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Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Income Taxes

(5) Income Taxes

The provision for income taxes was as follows:

 

Year Ended December 31

 

2024

 

 

2023

 

 

2022

 

 

 

 

 

 

 

 

 

 

 

Current

 

 

 

 

 

 

 

 

 

United States

 

 

 

 

 

 

 

 

 

Federal

 

$

2.4

 

 

$

(2.9

)

 

$

17.6

 

State

 

 

0.8

 

 

 

7.3

 

 

 

6.8

 

Non-United States

 

 

140.9

 

 

 

133.3

 

 

 

154.1

 

Total current

 

 

144.1

 

 

 

137.7

 

 

 

178.5

 

Deferred

 

 

 

 

 

 

 

 

 

United States

 

 

 

 

 

 

 

 

 

Federal

 

 

(22.6

)

 

 

(8.6

)

 

 

11.2

 

State

 

 

2.9

 

 

 

(4.0

)

 

 

0.9

 

Non-United States

 

 

(12.7

)

 

 

(8.0

)

 

 

(7.3

)

Total deferred

 

 

(32.4

)

 

 

(20.6

)

 

 

4.8

 

Total provision

 

$

111.7

 

 

$

117.1

 

 

$

183.3

 

 

 

A tax reconciliation between taxes computed at the United States federal statutory rate of 21% and the consolidated effective tax rate is as follows:

 

Year Ended December 31

 

2024

 

 

2023

 

 

2022

 

 

 

 

 

 

 

 

 

 

 

Income tax based on statutory rate

 

$

53.9

 

 

$

43.2

 

 

$

117.0

 

Increase (decrease) resulting from:

 

 

 

 

 

 

 

 

 

Non-United States tax rate difference:

 

 

 

 

 

 

 

 

 

French business tax(a)

 

 

9.2

 

 

 

13.0

 

 

 

24.6

 

Other(b)

 

 

18.0

 

 

 

10.4

 

 

 

15.2

 

Repatriation of non-United States earnings

 

 

(5.8

)

 

 

4.6

 

 

 

10.7

 

State income taxes, net of federal benefit

 

 

3.6

 

 

 

2.0

 

 

 

5.5

 

Change in valuation allowance(c)

 

 

34.1

 

 

 

53.5

 

 

 

13.7

 

Work Opportunity Tax Credit(d)

 

 

(4.6

)

 

 

(5.6

)

 

 

(14.4

)

Foreign-Derived Intangible Income deduction

 

 

(3.6

)

 

 

(7.2

)

 

 

(9.6

)

Goodwill impairment(e)

 

 

—

 

 

 

10.9

 

 

 

8.9

 

Change in unrecognized tax benefits(f)

 

 

(0.3

)

 

 

(14.4

)

 

 

4.2

 

Other, net

 

 

7.2

 

 

 

6.7

 

 

 

7.5

 

Tax provision

 

$

111.7

 

 

$

117.1

 

 

$

183.3

 

 

(a)
The French business tax is allowed as a deduction for French income tax purposes. The gross amount of the French business tax was $11.7, $16.4 and $31.2 for 2024, 2023, and 2022 respectively. The amounts in the table above of $9.2, $13.0 and $24.6 for 2024, 2023, and 2022, respectively, represent the French business tax expense net of the French tax benefit using the United States federal rate of 21%. In December 2023, the French Parliament approved the Finance Bill for 2024 which reversed the scheduled elimination of the business tax in 2024 and replaced it with a gradual reduction of the tax rate (i.e., 0.28% in 2024, 0.19% in 2025, 0.09% in 2026) before eliminating altogether in 2027. Recent proposals have called for a delay in the gradual reduction of the French business tax, which could defer the scheduled reductions to future years.
(b)
Included in Other Non-United States tax rate differences is the impact of all Non-United States pre-tax earnings and permanent tax differences at the local statutory tax rate versus the United States federal rate of 21%. This includes benefits of $0.6, $0.8 and $1.5 for 2024, 2023 and 2022, respectively, related to the difference between the United States federal rate and the French tax rate applied to the respective gross amounts of the French business tax deduction previously mentioned.
(c)
Losses incurred in 2024, 2023 and 2022 in Germany resulted in an increase in valuation allowance of $16.1, $46.3 and $13.5, respectively.
(d)
The Work Opportunity Tax Credit is currently authorized until December 31, 2025.
(e)
Non-deductible portion of the goodwill impairment charges recorded in the Netherlands in 2023 and 2022.
(f)
Effective settlement of an audit during the third quarter of 2023 resulted in the recognition of a tax benefit of $10.8.

Deferred income taxes are recorded based on temporary differences at the tax rate expected to be in effect when the temporary differences reverse. Temporary differences, which give rise to the deferred taxes, are as follows:

 

December 31

 

2024

 

 

2023

 

 

 

 

 

 

 

 

Future Income Tax Benefits (Expense)

 

 

 

 

 

 

Accrued payroll taxes and insurance

 

$

11.5

 

 

$

11.2

 

Employee compensation payable

 

 

40.9

 

 

 

40.8

 

Pension and postretirement benefits

 

 

66.9

 

 

 

71.8

 

Intangible assets

 

 

(130.9

)

 

 

(129.3

)

Repatriation of non-United States earnings

 

 

(24.2

)

 

 

(20.4

)

Loans denominated in foreign currencies

 

 

(4.8

)

 

 

16.8

 

Operating lease ROU assets

 

 

(95.1

)

 

 

(104.5

)

Operating lease liabilities

 

 

90.8

 

 

 

107.0

 

Tax credit and other carryforwards

 

 

59.2

 

 

 

20.6

 

Tax loss carryforwards

 

 

212.1

 

 

 

212.9

 

Other

 

 

115.9

 

 

 

120.5

 

Valuation allowance

 

 

(222.9

)

 

 

(219.8

)

Total future tax benefits

 

$

119.4

 

 

$

127.6

 

Deferred tax asset

 

$

135.0

 

 

$

138.3

 

Deferred tax liability

 

 

(15.6

)

 

 

(10.7

)

Total future tax benefits

 

$

119.4

 

 

$

127.6

 

 

 

For 2024, the Other category was updated to remove tax credit, capital loss, and other carryforwards. The capital loss carryforwards of $27.4 and $25.2 for 2024 and 2023, respectively, were combined with net operating losses, and the category was renamed to Tax loss carryforwards. The capital loss carryforwards are fully offset by valuation allowance due to the expiration of carryforwards and uncertain source of future capital gains. The tax credit and other carryforwards were combined in a new category and consist primarily of U.S. foreign and general business tax credits. A related valuation allowance of $11.8 was recorded as of December 31, 2024, as management believes that realization of certain tax credit carryforwards is unlikely.

 

Pre-tax earnings of non-United States operations were $246.0, $165.2 and $380.9 in 2024, 2023, and 2022, respectively. We have not provided deferred taxes on $289.4 of accumulated unremitted earnings of non-United States subsidiaries that are considered indefinitely reinvested. We have not estimated the deferred tax liability on these earnings as such estimation is not practicable to determine or immaterial to the financial statements. As of December 31, 2024, deferred taxes for non-United States withholding and other taxes were provided on $1,353.5 of accumulated unremitted earnings of non-United States subsidiaries that may be remitted to the United States. As of December 31, 2024 and 2023, we have recorded a deferred tax liability of $25.9 and $23.1, respectively, related to these non-United States earnings that may be remitted.

We had United States federal and non-United States net operating loss carryforwards and United States state net operating loss carryforwards totaling $1,041.2 and $151.5, respectively, as of December 31, 2024. The net operating loss carryforwards expire as follows:

 

 

 

United States
Federal and
Non-United
States

 

 

United States
State

 

 

 

 

 

 

 

 

2024

 

 

2.7

 

 

 

2.4

 

2025

 

 

0.7

 

 

 

8.1

 

2026

 

 

3.5

 

 

 

3.7

 

2027

 

 

5.0

 

 

 

0.2

 

2028

 

6.9

 

 

1

 

Thereafter

 

 

15.1

 

 

 

105.3

 

No expirations

 

 

1,007.3

 

 

 

30.8

 

Total net operating loss carryforwards

 

$

1,041.2

 

 

$

151.5

 

 

We have recorded a deferred tax asset of $184.7 as of December 31, 2024, for the benefit of these net operating losses. Realization of this asset is dependent on generating sufficient taxable income prior to the expiration of the loss carryforwards. A related valuation allowance of $168.8 was recorded as of December 31, 2024, due to the expiration of net operating loss carryforwards and uncertain source of future taxable income.

We had gross unrecognized tax benefits related to various tax jurisdictions, including interest and penalties, of $36.1, $32.8 and $81.6 in 2024, 2023 and 2022, respectively. If recognized, the entire amount would favorably affect the effective tax rate except for $9.5. Our unrecognized tax benefits decreased by $48.8 during 2023 primarily due to the effective settlement of an audit during the third quarter, which resulted in the recognition of a tax benefit of $10.8. We do not expect our unrecognized tax benefits to change significantly over the next 12 months.

We recognize accrued interest and penalties related to unrecognized tax benefits in income tax expense. We accrued net interest and penalties of $0.5, $0.6 and $0.8 in 2024, 2023 and 2022, respectively. We reduced our accrued interest and penalties related to unrecognized tax benefits by $4.2 primarily due to the effectively settled income tax audit in the third quarter of 2023.

The following table summarizes the activity related to our unrecognized tax benefits during 2024, 2023, and 2022:

 

 

 

2024

 

 

2023

 

 

2022

 

 

 

 

 

 

 

 

 

 

 

Gross unrecognized tax benefits, beginning of year

 

$

31.1

 

 

$

76.3

 

 

$

67.3

 

Increases in prior year tax positions

 

 

6.5

 

 

 

4.6

 

 

 

10.5

 

Decreases in prior year tax positions

 

 

(0.6

)

 

 

(1.2

)

 

 

(1.2

)

Increases for current year tax positions

 

 

2.2

 

 

 

2.6

 

 

 

2.3

 

Expiration of statute of limitations and audit settlements

 

 

(4.5

)

 

 

(51.2

)

 

 

(2.6

)

Gross unrecognized tax benefits, end of year

 

$

34.7

 

 

$

31.1

 

 

$

76.3

 

Potential interest and penalties

 

 

1.4

 

 

 

1.7

 

 

 

5.3

 

Balance, end of year

 

$

36.1

 

 

$

32.8

 

 

$

81.6

 

 

We conduct business globally in various countries and territories. We are routinely audited by the tax authorities of the various tax jurisdictions in which we operate. Generally, the tax years that could be subject to examination are 2016 through 2023 for our major operations in France, Italy, the United Kingdom and the United States. As of December 31, 2024, we were subject to tax audits in Austria, Germany, India, Israel, Spain and the United States.