to additions and reductions for tax positions of current and prior years, changes in judgments and lapses of statutes of limitations. During 2022, the Company made the determination that it will be able to utilize approximately $15.7 million of indirect favorable benefits in the United States related to the settlement of a foreign audit examination. In addition, the gross unrecognized income tax benefits as of December 31, 2024 and 2023 exclude certain deposits made in a foreign jurisdiction of approximately $25.2 million, net of $18.5 million refunds received, and $26.9 million, net of $19.7 million refunds received, respectively, 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, 2024, 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 $9.3 million could be concluded within the next 12 months. Although there are ongoing examinations in various federal and state jurisdictions, the 2019 through 2024 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 2019 through 2024 tax years generally remain subject to examination by their respective tax authorities. In 2008 and 2012, as part of routine audits, the Brazilian taxing authorities disallowed deductions relating to the amortization of certain goodwill recognized in connection with a reorganization of the Company’s Brazilian operations and the related transfer of certain assets to the Company’s Brazilian subsidiaries. The amount of the tax disallowance through December 31, 2023 would have been approximately 131.5 million Brazilian reais (or approximately $27.1 million) and subject to significant interest and penalties. In the first quarter of 2023, the Brazilian government issued a “Litigation Zero” tax amnesty program, whereby cases being disputed at the administrative court level of review for a period of more than ten years could be considered for amnesty. Enrollment in the amnesty program was not considered an admission of guilt and allowed for outstanding contested cases to be settled at a significant monetary discount. The Company contested the disallowance and had been historically advised by its legal and tax advisors that its position was allowable under the tax laws of Brazil. After weighing various impacts involved with enrollment, including the avoidance of potential interest, penalties and legal costs, the Company enrolled in the program in the quarter ended March 31, 2023. The Company recorded approximately 182.6 million Brazilian reais (or approximately $34.8 million) within “Income tax provision” net of associated U.S. income tax credits of approximately $8.4 million and completed its installment payments related to its enrollment in the program during the year ended December 31, 2023.

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