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Income Taxes | 12 Months Ended
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Dec. 31, 2020
Income Tax Disclosure [Abstract] |
Income Taxes | 13. Income Taxes Income (loss) from continuing operations before income taxes for the years ended December 31, 2020, 2019 and 2018 is summarized as follows:
|  | 2020 |  |  | 2019 |  |  | 2018 |
Income (loss) from continuing operations before income taxes: |  |  |  |  |  |  |  |  |  |  |  |
U.S. |  | $ | (51.6 | ) |  | $ | (10.0 | ) |  | $ | (76.4 | )
Non-U.S. |  |  | 49.6 |  |  |  | 69.0 |  |  |  | 4.7 |
Total |  | $ | (2.0 | ) |  | $ | 59.0 |  |  | $ | (71.7 | )
Income tax provision (benefit) for the years ended December 31, 2020, 2019 and 2018 is summarized as follows:
|  | 2020 |  |  | 2019 |  |  | 2018 |
Current: |  |  |  |  |  |  |  |  |  |  |  |
U.S. federal and state |  | $ | (4.3 | ) |  | $ | (0.7 | ) |  | $ | (7.3 | )
Non-U.S. |  |  | 16.6 |  |  |  | 11.6 |  |  |  | 13.6 |
Total current |  | $ | 12.3 |  |  | $ | 10.9 |  |  | $ | 6.3 |
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
U.S. federal and state |  | $ | 0.3 |  |  | $ | 0.2 |  |  | $ | (6.2 | )
Non-U.S. |  |  | 4.5 |  |  |  | 1.3 |  |  |  | (4.9 | )
Total deferred |  | $ | 4.8 |  |  | $ | 1.5 |  |  | $ | (11.1 | )
Income tax provision (benefit) |  | $ | 17.1 |  |  | $ | 12.4 |  |  | $ | (4.8 | )
The calculated U.S. federal income tax amount at the statutory rate of 21% is reconciled to the Company’s income tax provision (benefit) for the years ended December 31, 2020, 2019 and 2018. The Company updated 2019 and 2018 from the previously presented rate-based reconciliation.
|  | 2020 |  |  | 2019 |  |  | 2018 |
U.S. federal income tax at statutory rate |  | $ | (0.4 | ) |  | $ | 12.4 |  |  | $ | (15.1 | )
U.S. state income tax provision |  |  | 1.9 |  |  |  | (0.1 | ) |  |  | (3.1 | )
Manufacturing & research incentives |  |  | (0.8 | ) |  |  | (3.0 | ) |  |  | (1.7 | )
Taxes on non-U.S. income which differ from the U.S. statutory rate |  |  | — |  |  |  | (2.6 | ) |  |  | 2.3 |
Adjustments for unrecognized tax benefits |  |  | 10.7 |  |  |  | (1.3 | ) |  |  | (6.9 | )
Adjustments for valuation allowances |  |  | 22.2 |  |  |  | 4.5 |  |  |  | 1.3 |
U.S. tax reform |  |  | (14.6 | ) |  |  | 4.0 |  |  |  | (1.8 | )
Goodwill impairment |  |  | — |  |  |  | — |  |  |  | 17.6 |
Other items |  |  | (1.9 | ) |  |  | (1.5 | ) |  |  | 2.6 |
Income tax provision (benefit) |  | $ | 17.1 |  |  | $ | 12.4 |  |  | $ | (4.8 | )
The U.S. Tax Cuts and Jobs Act (the “Tax Reform Act”) provided for a one-time deemed mandatory repatriation of post-1986 undistributed foreign subsidiary earnings and profits through the year ended December 31, 2017. The Transition Tax, which was completed in 2018, resulted in recording a total Transition Tax obligation of $57.2 million, however there was no U.S. cash tax impact due to net operating loss utilization. Beginning in 2018, the Tax Reform Act included two new U.S. corporate tax provisions, the global intangible low-taxed income (“GILTI”) and the base-erosion and anti-abuse tax (“BEAT”) provisions. The GILTI provision requires the Company to include in its U.S. income tax return non-U.S. subsidiary earnings in excess of an allowable return on the non-U.S. subsidiary’s tangible assets. Upon adoption, the Company elected to treat GILTI as a period cost. During 2020, final regulations were issued under Internal Revenue Code Section 951A relating to the treatment of income that is subject to a high rate of tax under the GILTI regime. Final regulations are effective for 2021 and the Company has elected to apply them to 2020 and 2019. While GILTI resulted in an inclusion of non-U.S. earnings of $0.0, $22.7 and $19.0 million, for the years ended December 31, 2020, 2019 and 2018, respectively, due to the Company’s net operating losses and valuation allowance, there was no net impact to the consolidated financial statements. The BEAT provision in the Tax Reform Act eliminates the deduction of certain base-erosion payments made to related non-U.S. corporations, and imposes a minimum tax if the amount is greater than the regular tax. The Company evaluated the BEAT provisions, resulting in no net financial statement impact for the years ended December 31, 2020, 2019 and 2018. As of each reporting date, the Company's management considers new evidence, both positive and negative, that could impact management's view related to future realization of deferred tax assets. The Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) was enacted in response to the COVID-19 pandemic. The CARES Act allowed the Company to implement certain U.S. tax planning strategies which resulted in the Company filing an amended 2018 tax return during 2020 and recognizing a net income tax benefit of $3.7 million for the year ended December 31, 2020. The Company has recorded valuation allowances on the deferred tax assets for certain of the legal entities in Brazil, China, Germany, India, U.K., and the U.S. as it is more likely than not that they will not be utilized. During 2018, the Company partially released the valuation allowance in the U.K. resulting in a $12.3 million income tax benefit. The 2018 income tax provision was impacted by a net increase of $ 1.3 million primarily related to additional valuation allowances recorded in the U.S., partially offset by the U.K. valuation allowance release. The 2019 and 2020 income tax provisions were impacted by a net increase of $ 4.5 million and $22.2 million respectively, related to additional valuation allowances recorded in the various jurisdictions. The Company will continue to periodically evaluate its valuation allowance requirements in light of changing facts and circumstances and may adjust its deferred tax asset valuation allowances accordingly. It is reasonably possible that the Company will either add to or reverse a portion of its existing deferred tax asset valuation allowances in the future. Such changes in the deferred tax asset valuation allowances will be reflected in the current operations through the Company’s income tax provision and could have a material effect on operating results. For 2020, there were no significant items included in other items in the reconciliation of the U.S. federal statutory rate table. For 2019, the only significant item included in other items was the favorable resolution of the German income tax audit. For 2018, the only significant item included in other items was the $1.7 million of deferred taxes related to the impact of updating the Company’s permanent reinvestment of foreign earnings assertion. Temporary differences and carryforwards that give rise to deferred tax assets and liabilities include the following items:
|  | 2020 |  |  | 2019 |
Non-current deferred income tax assets (liabilities): |  |  |  |  |  |  |  |
Inventories |  | $ | 22.8 |  |  | $ | 24.3 |
Accounts receivable |  |  | (2.7 | ) |  |  | (3.7 | )
Property, plant and equipment |  |  | (17.2 | ) |  |  | (8.2 | )
Intangible assets |  |  | (36.0 | ) |  |  | (34.1 | )
Deferred employee benefits |  |  | 34.7 |  |  |  | 39.8 |
Product warranty reserves |  |  | 9.3 |  |  |  | 8.6 |
Product liability reserves |  |  | 2.0 |  |  |  | 3.0 |
Tax credits |  |  | 7.7 |  |  |  | 5.4 |
Loss and other tax attribute carryforwards |  |  | 142.6 |  |  |  | 125.7 |
Deferred revenue |  |  | 3.9 |  |  |  | 5.8 |
Other |  |  | 18.0 |  |  |  | 11.9 |
Total non-current deferred income tax assets |  |  | 185.1 |  |  |  | 178.5 |
Less valuation allowance |  |  | (171.4 | ) |  |  | (157.1 | )
Net deferred income tax assets, non-current |  | $ | 13.7 |  |  | $ | 21.4 |
The net deferred tax assets reflected in the Consolidated Balance Sheets for the years ended December 31, 2020 and 2019 are as follows:
|  | 2020 |  |  | 2019 |
Long-term income tax assets, included in other non-current assets |  | $ | 19.6 |  |  | $ | 26.9 |
Long-term deferred income tax liability |  |  | (5.9 | ) |  |  | (5.5 | )
Net deferred income tax asset |  | $ | 13.7 |  |  | $ | 21.4 |
With the enactment of the Tax Reform Act, the Company believes that its offshore cash can be accessed in a more tax efficient manner. In 2018, the Company updated its assertion that foreign earnings are permanently reinvested such that jurisdictions where cash can be tax efficiently repatriated are no longer permanently reinvested. As of December 31, 2020, $0.9 million of deferred taxes were provided on approximately $239.4 million of unremitted earnings of non-U.S. subsidiaries that may be remitted to the U.S. As of December 31, 2019, $1.8 million of deferred taxes were provided on approximately $255.3 million of unremitted earnings of Non-U.S. subsidiaries that may be remitted to the U.S. As of December 31, 2020, the Company has approximately $463.0 million of additional unremitted earnings of non-U.S. subsidiaries for which it has not currently provided deferred taxes. These earnings, if repatriated to the U.S., would not result in a material income tax expense. The Company has approximately $148.2 million of U.S. federal loss carryforwards, which are available to reduce future U.S. federal tax liabilities. $24.4 million of the federal net operating loss carryforward expire in 2036 and the remaining $123.8 million is not subject to any time restrictions for future use. However, utilization of these indefinite lived loss carryforwards is annually limited to 80% of adjusted taxable income. The carryforward is offset by a valuation allowance. The Company has approximately $728.2 million of U.S. state net operating loss carryforwards, which are available to reduce future U.S. state tax liabilities. These U.S. state net operating loss carryforwards expire at various times through 2040. The Company has recorded a full valuation allowance related to the U.S. state net operating losses. The Company has approximately $303.6 million of non-U.S. loss carryforwards, which are available to reduce future non-U.S. tax liabilities. Substantially all of the non-U.S. loss carryforwards are not subject to any time restrictions on their future use, and $165.6 million are offset by a valuation allowance. The Company or one of its subsidiaries files income tax returns in the U.S. federal, U.S. state and non-U.S. jurisdictions. The following table provides the open tax years for which the Company could be subject to income tax examination by the tax authorities in its major jurisdictions:
Jurisdiction |  | Open Years
U.S. federal |  | 2016 — 2020
China |  | 2010 — 2020
France |  | 2017 — 2020
Germany |  | 2015 — 2020
Among other regular and ongoing examinations by U.S. federal, U.S. state and non- U.S. jurisdictions globally, the Company agreed to the results of a Mutually Agreed upon Procedure for 2006 with the Italian tax authorities. There have been no significant developments with respect to the Company’s ongoing tax audits in other jurisdictions. The Company regularly assesses the likelihood of an adverse outcome resulting from examinations to determine the adequacy of its tax reserves. As of December 31, 2020, the Company believes that it is more likely than not that the tax positions it has taken will be sustained upon the resolution of its audits resulting in no material impact on its consolidated financial position and the results of operations and cashflows. However, the final determination with respect to any tax audits, and any related litigation, could be materially different from the Company’s estimates and/or from its historical income tax provisions and accruals and could have a material effect on operating results and/or cashflows in the periods for which that determination is made. In addition, future period earnings may be adversely impacted by litigation costs, settlements, penalties, and/or interest assessments. During the years ended December 31, 2020, 2019 and 2018, the Company recorded a change to gross unrecognized tax benefits including interest and penalties of $5.5 million, $1.7 million, and $7.6 million, respectively. During the years ended December 31, 2020, 2019 and 2018, the Company recognized benefit for income taxes in the Consolidated Statements of Operations of $(3.1) million, $(0.3) million, and $(1.0) million, respectively, for net reductions to interest and penalties related to uncertain tax liabilities. As of December 31, 2020, 2019, and 2018, the Company has accrued interest and penalties of $3.3 million and $6.4 million, and $6.7 million, respectively. A reconciliation of the beginning and ending amount of unrecognized tax benefits excluding interest and penalties for the years ended December 31, 2020, 2019 and 2018 is as follows:
|  | 2020 |  |  | 2019 |  |  | 2018 |
Balance at beginning of year |  | $ | 11.5 |  |  | $ | 12.8 |  |  | $ | 19.5 |
Additions for tax positions of current year |  |  | 0.3 |  |  |  | 0.5 |  |  |  | 0.3 |
Additions for tax positions of prior years |  |  | 10.9 |  |  |  | 0.3 |  |  |  | 0.5 |
Reductions for tax positions of prior years |  |  | (0.4 | ) |  |  | — |  |  |  | (1.7 | )
Reductions based on settlements with tax authorities |  |  | (2.1 | ) |  |  | (0.6 | ) |  |  | (0.6 | )
Reductions for lapse of statute of limitations |  |  | (0.1 | ) |  |  | (1.5 | ) |  |  | (5.2 | )
Balance at end of year |  | $ | 20.1 |  |  | $ | 11.5 |  |  | $ | 12.8 |
The increase in unrecognized tax benefits primarily relates to $10.9 million from the uncertainty of a portion of the U.S. federal tax planning strategies implemented as a result of the CARES Act. Approximately $15.4 million, $7.2 million, and $7.2 million of the Company’s unrecognized tax benefits as of December 31, 2020, 2019, and 2018, respectively, would impact the effective tax rate. During the next twelve months, the unrecognized tax benefits are not expected to significantly increase or decrease because the Company’s tax positions are sustained on audit or settled, or the applicable statute of limitations closes.

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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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