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Income Taxes | 12 Months Ended
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Dec. 31, 2020
Income Tax Disclosure [Abstract] |
Income Taxes | 15. Income Taxes The components of income from continuing operations before income taxes and noncontrolling interests were as follows:
(In millions) |  |  | 2020 |  |  |  | 2019 |  |  | 2018 |
Domestic operations |  |  | $ | 576.8 |  |  |  | $ | 438.2 |  |  | $ | 456.7 |
Foreign operations |  |  |  | 154.0 |  |  |  |  | 137.1 |  |  |  | 80.3 |
Income before income taxes and noncontrolling interests |  |  | $ | 730.8 |  |  |  | $ | 575.3 |  |  | $ | 537.0 |
Income tax expense in the consolidated statement of income consisted of the following:
(In millions) |  |  | 2020 |  |  |  | 2019 |  |  | 2018 |
Current |  |  |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | $ | 100.0 |  |  |  | $ | 94.9 |  |  | $ | 93.5 |
Foreign |  |  |  | 55.9 |  |  |  |  | 35.1 |  |  |  | 26.4 |
State and other |  |  |  | 27.5 |  |  |  |  | 21.5 |  |  |  | 24.1 |
Deferred |  |  |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  |  | (1.8 | ) |  |  |  | (6.9 | ) |  | 3.2 |
Foreign |  |  |  | (11.5 | ) |  |  |  | (3.1 | ) |  |  | (1.8 | )
State and Local |  |  |  | (1.3 | ) |  |  |  | 2.5 |  |  |  | 1.6 |
Total income tax expense |  |  | $ | 168.8 |  |  |  | $ | 144.0 |  |  | $ | 147.0 |
A reconciliation between the federal statutory tax rate and the effective tax rate is as follows:
(In millions) |  |  | 2020 |  |  |  | 2019 |  |  | 2018 |
Income tax expense computed at federal statutory income tax rate |  |  | $ | 153.5 |  |  |  | $ | 120.8 |  |  | $ | 112.8 |
Other income taxes, net of federal tax benefit |  |  |  | 22.3 |  |  |  |  | 18.0 |  |  |  | 13.7 |
Foreign taxes at a different rate than U.S. federal statutory income tax rate |  |  |  | 3.0 |  |  |  |  | 1.4 |  |  |  | 3.5 |
Provision for foreign earnings repatriation, net |  |  |  | 3.2 |  |  |  |  | 0.4 |  |  |  | 0.6 |
Net adjustments for uncertain tax positions |  |  |  | (0.2 | ) |  |  |  | 7.5 |  |  |  | 4.1 |
Share-based compensation (ASU 2016-09) |  |  |  | (11.5 | ) |  |  |  | (3.7 | ) |  |  | (2.1 | )
2017 Tax Act impact |  |  |  | — |  |  |  |  | — |  |  |  | 5.5 |
Deferred tax impact of state tax rate changes |  |  |  | (0.7 | ) |  |  |  | 3.1 |  |  |  | 3.5 |
Valuation allowance (decrease) increase |  |  |  | (7.1 | ) |  |  |  | 3.4 |  |  |  | 3.0 |
Expiration of loss carryforwards |  |  |  | 6.1 |  |  |  |  | — |  |  |  | — |
Miscellaneous other, net |  |  |  | 0.2 |  |  |  |  | (6.9 | ) |  |  | 2.4 |
Income tax expense as reported |  |  | $ | 168.8 |  |  |  | $ | 144.0 |  |  | $ | 147.0 |
Effective income tax rate |  |  |  | 23.1 | % |  |  |  | 25.0 | % |  |  | 27.4 | %
The 2020 effective income tax rate was unfavorably impacted by state, local and foreign taxes, and was favorably impacted by a benefit related to share-based compensation. The 2019 and 2018 effective income tax rates were unfavorably impacted by state, local and foreign taxes, a valuation allowance increase, 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 Act. The 2019 and 2018 effective income tax rates were favorably impacted by a benefit related to share-based compensation. 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”) is as follows:
(In millions) |  |  | 2020 |  |  |  | 2019 |  |  | 2018 |
Unrecognized tax benefits—beginning of year |  |  | $ | 88.0 |  |  |  | $ | 83.5 |  |  | $ | 87.5 |
Gross additions—current year tax positions |  |  |  | 7.2 |  |  |  |  | 9.2 |  |  |  | 9.1 |
Gross additions—prior year tax positions |  |  |  | 3.7 |  |  |  |  | 2.9 |  |  |  | 9.3 |
Gross additions (reductions)—purchase accounting adjustments |  |  |  | 12.1 |  |  |  |  | — |  |  |  | 1.0 |
Gross reductions—prior year tax positions |  |  |  | (11.7 | ) |  |  |  | (6.9 | ) |  |  | (14.5 | )
Gross reductions—settlements with taxing authorities |  |  |  | (3.2 | ) |  |  |  | (0.7 | ) |  |  | (8.9 | )
Unrecognized tax benefits—end of year |  |  | $ | 96.1 |  |  |  | $ | 88.0 |  |  | $ | 83.5 |
