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Income Taxes | 12 Months Ended
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Dec. 31, 2019
Income Tax Disclosure [Abstract] |
Income Taxes | 17. Income Taxes The components of income from continuing operations before income taxes and noncontrolling interests were as follows:
(In millions) |  |  | 2019 |  |  |  | 2018 |  |  | 2017 |
Domestic operations |  |  | $ | 438.2 |  |  |  | $ | 456.7 |  |  | $ | 554.7 |
Foreign operations |  |  |  | 137.1 |  |  |  |  | 80.3 |  |  |  | 80.1 |
Income before income taxes and noncontrolling interests |  |  | $ | 575.3 |  |  |  | $ | 537.0 |  |  | $ | 634.8 |
A reconciliation of income taxes at the 35% federal statutory income tax rate for 2017 and 21% for 2018 and 2019 to the income tax provision reported was as follows:
(In millions) |  |  | 2019 |  |  |  | 2018 |  |  | 2017 |
Income tax expense computed at federal statutory income tax rate |  |  | $ | 120.8 |  |  |  | $ | 112.8 |  |  | $ | 222.2 |
Other income taxes, net of federal tax benefit |  |  |  | 18.0 |  |  |  |  | 13.7 |  |  |  | 13.4 |
Foreign taxes at a different rate than U.S. federal statutory income tax rate |  |  |  | 1.4 |  |  |  |  | 3.5 |  |  |  | (8.3 | )
Tax benefit on income attributable to domestic production activities |  |  |  | — |  |  |  |  | — |  |  |  | (10.9 | )
Net adjustments for uncertain tax positions |  |  |  | 7.5 |  |  |  |  | 4.1 |  |  |  | 11.6 |
Share-based compensation (ASU 2016-09) |  |  |  | (3.7 | ) |  |  |  | (2.1 | ) |  |  | (23.9 | )
Tax Act impact |  |  |  | — |  |  |  |  | 5.5 |  |  |  | (25.7 | )
Deferred tax impact of state tax rate changes |  |  |  | 3.1 |  |  |  |  | 3.5 |  |  |  | (2.0 | )
Valuation allowance increase (decrease) |  |  |  | 3.4 |  |  |  |  | 3.0 |  |  |  | (5.2 | )
Miscellaneous other, net |  |  |  | (6.5 | ) |  |  |  | 3.0 |  |  |  | (11.7 | )
Income tax expense as reported |  |  | $ | 144.0 |  |  |  | $ | 147.0 |  |  | $ | 159.5 |
Effective income tax rate |  |  |  | 25.0 | % |  |  |  | 27.4 | % |  |  | 25.1 | %
The 2019 and 2018 effective income tax rates were favorably impacted by a tax benefit related to share-based compensation and were unfavorably impacted by a valuation allowance increase, state and local taxes, unfavorable tax rates in foreign jurisdictions, and increases in uncertain tax positions. The 2018 effective income tax rate was also unfavorably impacted by an adjustment to the provisional net benefit recorded in 2017 under the Tax Cuts and Jobs Act of 2017 (the “Tax Act”). The 2017 effective income tax rate was favorably impacted by the Tax Act, a tax benefit related to share-based compensation, the tax benefit attributable to the Domestic Production Activity Deduction and favorable tax rates in foreign jurisdictions, partially offset by state and local taxes and increases to uncertain tax positions. The Tax Act, enacted on December 22, 2017, made significant changes to the U.S. Internal Revenue Code including a reduction in the corporate tax rate from 35% to 21% for tax years beginning after December 31, 2017, an exemption from federal income tax for dividends received from foreign subsidiaries and an imposition of a one-time transition tax on the deemed repatriation of cumulative foreign earnings as of December 31, 2017. A reconciliation of the beginning and ending amount of unrecognized tax benefits (“UTBs”) was as follows:
(In millions) |  |  | 2019 |  |  |  | 2018 |  |  | 2017 |
Unrecognized tax benefits—beginning of year |  |  | $ | 83.5 |  |  |  | $ | 87.5 |  |  | $ | 58.2 |
Gross additions—current year tax positions |  |  |  | 9.2 |  |  |  |  | 9.1 |  |  |  | 31.0 |
Gross additions—prior year tax positions |  |  |  | 2.9 |  |  |  |  | 9.3 |  |  |  | 10.9 |
Gross additions (reductions)—purchase accounting adjustments |  |  |  | — |  |  |  |  | 1.0 |  |  |  | 4.0 |
Gross reductions—prior year tax positions |  |  |  | (6.9 | ) |  |  |  | (14.5 | ) |  |  | (9.4 | )
Gross reductions—settlements with taxing authorities |  |  |  | (0.7 | ) |  |  |  | (8.9 | ) |  |  | (7.2 | )
Unrecognized tax benefits—end of year |  |  | $ | 88.0 |  |  |  | $ | 83.5 |  |  | $ | 87.5 |
The amount of UTBs that, if recognized as of December 31, 2019, would affect the Company’s effective tax rate was $72.4 million. It is reasonably possible that, within the next twelve months, total UTBs may decrease in the range of $3.1 million to $3.8 million primarily as a result of the conclusion of U.S. federal, state and foreign income tax proceedings. We classify interest and penalty accruals related to UTBs as income tax expense. In 2019, we recognized an interest and penalty expense of approximately $3.0 million. In 2018, we recognized an interest and penalty expense of approximately $2.2 million. In 2017, we recognized an interest and penalty expense of approximately $2.0 million. At December 31, 2019 and 2018, we had accruals for the payment of interest and penalties of $16.1 million and $14.4 million, respectively. We file income tax returns in the U.S., various state and foreign jurisdictions. The Company is currently under examination by the U.S. Internal Revenue Service for the periods related to 2017 and 2018, and open and subject to examination for 2016. In addition to the U.S., we have tax years that remain open and subject to examination by tax authorities in the following major taxing jurisdictions: Canada for years after 2014, Mexico for years after 2014 and China for years after 2015. Income taxes in 2019, 2018 and 2017 were as follows:
(In millions) |  |  | 2019 |  |  |  | 2018 |  |  | 2017 |
Current |  |  |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | $ | 94.9 |  |  |  | $ | 93.5 |  |  | $ | 133.1 |
Foreign |  |  |  | 35.1 |  |  |  |  | 26.4 |  |  |  | 22.4 |
State and other |  |  |  | 21.5 |  |  |  |  | 24.1 |  |  |  | 22.8 |
Deferred |  |  |  |  |  |  |  |  |  |  |  |  |  |
Federal, state and other |  |  |  | (4.4 | ) |  |  |  | 4.8 |  |  |  | (27.2 | )
Foreign |  |  |  | (3.1 | ) |  |  |  | (1.8 | ) |  |  | 8.4 |
Total income tax expense |  |  | $ | 144.0 |  |  |  | $ | 147.0 |  |  | $ | 159.5 |
The components of net deferred tax assets (liabilities) as of December 31, 2019 and 2018 were as follows:
(In millions) |  |  | 2019 |  |  |  | 2018 |
Deferred tax assets: |  |  |  |  |  |  |  |  |  |
Compensation and benefits |  |  | $ | 37.6 |  |  |  | $ | 31.5 |
Defined benefit plans |  |  |  | 50.8 |  |  |  |  | 39.3 |
Capitalized inventories |  |  |  | 18.2 |  |  |  |  | 16.1 |
Accounts receivable |  |  |  | 5.1 |  |  |  |  | 5.4 |
Other accrued expenses |  |  |  | 58.8 |  |  |  |  | 55.2 |
Net operating loss and other tax carryforwards |  |  |  | 22.4 |  |  |  |  | 21.2 |
Valuation allowance |  |  |  | (16.8 | ) |  |  |  | (13.3 | )
Miscellaneous |  |  |  | 3.9 |  |  |  |  | 2.5 |
Total deferred tax assets |  |  |  | 180.0 |  |  |  |  | 157.9 |
Deferred tax liabilities: |  |  |  |  |  |  |  |  |  |
Fixed assets |  |  |  | (70.4 | ) |  |  |  | (60.2 | )
Intangible assets |  |  |  | (222.9 | ) |  |  |  | (224.6 | )
Investment in partnership |  |  |  | (7.4 | ) |  |  |  | (3.8 | )
Miscellaneous |  |  |  | (19.2 | ) |  |  |  | (20.0 | )
Total deferred tax liabilities |  |  |  | (319.9 | ) |  |  |  | (308.6 | )
Net deferred tax liability |  |  | $ | (139.9 | ) |  |  | $ | (150.7 | )
In accordance with ASC requirements for Income Taxes, deferred taxes were classified in the consolidated balance sheets as of December 31, 2019 and 2018 as follows:
(In millions) |  |  | 2019 |  |  |  | 2018 |
Other assets |  |  |  | 17.3 |  |  |  |  | 11.9 |
Deferred income taxes |  |  |  | (157.2 | ) |  |  |  | (162.6 | )
Net deferred tax liability |  |  | $ | (139.9 | ) |  |  | $ | (150.7 | )
As of December 31, 2019 and 2018, the Company had deferred tax assets relating to net operating losses, capital losses, and other tax carryforwards of $22.4 million and $21.2 million, respectively, of which approximately $7.9 million will expire between 2020 and 2024, and the remainder of which will expire in 2025 and thereafter. The Company has provided a valuation allowance to reduce the carrying value of certain of these deferred tax assets, as management has concluded that, based on the available evidence, it is more likely than not that the deferred tax assets will not be fully realized. Under the Tax Act, the accumulated foreign earnings and profits of the Company’s foreign subsidiaries as of December 31, 2017 are subject to a deemed repatriation tax and should not be subject to additional U.S. federal income tax upon an actual repatriation of those earnings. As a result, the Company has recorded an estimated tax liability of $9.7 million for foreign and state taxes that would be payable on a distribution of those earnings and profits. We have not provided for deferred taxes on the remaining book over tax outside basis differences of our foreign subsidiaries. The outside basis differences of foreign subsidiaries considered indefinitely reinvested totaled approximately $133.6 million at December 31, 2019. The associated deferred tax liability on this basis difference is less than $3 million.

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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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