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Income Taxes (Notes) | 12 Months Ended
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Dec. 31, 2019
Income Tax Disclosure [Abstract] |
Income Tax Disclosure [Text Block] | Income Taxes The provision for income taxes consists of the following components (in thousands):
| Year Ended December 31,
| 2019 |  | 2018 |  | 2017
Current: |  |  |  |  |
Federal | $ | 101,839 |  |  | $ | 90,216 |  |  | $ | 196,825 |
State | 24,925 |  |  | 25,851 |  |  | 27,149 |
Foreign | 81,081 |  |  | 77,508 |  |  | 58,123 |
Total current provision for income taxes | $ | 207,845 |  |  | $ | 193,575 |  |  | $ | 282,097 |
Deferred: |  |  |  |  |
Federal | $ | 22,173 |  |  | $ | 14,977 |  |  | $ | (37,486 | )
State | 6,376 |  |  | 4,386 |  |  | 4,044 |
Foreign | (21,064 | ) |  | (21,543 | ) |  | (13,095 | )
Total deferred provision (benefit) for income taxes | $ | 7,485 |  |  | $ | (2,180 | ) |  | $ | (46,537 | )
Provision for income taxes | $ | 215,330 |  |  | $ | 191,395 |  |  | $ | 235,560 |
Income taxes have been based on the following components of income from continuing operations before provision for income taxes (in thousands):
| Year Ended December 31,
| 2019 |  | 2018 |  | 2017
Domestic | $ | 616,842 |  |  | $ | 562,758 |  |  | $ | 575,148 |
Foreign | 174,180 |  |  | 180,673 |  |  | 191,479 |
Income from continuing operations before provision for income taxes | $ | 791,022 |  |  | $ | 743,431 |  |  | $ | 766,627 |
The U.S. federal statutory rate is reconciled to the effective tax rate as follows:
| Year Ended December 31,
| 2019 |  | 2018 |  | 2017
U.S. federal statutory rate | 21.0 | % |  | 21.0 | % |  | 35.0 | %
U.S. federal tax reform - federal deferred tax rate change | — | % |  | — | % |  | (9.5 | )%
U.S. federal tax reform - transition tax on foreign earnings | 0.1 | % |  | (1.3 | )% |  | 6.6 | %
State income taxes, net of state credits and federal tax impact | 3.2 | % |  | 3.5 | % |  | 2.8 | %
Impact of rates on international operations | 1.4 | % |  | 0.9 | % |  | (3.2 | )%
Excess tax benefits from stock-based compensation | (0.3 | )% |  | (0.6 | )% |  | (1.0 | )%
Non-deductible expenses | 0.9 | % |  | 1.6 | % |  | 1.1 | %
Other, net | 0.9 | % |  | 0.6 | % |  | (1.1 | )%
Effective tax rate | 27.2 | % |  | 25.7 | % |  | 30.7 | %
On December 22, 2017, the U.S. government enacted the Tax Act. The Tax Act introduced broad and complex changes to U.S. income tax laws that impact us, most notably a reduction of the U.S. statutory corporate tax rate from 35% to 21% for tax years beginning after December 31, 2017. Additionally, beginning in 2018 the Tax Act imposed a regime of taxation on foreign subsidiary earnings, GILTI, and on certain related party payments, BEAT. As part of the transition of U.S. international taxation from a worldwide tax system to a modified territorial tax system, the Tax Act imposed a one-time transition tax on the deemed repatriation of historical earnings of foreign subsidiaries as of December 31, 2017. On December 22, 2017, the U.S. Securities and Exchange Commission Staff issued SAB 118, which provided guidance on accounting for the tax effects of the Tax Act. SAB 118 provided a measurement period that should not extend beyond one year from the Tax Act enactment date for companies to complete the accounting required under ASC 740, Income Taxes. In accordance with SAB 118, a company was required to reflect the income tax effects of those aspects of the Tax Act for which the accounting under ASC 740 was complete. To the extent that a company’s accounting for certain income tax effects of the Tax Act was incomplete but the company was able to determine a reasonable estimate, it was required to record a provisional estimate in the financial statements. Transition Tax on Foreign Earnings: In the fourth quarter of 2017, we recognized a provisional income tax expense of $51 million related to the one-time transition tax on foreign earnings. During the third quarter of 2018, we recorded a $10 million favorable adjustment to the provisional amount. As of December 31, 2018, we substantially completed our analysis of the transition tax, and the liability was no longer considered provisional. In the third quarter of 2019, we amended our 2017 transition tax calculation and recorded an additional expense of $1 million. As permitted by the Tax Act, we elected to pay the final $42 million liability in installments over 8 years. This liability has been reduced by the first two installments and other payment credits to $33 million and is recorded in Other noncurrent liabilities on our Consolidated Balance Sheets. Revaluation of Deferred Tax Assets and Liabilities: As a result of the Tax Act reduction in the U.S. federal statutory rate from 35% to 21%, at December 31, 2017, we recorded a provisional decrease to net deferred tax liabilities and a corresponding provisional U.S. federal deferred tax benefit of $73 million. There were no subsequent adjustments recognized with regard to the revaluation of deferred taxes, and the accounting for this impact of the Tax Act is complete. GILTI: While the Tax Act provides for a modified territorial tax system, under a highly complex provision commonly known as GILTI, the Tax Act subjects a U.S. shareholder to current tax on certain earnings of foreign subsidiaries, subject to relief for available foreign tax credits. The FASB Staff Q&A, Topic 740, No. 5, "Accounting for GILTI," provides that an accounting policy election can be made either to recognize deferred taxes for temporary basis differences expected to reverse as GILTI in future years, or to provide for the tax expense related to GILTI in the year the tax is incurred as a period expense only. We have elected to account for GILTI in the year the tax is incurred. For the years ended December 31, 2019 and 2018, the impact of GILTI increased our effective tax rate by approximately 0.6% and 0.3%, respectively. Indefinite Reinvestment Assertion: Undistributed earnings of our foreign subsidiaries amounted to approximately $743 million at December 31, 2019. Through December 31, 2017, it was our practice and intention to permanently reinvest the undistributed earnings of our foreign subsidiaries, and no U.S. deferred income taxes or foreign withholding taxes were recorded. Beginning in 2018, the Tax Act generally provided a 100% participation exemption from further U.S. taxation of dividends received from 10-percent or more owned foreign corporations held by U.S. corporate shareholders. Although future dividend income is exempt from U.S. federal tax in the hands of the U.S. corporate shareholders, either as a result of the participation exemption, or due to the previous taxation of such earnings under the transition tax and GILTI regime, companies must still apply the guidance of ASC 740 to account for the tax consequences of outside basis differences and other tax impacts of their investments in non-U.S. subsidiaries. Further, the 2017 transition tax reduced a majority of the previous outside basis differences in our foreign subsidiaries, and most of any new differences arising have extensive interaction with the GILTI regime discussed above. Based on a review of our global financing and capital expenditure requirements as of December 31, 2019, we have made no changes to our assertion that we plan to permanently reinvest the undistributed earnings of our international subsidiaries. Thus, no deferred U.S. income taxes or potential foreign withholding taxes have been recorded. Due to the complexity of the new U.S. tax regime, it remains impractical to estimate the amount of deferred taxes potentially payable were such earnings to be repatriated. Although the SAB 118 measurement period has closed, further technical guidance related to the Tax Act, including final regulations on a broad range of topics, is expected to be issued. In accordance with ASC 740, the Company will recognize any effects of the guidance in the period that such guidance is issued. The significant components of our deferred tax assets and liabilities are as follows (in thousands):
| December 31,
| 2019 |  | 2018
Deferred Tax Assets: |  |  |
Accrued expenses and reserves | $ | 51,869 |  |  | $ | 60,337 |
Qualified and nonqualified retirement plans | 31,053 |  |  | 20,525 |
Inventory | 12,679 |  |  | 15,474 |
Accounts receivable | 14,025 |  |  | 16,208 |
Interest deduction carryforwards | 25,448 |  |  | 20,392 |
Stock-based compensation | 4,755 |  |  | 4,859 |
Operating lease assets, net | 303,705 |  |  | — |
Net operating loss carryforwards | 16,287 |  |  | 13,222 |
Other | 11,777 |  |  | 12,370 |
Total deferred tax assets, gross | 471,598 |  |  | 163,387 |
Less: valuation allowance | (41,815 | ) |  | (34,779 | )
Total deferred tax assets | $ | 429,783 |  |  | $ | 128,608 |
Deferred Tax Liabilities: |  |  |
Goodwill and other intangible assets | $ | 219,879 |  |  | $ | 216,699 |
Property, plant and equipment | 100,461 |  |  | 87,839 |
Trade name | 108,039 |  |  | 116,615 |
Operating lease liabilities | 292,498 |  |  | — |
Other | 8,916 |  |  | 15,511 |
Total deferred tax liabilities | $ | 729,793 |  |  | $ | 436,664 |
Net deferred tax liability | $ | (300,010 | ) |  | $ | (308,056 | )
Deferred tax assets and liabilities are reflected on our Consolidated Balance Sheets as follows (in thousands):
| December 31,
| 2019 |  | 2018
Noncurrent deferred tax assets | $ | 10,119 |  |  | $ | 3,378 |
Noncurrent deferred tax liabilities | 310,129 |  |  | 311,434 |
Noncurrent deferred tax assets and noncurrent deferred tax liabilities are included in Other noncurrent assets and Deferred income taxes, respectively, on our Consolidated Balance Sheets. We had net operating loss carryforwards, primarily for certain international tax jurisdictions, the tax benefits of which were $16 million and $13 million at December 31, 2019 and 2018, respectively. At December 31, 2019 and 2018, we had tax credit carryforwards for certain U.S. state jurisdictions, the tax benefits of which total less than $1 million and $1 million, respectively. As of December 31, 2019 and 2018, we had interest deduction carryforwards, primarily in Italy and Germany, the tax benefits of which were $25 million and $20 million, respectively. As of December 31, 2019 and 2018, we had a U.S. capital loss carryforward, the tax benefit of which was $5 million. As of December 31, 2019 and 2018, valuation allowances of $42 million and $35 million, respectively, were recorded for deferred tax assets related to the Italy and Germany interest deduction carryforwards, the U.S. capital loss carryforward, and for certain foreign and U.S. net operating loss carryforwards. The $7 million net increase in valuation allowances was primarily attributable to a $5 million valuation allowance provided on the interest deduction carryforwards generated in 2019 due to thin capitalization constraints in Italy and Germany. The net operating losses generally carry forward for an indefinite period. The interest deduction carryforwards in Italy and Germany do not expire. U.S. capital losses carry forward for five years. Realization of these deferred tax assets is dependent on the generation of sufficient taxable income prior to the expiration dates, where applicable, or in the case of interest carryforwards subject to legislative thin capitalization constraints, typically growth in EBITDA. Based on historical and projected operating results, we believe that it is more likely than not that earnings will be sufficient to realize the deferred tax assets for which valuation allowances have not been provided. While we expect to realize the deferred tax assets, net of valuation allowances, changes in tax laws or in estimates of future taxable income may alter this expectation. A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows (in thousands):
| 2019 |  | 2018 |  | 2017
Balance at January 1 | $ | 1,237 |  |  | $ | 1,690 |  |  | $ | 2,146 |
Additions for acquired tax positions | 1,376 |  |  | — |  |  | 73 |
Additions based on tax positions related to the current year | 50 |  |  | 5 |  |  | 5 |
Lapse of statutes of limitations | (297 | ) |  | (458 | ) |  | (534 | )
Cumulative translation adjustment | (49 | ) |  | — |  |  | — |
Balance at December 31 | $ | 2,317 |  |  | $ | 1,237 |  |  | $ | 1,690 |
Included in the balance of unrecognized tax benefits above as of December 31, 2019 are approximately $2 million, and as of December 31, 2018 and 2017, approximately $1 million, of tax benefits that, if recognized, would affect the effective tax rate. The balance of unrecognized tax benefits at December 31, 2019, 2018 and 2017 includes approximately $1 million of tax benefits that, if recognized, would result in adjustments to deferred taxes. The Company recognizes interest and penalties accrued related to unrecognized tax benefits as income tax expense. Attributable to the unrecognized tax benefits noted above, the Company had accumulated interest and penalties of less than $1 million at December 31, 2019, 2018 and 2017. During each of the years ended December 31, 2019, 2018 and 2017, an immaterial amount of interest and penalties were recorded through the income tax provision, prior to any reversals for lapses in the statutes of limitations. During the twelve months beginning January 1, 2020, it is reasonably possible that we will reduce unrecognized tax benefits by less than $1 million, an immaterial amount of which would impact our effective tax rate, primarily as a result of the expiration of certain statutes of limitations. The company and/or its subsidiaries file income tax returns in the U.S. federal jurisdiction, and various U.S. state and international jurisdictions. With few exceptions, the company is no longer subject to U.S. federal, state and local, or international income tax examinations by tax authorities for years before 2015. Adjustments from examinations, if any, are not expected to have a material effect on our consolidated financial statements.

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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