The amount of UTBs that, if recognized as of December 31, 2020, would affect the Company’s effective tax rate was $80.0 million. It is reasonably possible that, within the next twelve months, total UTBs may decrease in the range of $4.0 million to $48.1 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 2020, 2019 and 2018, we recognized interest and penalty expense of approximately $0.7 million, $3.0 million and $2.2 million, respectively. At December 31, 2020 and 2019, we had accruals for the payment of interest and penalties of $17.6 million and $16.1 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. 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 2015, Mexico for years after 2015 and China for years after 2016. The components of net deferred tax assets (liabilities) as of December 31, 2020 and 2019 were as follows:
(In millions) |  |  | 2020 |  |  |  | 2019 |
Deferred tax assets: |  |  |  |  |  |  |  |  |  |
Compensation and benefits |  |  | $ | 43.3 |  |  |  | $ | 37.6 |
Defined benefit plans |  |  |  | 38.9 |  |  |  |  | 50.8 |
Capitalized inventories |  |  |  | 18.4 |  |  |  |  | 18.2 |
Accounts receivable |  |  |  | 16.0 |  |  |  |  | 5.1 |
Operating lease liabilities |  |  |  | 43.3 |  |  |  |  | 42.0 |
Other accrued expenses |  |  |  | 79.7 |  |  |  |  | 58.8 |
Net operating loss and other tax carryforwards |  |  |  | 14.4 |  |  |  |  | 22.4 |
Valuation allowance |  |  |  | (9.7 | ) |  |  |  | (16.8 | )
Miscellaneous |  |  |  | 1.2 |  |  |  |  | 3.9 |
Total deferred tax assets |  |  |  | 245.5 |  |  |  |  | 222.0 |
Deferred tax liabilities: |  |  |  |  |  |  |  |  |  |
Fixed assets |  |  |  | (86.4 | ) |  |  |  | (70.4 | )
Intangible assets |  |  |  | (220.9 | ) |  |  |  | (222.9 | )
Operating lease assets |  |  |  | (43.3 | ) |  |  |  | (42.0 | )
Other investments |  |  |  | (6.8 | ) |  |  |  | (7.4 | )
Miscellaneous |  |  |  | (17.8 | ) |  |  |  | (19.2 | )
Total deferred tax liabilities |  |  |  | (375.2 | ) |  |  |  | (361.9 | )
Net deferred tax liability |  |  | $ | (129.7 | ) |  |  | $ | (139.9 | )
In accordance with ASC requirements for Income Taxes, deferred taxes were classified in the consolidated balance sheets as of December 31, 2020 and 2019 as follows:
(In millions) |  |  | 2020 |  |  |  | 2019 |
Other assets |  |  |  | 30.8 |  |  |  |  | 17.3 |
Deferred income taxes |  |  |  | (160.5 | ) |  |  |  | (157.2 | )
Net deferred tax liability |  |  | $ | (129.7 | ) |  |  | $ | (139.9 | )
As of December 31, 2020 and 2019, the Company had deferred tax assets relating to net operating losses, capital losses, and other tax carryforwards of $14.4 million and $22.4 million, respectively, of which approximately $0.6 million will expire between 2021 and 2025, and the remainder of which will expire in 2026 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. During 2020, certain loss carryforwards expired, and as a result, the valuation allowance associated with these loss carryforwards also decreased. The Company has adjusted the 2019 deferred tax components to include operating lease assets and liabilities on a gross basis for comparative purposes. The impact to 2019 was not material. Accumulated foreign earnings and profits of the Company’s foreign subsidiaries as of December 31, 2017 were subject to a deemed repatriation tax and should not be subject to additional U.S. federal income tax upon an actual repatriation of these earnings. As of December 31, 2020, the Company has recorded an estimated deferred tax liability of $7.2 million for foreign and state taxes that will be payable upon distribution of these earnings. Subsequent to December 31, 2017, we consider the unremitted earnings of certain foreign subsidiaries that impose local country taxes on dividends to be indefinitely reinvested. We have not provided deferred taxes on the remaining book over tax outside basis difference of $126 million related to these subsidiaries. The amount of unrecognized deferred tax liabilities for local country withholding taxes that would be owed related to these earnings is less than $7 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://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=84230637&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=116825942&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=84230637&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=116825942&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=84230637&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 + Details
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