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Income Taxes | 12 Months Ended
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Dec. 31, 2022
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes A summary of consolidated income before provision for income taxes and equity in net income of affiliates and the components of provision for income taxes is shown below (in millions):
For the year ended December 31, | 2022 |  | 2021 |  | 2020
Consolidated income before provision for income taxes and equity in net income of affiliates: |  |  |  |  |
Domestic | $ | 87.6 |  |  | $ | (110.9) |  |  | $ | (145.0) |
Foreign | 421.7 |  |  | 694.4 |  |  | 444.3 |
| $ | 509.3 |  |  | $ | 583.5 |  |  | $ | 299.3 |
Domestic benefit for income taxes: |  |  |  |  |
Current provision | $ | 35.3 |  |  | $ | 38.4 |  |  | $ | 29.0 |
Deferred benefit | (41.4) |  |  | (76.6) |  |  | (106.2) |
Total domestic benefit | $ | (6.1) |  |  | $ | (38.2) |  |  | $ | (77.2) |
Foreign provision for income taxes: |  |  |  |  |
Current provision | $ | 147.8 |  |  | $ | 154.8 |  |  | $ | 149.6 |
Deferred (benefit) provision | (8.0) |  |  | 21.1 |  |  | 21.5 |
Total foreign provision | $ | 139.8 |  |  | $ | 175.9 |  |  | $ | 171.1 |
Provision for income taxes | $ | 133.7 |  |  | $ | 137.7 |  |  | $ | 93.9 |
The domestic current provision includes withholding taxes related to dividends and royalties paid by the Company's foreign subsidiaries, as well as state and local taxes. In 2022, 2021 and 2020, the provision for income taxes includes the benefit of prior unrecognized net operating loss carryforwards of $0.8 million, $2.9 million and $5.3 million, respectively. A summary of the differences between the provision for income taxes calculated at the United States federal statutory income tax rate of 21% and the consolidated provision for income taxes is shown below (in millions):
For the year ended December 31, | 2022 |  | 2021 |  | 2020
Consolidated income before provision for income taxes and equity in net income of affiliates multiplied by the United States federal statutory income tax rate | $ | 107.0 |  |  | $ | 122.5 |  |  | $ | 62.9 |
Differences in income taxes on foreign earnings, losses and remittances | 24.5 |  |  | 30.4 |  |  | 20.7 |
Valuation allowance adjustments (1) | 45.2 |  |  | 29.0 |  |  | 47.7 |
Research and development and other tax credits | (15.0) |  |  | (19.0) |  |  | (11.8) |
FDII deduction | (16.9) |  |  | (6.0) |  |  | (14.6) |
U.S. tax impact of foreign earnings (2) | (6.3) |  |  | (9.8) |  |  | (21.1) |
Tax audits and assessments | 3.2 |  |  | 3.2 |  |  | 8.9 |
Other | (8.0) |  |  | (12.6) |  |  | 1.2 |
Provision for income taxes | $ | 133.7 |  |  | $ | 137.7 |  |  | $ | 93.9 |
(1) Relates primarily to changes in valuation allowances on the deferred tax assets of foreign subsidiaries. (2) Reflects the impact on the domestic provision for income taxes related to foreign source income, including foreign branch earnings net of the applicable foreign tax credits in the general, foreign branch, GILTI and passive separate limitation categories. This amount includes the U.S. tax impact of apportioning U.S. expenses against the GILTI basket in calculating the foreign tax credit limitation resulting in no tax benefit for these expenses due to the Company's excess foreign tax credit position in the GILTI basket for 2021 and 2020. In 2020, as a result of the change in the foreign branch basket limitation, the Company recognized tax benefits of $15.5 million related to the U.S. deferred tax effect of the foreign branches. For the years ended December 31, 2022, 2021 and 2020, income in foreign jurisdictions with tax holidays was $40.5 million, $55.6 million and $29.4 million, respectively. Such tax holidays generally expire from 2022 through 2035. Deferred income taxes represent temporary differences in the recognition of certain items for financial reporting and income tax purposes. A summary of the components of the net deferred income tax asset is shown below (in millions):
December 31, | 2022 |  | 2021
Deferred income tax assets (liabilities): |  |  |
Tax loss carryforwards | $ | 397.4 |  |  | $ | 396.9 |
Tax credit carryforwards | 243.9 |  |  | 266.4 |
Retirement benefit plans | 22.6 |  |  | 55.8 |
Accrued liabilities | 208.7 |  |  | 193.9 |
Self-insurance reserves | 5.5 |  |  | 6.7 |
Current asset basis differences | 42.0 |  |  | 41.4 |
Long-term asset basis differences | 3.5 |  |  | (24.2) |
Deferred compensation | 25.8 |  |  | 25.4 |
Capitalized engineering, research and development | 169.6 |  |  | 138.3 |
Undistributed earnings of foreign subsidiaries | (71.7) |  |  | (74.0) |
Derivative instruments and hedging activities | (10.7) |  |  | 2.0 |
Other | 1.8 |  |  | (12.3) |
Net deferred income tax asset before valuation allowance | 1,038.4 |  |  | 1,016.3 |
Valuation allowance | (417.9) |  |  | (406.9) |
Net deferred income tax asset | $ | 620.5 |  |  | $ | 609.4 |
As of December 31, 2022 and 2021, the valuation allowance with respect to the Company's deferred tax assets was $417.9 million and $406.9 million, respectively, a net increase of $11.0 million. Concluding that a valuation allowance is not required is difficult when there is significant negative evidence, such as cumulative losses in recent years, which is objective and verifiable. When measuring cumulative losses in recent years, the Company uses a rolling three-year period of pretax book income, adjusted for permanent differences between book and taxable income and certain other items. As of December 31, 2022, the Company continues to maintain a U.S. valuation allowance of $25.5 million, primarily related to U.S. state and local deferred tax assets that, due to their nature, are not likely to be realized. In addition, the Company continues to maintain a valuation allowance of $392.4 million with respect to its deferred tax assets in several international jurisdictions. The classification of the net deferred income tax asset is shown below (in millions):
December 31, | 2022 |  | 2021
Long-term deferred income tax assets | $ | 709.2 |  |  | $ | 701.4 |
