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Income Taxes | 12 Months Ended
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Dec. 31, 2019
Income Tax Disclosure [Abstract] |
Income Taxes | INCOME T AXES Income before income taxes was taxed in the following jurisdictions in each of the years ended December 31:
| 2019 |  | 2018 |  | 2017
| (Dollars in thousands)
Domestic | $ | 194,822 |  |  | $ | 215,354 |  |  | $ | 187,521 |
Foreign | 57,314 |  |  | 77,947 |  |  | 52,160 |
Total | $ | 252,136 |  |  | $ | 293,301 |  |  | $ | 239,681 |
The components of the provision (benefit) for income taxes were as follows:
| 2019 |  | 2018 |  | 2017
| (Dollars in thousands)
Current: |  |  |  |  |
Federal | $ | 41,949 |  |  | $ | 17,846 |  |  | $ | 56,834 |
State | 13,924 |  |  | 3,336 |  |  | 7,507 |
Foreign | 23,308 |  |  | 24,385 |  |  | 20,650 |
Current income tax provision | 79,181 |  |  | 45,567 |  |  | 84,991 |
Deferred: |  |  |  |  |
Federal | (11,521 | ) |  | 25,887 |  |  | (118,919 | )
State | (5,013 | ) |  | 3,382 |  |  | 4,413 |
Foreign | (4,325 | ) |  | (5,529 | ) |  | (463 | )
Deferred income tax (benefit) provision | (20,859 | ) |  | 23,740 |  |  | (114,969 | )
| $ | 58,322 |  |  | $ | 69,307 |  |  | $ | (29,978 | )
On December 22, 2017, the 2017 Tax Act was signed into law, making significant changes to the Internal Revenue Code. Changes include, but are not limited to, a federal corporate tax rate decrease from 35 percent to 21 percent effective for tax years beginning after December 31, 2017 and a one-time transition tax on the mandatory deemed repatriation of cumulative foreign earnings as of December 31, 2017 as part of the move from a worldwide to a territorial tax system. The 2017 Tax Act also provides for the acceleration of depreciation for certain assets placed into service after September 27, 2017 as well as prospective changes beginning in 2018, including the repeal of the domestic manufacturing deduction, acceleration of tax revenue recognition, capitalization of research and development expenditures, additional limitations on the deductibility of executive compensation and limitations on the deductibility of interest. We recognized the impact of the 2017 Tax Act in our year end income tax provision for 2017 and recorded $110.9 million as an additional income tax benefit in the fourth quarter of 2017. This income tax benefit primarily represented the provisional amount related to the remeasurement of net deferred tax liabilities based on the rates at which they are expected to be taxed in the future. The provisional estimate also reflected our computation that we will not incur the one-time transition tax on the mandatory deemed repatriation of cumulative foreign earnings. We recognized the income tax effects of the 2017 Tax Act in our 2017 financial statements in accordance with the Staff Accounting Bulletin No. 118, or SAB 118, issued by the staff of the Securities and Exchange Commission, which provides guidance for the application of GAAP as it pertains to accounting for income taxes, in the reporting period in which the 2017 Tax Act was signed into law. In accordance with SAB 118, we had determined that the $110.9 million deferred tax benefit recorded in the fourth quarter of 2017 primarily in connection with the remeasurement of deferred tax assets and liabilities and the computation related to the one-time transition tax on the mandatory deemed repatriation of cumulative foreign earnings were provisional amounts and a reasonable estimate at December 31, 2017. As of December 31, 2018, we completed our accounting for all of the enactment date income tax effects of the 2017 Tax Act. During 2018, we recognized insignificant adjustments to the provisional amounts recorded at December 31, 2017 and included these adjustments as a component of income tax expense. The final amount of the income tax benefit from the enactment of the 2017 Tax Act was $111.6 million, which related primarily to the remeasurement of deferred tax assets and liabilities. We did not incur any income tax expense due to the one-time transition tax on the mandatory deemed repatriation of cumulative foreign earnings. As of January 1, 2018, the 2017 Tax Act imposes a minimum tax on foreign earnings in excess of a return on tangible assets, commonly referred to as the tax on Global Intangible Low-Taxed Income. We have elected to account for this tax as a component of current income tax expense. The provision (benefit) for income taxes varied from income taxes computed at the statutory U.S. federal income tax rate as a result of the following:
| 2019 |  | 2018 |  | 2017
| (Dollars in thousands)
Income taxes computed at the statutory U.S. federal income tax rate | $ | 52,949 |  |  | $ | 61,543 |  |  | $ | 83,884 |
State income taxes, net of federal tax benefit | 7,133 |  |  | 6,326 |  |  | 4,529 |
Tax liabilities (no longer required) required | (2,002 | ) |  | 1,908 |  |  | 1,254 |
Valuation allowance | 1,699 |  |  | 240 |  |  | 4,636 |
Manufacturing exemption | — |  |  | — |  |  | (5,143 | )
Tax credit refunds, net | (3,493 | ) |  | (3,415 | ) |  | (2,797 | )
Foreign earnings taxed at other than 21%, 21% and 35%, respectively | 3,741 |  |  | 7,851 |  |  | (3,840 | )
Deferred tax rate changes | 92 |  |  | (1,947 | ) |  | (114,163 | )
Other | (1,797 | ) |  | (3,199 | ) |  | 1,662 |
| $ | 58,322 |  |  | $ | 69,307 |  |  | $ | (29,978 | )
Effective tax rate | 23.1 | % |  | 23.6 | % |  | (12.5 | )%
Deferred income taxes reflect the net tax effect of temporary differences between the financial statement carrying amounts of assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Significant components of our deferred tax assets and liabilities at December 31 were as follows:
| 2019 |  | 2018
| (Dollars in thousands)
Deferred tax assets: |  |  |
Pension and other postretirement liabilities | $ | 22,632 |  |  | $ | 18,653 |
Rationalization and other accrued liabilities | 23,038 |  |  | 19,343 |
AMT and other credit carryforwards | 3,802 |  |  | 3,701 |
Net operating loss carryforwards | 34,792 |  |  | 31,679 |
Other intangible assets | 5,251 |  |  | 3,964 |
Foreign currency translation | 246 |  |  | 234 |
Inventory and related reserves | 26,677 |  |  | 6,988 |
Long term operating lease liabilities | 48,889 |  |  | — |
Other | 5,265 |  |  | 5,971 |
Total deferred tax assets | 170,592 |  |  | 90,533 |
Deferred tax liabilities: |  |  |
Property, plant and equipment | (195,039 | ) |  | (185,101 | )
Pension and other postretirement liabilities | (25,016 | ) |  | (14,393 | )
Other intangible assets | (112,680 | ) |  | (117,168 | )
Operating lease right of use assets | (46,709 | ) |  | — |
Other | (6,258 | ) |  | (7,275 | )
Total deferred tax liabilities | (385,702 | ) |  | (323,937 | )
Valuation allowance | (15,025 | ) |  | (13,541 | )
| $ | (230,135 | ) |  | $ | (246,945 | )
At December 31, 2019, the net deferred tax liability in our Consolidated Balance Sheets was comprised of long-term deferred tax assets of $24.7 million and long-term deferred tax liabilities of $254.8 million. At December 31, 2018, the net deferred tax liability in our Consolidated Balance Sheets was comprised of long-term deferred tax assets of $21.1 million and long-term deferred tax liabilities of $268.0 million. Long-term deferred tax assets were classified as other assets, net in our Consolidated Balance Sheets. The valuation allowance in 2019 includes deferred tax assets of $15.0 million resulting from state and foreign net operating loss carryforwards, or NOLs. The valuation allowance for deferred tax assets increased in 2019 by $1.5 million primarily due to an increase in the valuation allowance related to foreign tax loss carryforwards. At December 31, 2019, we had foreign NOLs of approximately $29.3 million that are available to offset future taxable income. Of that amount, approximately $8.8 million will expire from 2020 to 2030. The remaining portion has no expiration date. At December 31, 2019, we had state tax NOLs of approximately $5.5 million that are available to offset future taxable income and that will expire from 2024 to 2038. We recognize accrued interest and penalties related to unrecognized taxes as additional income tax expense. At December 31, 2019 and 2018, we had $5.0 million and $4.9 million, respectively, accrued