XML 71 R21.htm IDEA: XBRL DOCUMENT
v3.19.3.a.u2

Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2019
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes Following is a summary of earnings before income taxes for United States and foreign operations:
| 2019 |  | 2018 |  | 2017
United States | $ | 163,764 |  |  | 387,564 |  |  | 754,562 |
Foreign | 585,781 |  |  | 661,637 |  |  | 563,295 |
Earnings before income taxes | $ | 749,545 |  |  | 1,049,201 |  |  | 1,317,857 |
Income tax expense (benefit) for the years ended December 31, 2019, 2018 and 2017 consists of the following:
| 2019 |  | 2018 |  | 2017
Current income taxes: |  |  |  |  |
U.S. federal | $ | 19,936 |  |  | 22,700 |  |  | 327,697 |
State and local | 12,659 |  |  | 14,521 |  |  | 17,811 |
Foreign | 80,221 |  |  | 58,669 |  |  | 73,248 |
Total current | 112,816 |  |  | 95,890 |  |  | 418,756 |
Deferred income taxes: |  |  |  |  |
U.S. federal | 11,993 |  |  | 54,983 |  |  | (17,419 | )
State and local | 15,371 |  |  | 19,076 |  |  | (3,046 | )
Foreign | (135,206 | ) |  | 14,397 |  |  | (55,126 | )
Total deferred | (107,842 | ) |  | 88,456 |  |  | (75,591 | )
Total | $ | 4,974 |  |  | 184,346 |  |  | 343,165 |
The geographic dispersion of earnings and losses contributes to the annual changes in the Company’s effective tax rates. Approximately 22% of the Company’s current year earnings before income taxes was generated in the United States at a combined federal and state effective tax rate that is higher than the Company’s overall effective tax rate. The Company is also subject to taxation in other jurisdictions where it has operations, including Australia, Belgium, Brazil, Bulgaria, France, Ireland, Italy, Luxembourg, Malaysia, Mexico, the Netherlands, New Zealand, Poland, Russia, Spain, the U.K. and the Ukraine. The effective tax rates that the Company accrues in these jurisdictions vary widely, but they are generally lower than the Company’s overall effective tax rate. The Company’s domestic effective tax rates for the years ended December 31, 2019, 2018 and 2017 were 36.6%, 28.7%, and 43.1%, respectively, and its non-U.S. effective tax rates for the years ended December 31, 2019, 2018 and 2017 were (9.4)%, 11.0%, and 3.2%, respectively. The difference in rates applicable in foreign jurisdictions results from a number of factors, including lower statutory rates, historical loss carry-forwards, financing arrangements, and other factors. The Company’s effective tax rate has been and will continue to be impacted by the geographical dispersion of the Company’s earnings and losses. To the extent that domestic earnings increase while the foreign earnings remain flat or decrease, or increase at a lower rate, the Company’s effective tax rate will increase. Income tax expense (benefit) attributable to earnings before income taxes differs from the amounts computed by applying the U.S. statutory federal income tax rate to earnings before income taxes as follows:
| 2019 |  | 2018 |  | 2017
Income taxes at statutory rate | $ | 157,404 |  |  | 220,332 |  |  | 461,250 |
State and local income taxes, net of federal income tax benefit | 22,185 |  |  | 22,315 |  |  | 10,133 |
Foreign income taxes(a) | (17,276 | ) |  | (39,915 | ) |  | (113,520 | )
Change in valuation allowance | (21,975 | ) |  | 2,472 |  |  | 10,008 |
European Restructuring(b) | (136,194 | ) |  | — |  |  | — |
Manufacturing deduction | — |  |  | — |  |  | (11,911 | )
2017 revaluation of deferred tax assets and liabilities (c) | — |  |  | — |  |  | (150,546 | )
Transition Tax | — |  |  | 28,201 |  |  | 105,165 |
Transition tax planning initiatives | — |  |  | (18,706 | ) |  | 14,825 |
Tax contingencies and audit settlements, net | 6,686 |  |  | (31,874 | ) |  | 23,097 |
Other, net | (5,856 | ) |  | 1,521 |  |  | (5,336 | )
| $ | 4,974 |  |  | 184,346 |  |  | 343,165 |
(a) Foreign income taxes include statutory rate differences, financing arrangements, withholding taxes, local income taxes, notional deductions, and other miscellaneous items. The significant decrease in foreign income taxes for 2018 is primarily due to the impact of the U.S. statutory rate reduction from 35% to 21% as a result of the Tax Cuts and Jobs Act (“TCJA”) discussed below. (b) The Company implemented select operational, administrative and financial restructurings that centralized certain business processes and intangible assets in various European jurisdictions into a new entity. The European Restructuring resulted in a current income tax liability of $148,240, calculated in part by measuring the fair value of intangible assets transferred. The Company offset the income tax liability with the utilization of $148,240 of deferred tax assets from accumulated net operating loss carry forwards. The European Restructuring also resulted in the Company recording a $136,194 deferred tax asset, and a corresponding deferred tax benefit, related to the tax basis of the intangible assets in the new entity. (c) 2017 revaluation of deferred tax assets and liabilities includes $106,107 related to the TCJA and $44,439 related to Belgium tax reform. The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities as of December 31, 2019 and 2018 are presented below:
| 2019 |  | 2018
Deferred tax assets: |  |  |
Accounts receivable | $ | 7,063 |  |  | 8,312 |
Inventories | 50,585 |  |  | 47,212 |
Employee benefits | 36,068 |  |  | 37,335 |
Accrued expenses and other | 67,638 |  |  | 71,621 |