Long-term deferred income tax liabilities | (88.7) |  |  | (92.0) |
Net deferred income tax asset | $ | 620.5 |  |  | $ | 609.4 |
As of December 31, 2022, deferred income taxes have not been provided on the undistributed earnings of the Company's foreign subsidiaries since these earnings will not be taxable upon repatriation to the United States. These earnings will be primarily treated as previously taxed income from either the one-time transition tax or GILTI, or they will be offset with a 100% dividend received deduction. However, the Company continues to provide a deferred tax liability for foreign withholding tax that will be incurred with respect to the undistributed foreign earnings that are not permanently reinvested. As of December 31, 2022, the Company had tax loss carryforwards of $1.7 billion. Of the total tax loss carryforwards, $1.4 billion have no expiration date, and $263.7 million expire between 2023 and 2039. In addition, the Company had tax credit carryforwards of $243.9 million, comprised principally of U.S. foreign tax credits of $80.7 million that expire between 2027 and 2031, U.S. research and development credits of $119.7 million that expire between 2025 and 2042 and other tax credits primarily in international jurisdictions of $43.5 million that generally expire between 2023 and 2042. As of December 31, 2022 and 2021, the Company's gross unrecognized tax benefits were $32.7 million and $34.9 million (excluding interest and penalties), respectively, which is recorded in other long-term liabilities in the accompanying consolidated balance sheets. If recognized, all of the Company's gross unrecognized tax benefits would affect the Company's effective tax rate. A summary of the changes in gross unrecognized tax benefits is shown below (in millions):
For the year ended December 31, | 2022 |  | 2021 |  | 2020
Balance at beginning of period | $ | 34.9 |  |  | $ | 36.4 |  |  | $ | 31.6 |
Additions based on tax positions related to current year | 4.8 |  |  | 7.7 |  |  | 4.9 |
Additions (reductions) based on tax positions related to prior years | — |  |  | (4.0) |  |  | 3.6 |
Settlements | (1.9) |  |  | (0.3) |  |  | (1.2) |
Statute expirations | (6.3) |  |  | (5.2) |  |  | (4.7) |
Foreign currency translation | 1.2 |  |  | 0.3 |  |  | 2.2 |
Balance at end of period | $ | 32.7 |  |  | $ | 34.9 |  |  | $ | 36.4 |
The Company recognizes interest and penalties with respect to unrecognized tax benefits as income tax expense. As of December 31, 2022 and 2021, the Company had recorded gross reserves of $12.3 million and $12.7 million, respectively, related to interest and penalties, all of which, if recognized, would affect the Company's effective tax rate. The Company operates in multiple jurisdictions throughout the world, and its tax returns are periodically audited or subject to review by both domestic and foreign tax authorities. During the next twelve months, it is reasonably possible that, as a result of audit settlements, the conclusion of current examinations and the expiration of the statute of limitations in multiple jurisdictions, the Company may decrease the amount of its gross unrecognized tax benefits by $5.1 million, all of which, if recognized, would affect the Company's effective tax rate. The gross unrecognized tax benefits subject to potential decrease involve issues related to transfer pricing and various other tax items in multiple jurisdictions. However, as a result of ongoing examinations, tax proceedings in certain countries, additions to the gross unrecognized tax benefits for positions taken and interest and penalties, if any, arising in 2023, it is not possible to estimate the potential net increase or decrease to the Company's gross unrecognized tax benefits during the next twelve months. The Company considers its significant tax jurisdictions to include China, Germany, Italy, Mexico, Morocco, Spain, the United Kingdom and the United States. The Company or its subsidiaries generally remain subject to income tax examination in certain U.S. state and local jurisdictions for years after 2016. Further, the Company or its subsidiaries remain subject to income tax examination in Spain for years after 2007, in Mexico for years after 2013, in Germany and Italy for years after 2015, in Morocco for years after 2017, in China and the United Kingdom for years after 2018 and in the United States generally for years after 2020. On August 16, 2022, the Inflation Reduction Act of 2022 ("IRA") was signed into law. The IRA contains a number of revisions to the Internal Revenue Code, including a 15% corporate minimum tax and a 1% excise tax on share repurchases, both of which are effective for tax years beginning after December 31, 2022, as well as numerous renewable energy credits. The Company is evaluating the impact of the IRA; however, the tax-related provisions of the IRA are not expected to have a material impact on the Company's consolidated financial statements. Other In 2021, the Brazilian Supreme Court ruled on certain matters, including the method of determining the amount of indirect tax credits that taxpayers are entitled to monetize in future periods. As a result of the ruling, other expense, net includes a gain of $45.0 million for the year ended December 31, 2021, for which $8.0 million of tax expense was recognized.

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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 https://asc.fasb.org/extlink&oid=121826272&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 https://asc.fasb.org/extlink&oid=122134291&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 https://asc.fasb.org/extlink&oid=121826272&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 https://asc.fasb.org/extlink&oid=122134291&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 https://asc.fasb.org/extlink&oid=121826272&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 https://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 https://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 https://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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