for potential interest and penalties. The total amount of unrecognized tax benefits recorded in other liabilities as of December 31, 2019 and 2018 were $41.4 million and $43.6 million, respectively, excluding associated tax assets and including the federal tax benefit of state taxes, interest and penalties. Tax assets associated with uncertain tax positions primarily represent our estimate of the potential tax benefits in one tax jurisdiction that could result from the payment of income taxes in another jurisdiction. At December 31, 2019 and 2018, we had approximately $17.3 million and $17.1 million, respectively, in assets associated with uncertain tax positions recorded in other assets, net in our Consolidated Balance Sheets. A reconciliation of the beginning and ending amount of gross unrecognized tax benefits included as other liabilities in our Consolidated Balance Sheets was as follows:
| 2019 |  | 2018
| (Dollars in thousands)
Balance at January 1, | $ | 43,508 |  |  | $ | 45,146 |
Decrease based upon tax positions of current year | (488 | ) |  | — |
Increase based upon tax positions of a prior year | 604 |  |  | 1,022 |
Decrease based upon settlements with taxing authorities | (1,316 | ) |  | (1,253 | )
Decrease based upon a lapse in the statute of limitations | (4,025 | ) |  | (1,407 | )
Balance at December 31, | $ | 38,283 |  |  | $ | 43,508 |
The total amount of unrecognized tax benefits that would impact the effective tax rate, if recognized, at December 31, 2019 and 2018 were $25.5 million and $28.0 million, respectively. Silgan and its subsidiaries file U.S. Federal income tax returns, as well as income tax returns in various states and foreign jurisdictions. The Internal Revenue Service, or IRS, has completed its review of the 2018 tax year with no change to our filed tax return. We have been accepted into the Compliance Assurance Program for the 2019 and 2020 tax years which provides for the review by the IRS of tax matters relating to our tax return prior to filing. We are subject to examination by state and local tax authorities generally for the period mandated by statute, with the exception of states where waivers of the statute of limitations have been executed. The earliest open period for a state audit is 2013. Our foreign subsidiaries are generally not subject to examination by tax authorities for periods before 2008, and we have contractual indemnities with third parties with respect to open periods that predate our ownership of certain foreign subsidiaries. Subsequent periods may be examined by the relevant tax authorities. In the next twelve months, it is reasonably possible that our reserve for unrecognized tax benefits will decrease by approximately $5.6 million primarily related to tax attributes acquired from and expenses related to certain acquisitions, as we anticipate the expiration of the applicable statute of limitations with respect to certain tax matters. As a result of the 2017 Tax Act, we have changed our assertion of indefinite reinvestment of the earnings of certain of our foreign subsidiaries. In connection with this change, we are estimating that there is no deferred tax to record for any U.S. income tax and foreign taxes on previously unremitted earnings of such foreign subsidiaries. For our foreign subsidiaries where we expect to be indefinitely reinvested, we estimate that the unremitted earnings as of December 31, 2019 are approximately $102.2 million. The amount of unrecognized deferred tax liabilities on these indefinitely reinvested earnings is estimated to be approximately $3.2 million. As of December 31, 2017, we reclassified the stranded tax effects resulting from the decrease in the federal corporate tax rate and certain other tax effects (primarily the decreased federal benefit of state income taxes) as a result of the 2017 Tax Act. As a result, we increased each of accumulated other comprehensive loss and retained earnings by $22.1 million in 2017. See Note 5 for further information.

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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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