Deductible state tax and interest benefit | 3,665 |  |  | 2,904 |
Intangibles | 146,953 |  |  | 16,134 |
Lease liabilities | 86,717 |  |  | — |
Federal, foreign and state net operating losses and credits | 376,375 |  |  | 575,625 |
Gross deferred tax assets | 775,064 |  |  | 759,143 |
Valuation allowance | (232,196 | ) |  | (347,786 | )
Net deferred tax assets | 542,868 |  |  | 411,357 |
Deferred tax liabilities: |  |  |
Inventories | (12,885 | ) |  | (18,332 | )
Plant and equipment | (510,952 | ) |  | (477,734 | )
Intangibles | (182,424 | ) |  | (181,436 | )
Right of use assets | (83,271 | ) |  | — |
Other liabilities | (24,220 | ) |  | (96,134 | )
Gross deferred tax liabilities | (813,752 | ) |  | (773,636 | )
Net deferred tax liability | $ | (270,884 | ) |  | (362,279 | )
The Company evaluates its ability to realize the tax benefits associated with deferred tax assets by analyzing its forecasted taxable income using both historic and projected future operating results, the reversal of existing temporary differences, taxable income in prior carry-back years (if permitted) and the availability of tax planning strategies. The valuation allowance as of December 31, 2019, and 2018 is $232,196 and $347,786, respectively. The valuation allowance as of December 31, 2019 relates to the net deferred tax assets of certain of the Company’s foreign subsidiaries as well as certain state net operating losses and tax credits. The total change in the 2019 valuation allowance was a decrease of $115,590 which includes $148,240 related to the tax liability resulting from the European Restructuring, with remaining $32,650 related to tax rate changes, foreign currency translation, and other activities. The total change in the 2018 valuation allowance was a decrease of $15,177, which includes $15,357 related to foreign currency translation. Management believes it is more likely than not that the Company will realize the benefits of its deferred tax assets, net of valuation allowances, based upon the expected reversal of deferred tax liabilities and the level of historic and forecasted taxable income over periods in which the deferred tax assets are deductible. As of December 31, 2019, the Company has state net operating loss carry forwards and state tax credits with potential tax benefits of $51,175, net of federal income tax benefit; these carry forwards expire over various periods based on taxing jurisdiction. A valuation allowance totaling $31,349 has been recorded against these state deferred tax assets as of December 31, 2019. In addition, as of December 31, 2019, the Company has credits and net operating loss carry forwards in various foreign jurisdictions with potential tax benefits of $1,549,745. A valuation allowance totaling $200,847 has been recorded against these deferred tax assets as of December 31, 2019. In 2018 the Company redeemed hybrid instruments in response to changes in global tax regimes. The changes were triggered by the EU’s Base Erosion and Profit Shifting “BEPS” and Anti-Tax Avoidance Directives “ATAD” I and II initiatives. As a result of the redemption, the Company recorded an ASC 740-10 liability of $1,224,545 for the full tax effected loss in the Tax Uncertainties section below. This ASC 740-10-45 liability is recorded as a reduction to the related deferred tax asset in the financial statements as a result of management’s determination that it is not more likely than not that the benefit will be realized. Due to the passage of the Tax Cuts and Jobs Act (“TCJA”) on December 22, 2017, the Company was required to recognize U.S. federal and state taxes on the higher of its accumulated earnings as of November 2, 2017, or December 31, 2017. The TCJA imposed U.S. tax on all post-1986 foreign unrepatriated earnings accumulated through December 31, 2017. Accordingly, as of December 31, 2018, the Company recognized $133,366 of income tax expense on its foreign earnings. As of December 31, 2018, the Company has recognized net income tax expense on earnings of approximately $1,936,000. As of December 31, 2019, the Company has accrued an additional $6,000 of income tax expense on additional foreign earnings of approximately $177,000. Should these earnings be distributed in the form of dividends in the future, the Company might be subject to withholding taxes (possibly offset by U.S. foreign tax credits) in various foreign jurisdictions, but the Company would not expect incremental U.S. federal or state taxes to be accrued on these previously taxed earnings. Despite the new territorial tax regime created by the TCJA, Company continues to assert that earnings of its foreign subsidiaries are permanently reinvested. Tax Uncertainties In the normal course of business, the Company’s tax returns are subject to examination by various taxing authorities. Such examinations may result in future tax and interest assessments by these taxing jurisdictions. Accordingly, the Company accrues liabilities when it believes that it is not more likely than not that it will realize the benefits of tax positions that it has taken in its tax returns or for the amount of any tax benefit that exceeds the cumulative probability threshold in accordance with ASC 740-10. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company records interest and penalties related to unrecognized tax benefits in income tax expense (benefit). Differences between the estimated and actual amounts determined upon ultimate resolution, individually or in the aggregate, are not expected to have a material adverse effect on the Company’s consolidated financial position but could possibly be material to the Company’s consolidated results of operations or cash flow in any given quarter or annual period. As of December 31, 2019, the Company’s gross amount of unrecognized tax benefits is $1,260,970, excluding interest and penalties. If the Company were to prevail on all uncertain tax positions, $29,420 of the unrecognized tax benefits would affect the Company’s effective tax rate, exclusive of any benefits related to interest and penalties. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
| 2019 |  | 2018
Balance as of January 1 | $ | 1,330,713 |  |  | 65,631 |
Additions based on tax positions related to the current year (a) | 2,302 |  |  | 1,304,447 |
Additions for tax positions of acquired companies | 2,094 |  |  | 1,413 |
Additions for tax positions of prior years | 4,744 |  |  | 5,098 |
Transition tax planning initiatives | — |  |  | (27,470 | )
Reductions resulting from the lapse of the statute of limitations | (2,729 | ) |  | (8,110 | )
Reductions due to Luxembourg tax rate change | (46,841 | ) |  | — |
Settlements with taxing authorities | (1,929 | ) |  | (9,773 | )
Effects of foreign currency translation | (27,384 | ) |  | (523 | )
Balance as of December 31 | $ | 1,260,970 |  |  | 1,330,713 |
(a) 2018 includes tax effected loss of $1,298,737 on Luxembourg hybrid instruments redemptions. The tax effected loss was adjusted for tax rate and foreign currency translation changes in 2019, resulting in an updated balance of $1,224,545 as of December 31, 2019. This $1,224,545 of unrecognized benefit is presented as a reduction to the related deferred tax asset in the balance sheet. The Company will continue to recognize interest and penalties related to unrecognized tax benefits as a component of its income tax provision. As of December 31, 2019 and 2018, the Company has $12,555 and $7,184, respectively, accrued for the payment of interest and penalties, excluding the federal tax benefit of interest deductions where applicable. During the years ended December 31, 2019, 2018 and 2017, the Company accrued interest and penalties through the consolidated statements of operations of $5,368, $(1,085) and $165, respectively. The Company believes that its unrecognized tax benefits could decrease by $6,772 within the next twelve months. The Internal Revenue Service has completed its audit of the Company’s 2014 & 2015 tax years, therefore Federal income tax matters related to years prior to 2016 has been effectively settled. Various other state and foreign income tax returns are open to examination for various years. Belgian Tax Matter Between 2012 and 2014, the Company received assessments from the Belgian tax authority for the calendar years 2005 through 2010 in the amounts of €46,135, €38,817, €39,635, €30,131, €35,567 and €43,117 respectively, including penalties, but excluding interest. The Belgian tax authority denied the Company’s formal protests against these assessments and the Company brought all six years before the Court of First Appeal in Bruges. The Court of First Appeal in Bruges ruled in favor of the Company on January 27, 2016, with respect to the calendar years ending December 31, 2005 and December 31, 2009; and on June 13, 2018, the Court of First Appeal in Bruges ruled in favor of the Company with respect to the calendar years ending December 31, 2006, December 31, 2007, December 31, 2008 and December 31, 2010. The Belgian tax authority has lodged its Notification of Appeal for all six years with the Ghent Court of Appeal. On September 17, 2019, the Company pled its case to the Ghent Court of Special (Tax) Appeals and on October 1, 2019, the Court ruled in favor of the Company, re-confirming the rulings of the Court of First Appeals in Bruges with respect to the calendar years ending December 31, 2005 and December 31, 2009. In March 2019, the Company received assessments from the Belgian tax authority for tax years 2011 through 2017 in the amount of €40,617, €39,732, €11,358, €23,919, €30,610, €93,145 and €79,933 respectively, including penalties, but excluding interest. The Company intends to file formal protests based on these assessments in a timely manner. The assessments are largely based on the same facts underlying the positive rulings, which the Belgian tax authority may appeal. In January 2020, the Belgian tax authority set aside its tax assessments for the years 2011 through 2017, inclusively. These assessments were still in the administrative phase of the audit. At this time, the Company is uncertain what the Belgian tax authority intends to do with these years, if anything. The Company continues to disagree with the views of the Belgian tax authority on this matter and will persist in its vigorous defense. Nevertheless, on May 24, 2016, the tax collector representing the Belgian tax authorities imposed a lien on the Company’s properties in Wielsbeke (Ooigemstraat and Breestraat), Oostrozebeke (Ingelmunstersteenweg) and Desselgem (Waregemstraat) included in the Flooring ROW segment. The purpose of the lien is to provide security for payment should the Belgian tax authority prevail on its appeal. The lien does not interfere with the Company’s operations at these properties.

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration