XML 46 R19.htm IDEA: XBRL DOCUMENT
v3.24.0.1

Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2023
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The sources of Earnings before income taxes were as follows:
(in millions) | 2023 |  | 2022 |  | 2021
United States | $ | 364.4 |  |  | $ | 603.2 |  |  | $ | 537.0 |
Foreign | 264.5 |  |  | 250.4 |  |  | 199.4 |
Earnings before income taxes | $ | 628.9 |  |  | $ | 853.6 |  |  | $ | 736.4 |
The Income tax provision consisted of the following:
(in millions) | 2023 |  | 2022 |  | 2021
Current tax expense: |  |  |  |  |
U.S. Federal | $ | 88.7 |  |  | $ | 109.8 |  |  | $ | 84.3 |
State and local | 17.3 |  |  | 20.3 |  |  | 11.2 |
Foreign | 73.9 |  |  | 61.1 |  |  | 67.3 |
Total current | 179.9 |  |  | 191.2 |  |  | 162.8 |
Deferred tax expense (benefit): |  |  |  |  |
U.S. Federal | 17.2 |  |  | (24.6) |  |  | (4.9) |
State and local | 10.2 |  |  | 1.5 |  |  | (5.9) |
Foreign | (11.0) |  |  | 4.2 |  |  | (11.0) |
Total deferred | 16.4 |  |  | (18.9) |  |  | (21.8) |
Income tax provision | $ | 196.3 |  |  | $ | 172.3 |  |  | $ | 141.0 |
Temporary differences and carryforwards giving rise to deferred tax assets and liabilities as of December 31, 2023 and 2022 are summarized in the table below:
(in millions) | 2023 |  | 2022
Deferred tax assets: |  |  |
Loss carryforwards | $ | 59.9 |  |  | $ | 56.8 |
Tax credit carryforwards | 56.1 |  |  | 52.9 |
Deferred revenue | 38.0 |  |  | 36.3 |
Product warranties | 35.4 |  |  | 33.6 |
Sales incentives and discounts | 33.3 |  |  | 29.2 |
Operating lease liabilities | 29.8 |  |  | 24.4 |
Interest expense | 17.6 |  |  | 18.0 |
Equity compensation | 13.1 |  |  | 13.5 |
Other | 73.2 |  |  | 66.2 |
Gross deferred tax assets | 356.4 |  |  | 330.9 |
Valuation allowance | (71.3) |  |  | (52.8) |
Deferred tax assets | 285.1 |  |  | 278.1 |
Deferred tax liabilities: |  |  |
Depreciation and amortization | (54.5) |  |  | (81.7) |
Operating lease assets | (27.6) |  |  | (21.8) |
State and Local income taxes | (22.7) |  |  | (22.7) |
Other | (5.9) |  |  | (9.3) |
Deferred tax liabilities | (110.7) |  |  | (135.5) |
Total net deferred tax assets | $ | 174.4 |  |  | $ | 142.6 |
As of December 31, 2023, the Company had a total valuation allowance against its deferred tax a ssets of $71.3 million. The remaining realizable value of deferred tax assets as of December 31, 2023 was determined by evaluating the potential to recover the value of these assets through the utilization of tax loss and credit carrybacks, the reversal of existing taxable temporary differences and carryforwards, certain tax planning strategies and future taxable income exclusive of reversing temporary differences and carryforwards. As of December 31, 2023, the Company retained valuation allowance reserves of $50.2 million against deferred tax assets in the U.S. primarily related to state tax credits that are subject to restrictive rules for future utilization, various state operating loss carryforwards, and non-amortizable intangibles and valuation allowances of $21.1 million for deferred tax assets related to foreign jurisdictions, primarily Luxembourg. As of December 31, 2023, the tax benefit of loss carryforwards totaling $60.3 million was available to reduce future tax liabilities. This deferred tax asset was comprised of $1.1 million for the tax benefit of federal net operating loss (NOL) carryforwards, $24.0 million for the tax benefit of state NOL carryforwards and $35.2 million for the tax benefit of foreign NOL carryforwards. NOL carryforwards of $43.1 million expire at various intervals between the years 2024 and 2043, while $17.2 million have an unlimited life. As of December 31, 2023, tax credit carryforwards totaling $56.1 million were available to reduce future tax liabilities. This deferred tax asset was comprised of $6.6 million related to federal tax credits, $48.4 million of various state tax credits related to research and development, capital investment and job incentives and $1.1 million related to foreign tax credits. These tax credit carryforwards expire at various intervals between the years 2024 and 2042. No deferred income taxes have been provided as of December 31, 2023 or 2022 on the applicable undistributed earnings of the non-U.S. subsidiaries where the indefinite reinvestment assertion has been applied. If at some future date these earnings cease to be indefinitely reinvested and are repatriated, the Company may be subject to additional U.S. income taxes and foreign withholding and other taxes on such amounts. Remittances from foreign subsidiaries are generally not subject to U.S. income taxation. These remittances are either excluded from U.S. taxable income as earnings that have already been subjected to taxation or in the alternative are subject to a 100 percent foreign dividends received deduction. The Company continues to provide deferred taxes, primarily related to foreign withholding taxes, on the undistributed net earnings of foreign subsidiaries and unconsolidated affiliates that are not deemed to be indefinitely reinvested in operations outside the United States, although such amounts were immaterial as of December 31, 2023 and 2022. We have not provided for deferred taxes on the outside basis differences in our investments in our foreign subsidiaries. A determination of the unrecognized deferred taxes related to these outside basis differences is not practicable. As of December 31, 2023, 2022 and 2021 the Company had $9.3 million, $7.8 million and $10.1 million of gross unrecognized tax benefits, including interest, respectively. Substantially all of these amounts, if recognized, would impact the Company's tax provision and the effective tax rate. The Company recognizes interest and penalties related to unrecognized tax benefits in income tax expense. As of December 31, 2023, 2022 and 2021, the amounts accrued for interest and penalties were not material. The following is a reconciliation of the total amounts of unrecognized tax benefits excluding interest and penalties for the 2023, 2022 and 2021 annual reporting periods:
(in millions) | 2023 |  | 2022 |  | 2021
Balance as of January 1 | $ | 7.5 |  |  | $ | 9.7 |  |  | $ | 3.7 |
Gross increases - tax positions prior periods | 0.9 |  |  | 0.5 |  |  | 5.9 |
Gross decreases - tax positions prior periods | — |  |  | (2.1) |  |  | (0.2) |
Gross increases - current period tax positions | — |  |  | — |  |  | 0.5 |
Decreases - settlements with taxing authorities | — |  |  | (0.6) |  |  | (0.2) |
Balance as of December 31 | $ | 8.4 |  |  | $ | 7.5 |  |  | $ | 9.7 |
The Company believes it is reasonably possible that the total amount of gross unrecognized tax benefits as of December 31, 2023 could decrease by approx imately $2.1 million in 2024 due to settlements with taxing authorities or lapses in applicable statutes of limitation. Due to the various jurisdictio ns in which the Company files tax returns and the uncertainty regarding the timing of the settlement of tax audits, it is possible that there could be significant changes in the amount of unrecognized tax benefits in 2024, but the amount cannot be estimated at this time. The Company is regularly audited by federal, state and foreign tax authorities. The Internal Revenue Service (IRS) has completed its field examination and has issued its Revenue Agents Report through the 2014 tax year and all open issues have been resolved. The Company is currently open to tax examinations by the IRS for the 2020 through 2022 tax years. The Company is open to state and local tax audits in major tax jurisdictions dating back to the 2017 taxable year. The Company is no longer subject to income tax examinations by any major foreign tax jurisdiction for years prior to 2015. Many countries are implementing local legislation based upon the Organization for Economic Co-operation and Development’s base erosion and profit shifting project, the Pillar Two framework, which imposes a global minimum corporate tax rate of 15%. The Company will continue to monitor the implementation of the Pillar Two rules in the jurisdictions in which it operates. The difference between the actual income tax provision and the tax provision computed by applying the statutory Federal income tax rate to Earnings before income taxes is attributable to the following:
(in millions) | 2023 |  | 2022 |  | 2021
Income tax provision at 21 percent | $ | 132.1 |  |  | $ | 179.3 |  |  | $ | 154.6 |
State and local income taxes, net of federal income tax effect | 13.3 |  |  | 19.5 |  |  | 18.0 |
Deferred tax asset valuation allowance | 17.8 |  |  | (10.4) |  |  | (24.2) |
Equity compensation | (1.3) |  |  | (2.9) |  |  | (1.8) |
Change in estimates related to prior years and prior years amended tax return filings | 1.8 |  |  | (1.3) |  |  | 3.5 |
Federal and state tax credits | (15.2) |  |  | (16.6) |  |  | (14.9) |
Taxes related to foreign income, net of credits | (4.5) |  |  | 12.1 |  |  | 5.5 |
Deferred tax reassessment | 2.5 |  |  | 6.4 |  |  | 6.4 |
FDII deduction | (16.6) |  |  | (18.4) |  |  | (15.3) |
Intercompany sales of intellectual property rights | 53.1 |  |  | — |  |  | — |
Nondeductible loss on intercompany sale | 6.9 |  |  | — |  |  | — |
Other | 6.4 |  |  | 4.6 |  |  | 9.2 |
Actual income tax provision | $ | 196.3 |  |  | $ | 172.3 |  |  | $ | 141.0 |
Effective tax rate | 31.2 | % |  | 20.2 | % |  | 19.1 | %
For the year ended December 31, 2023, the Company recorded $17.8 million of income tax expense related to an increase in its valuation allowance on deferred tax assets and $53.1 million of income tax expense related to the intercompany sales of intellectual property (IP) rights. The valuation allowance increase is primarily due to certain federal tax credits, impairment of certain investments, and state credits and NOLs that may not be realized in future years. The sales of the IP rights were to better align the ownership of these rights with how our business operates. During 2021, the Company recorded a $21.0 million income tax benefit related to the release of a portion of the Company’s valuation allowance. This was due to a reassessment of the realizability of certain federal tax credits, state tax credits and state NOLs. The conclusion to release the valuation allowance was based upon sustained positive operating performance of its U.S. operations and the availability of expected future taxable income, leading the Company to believe that it is more likely than not that the benefit of these U.S. deferred tax assets will be realized.

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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 -Topic 946 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 13 -Publisher FASB -URI https://asc.fasb.org//1943274/2147480990/946-20-50-13 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 235 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480678/235-10-S99-1 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//740/tableOfContent Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 14 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-14 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 21 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-21 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 270 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482526/740-270-50-1 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 17 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-17 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479360/740-10-S99-1 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479360/740-10-S99-2 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 30 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482603/740-30-50-2 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration