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Income taxes | 12 Months Ended
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Dec. 31, 2021
Income Tax Disclosure [Abstract] |
Income taxes | Income taxes Following is the total loss from continuing operations before income taxes and the provision (benefit) for income taxes.
Year ended December 31, |  | 2021 |  | 2020 |  | 2019
Income (loss) from continuing operations before income taxes |  |  |  |  |  |
United States |  | $ | (443.5) |  |  | $ | (316.3) |  |  | $ | (148.4) |
Foreign |  | (18.2) |  |  | 44.5 |  |  | 87.8 |
Total income (loss) from continuing operations before income taxes |  | $ | (461.7) |  |  | $ | (271.8) |  |  | $ | (60.6) |
Provision (benefit) for income taxes |  |  |  |  |  |
Current |  |  |  |  |  |
United States |  | $ | 9.1 |  |  | $ | 7.3 |  |  | $ | (17.7) |
Foreign |  | 38.1 |  |  | 51.5 |  |  | 41.0 |
Total |  | 47.2 |  |  | 58.8 |  |  | 23.3 |
Deferred |  |  |  |  |  |
Foreign |  | (59.1) |  |  | (13.4) |  |  | 4.4 |
Total (benefit) provision for income taxes |  | $ | (11.9) |  |  | $ | 45.4 |  |  | $ | 27.7 |
Following is a reconciliation of the provision (benefit) for income taxes at the United States statutory tax rate to the provision (benefit) for income taxes as reported:
Year ended December 31, |  | 2021 |  | 2020 |  | 2019
United States statutory income tax provision (benefit) |  | $ | (96.9) |  |  | $ | (57.1) |  |  | $ | (12.7) |
Income and losses for which no provision or benefit has been recognized |  | 91.1 |  |  | 78.6 |  |  | 23.9 |
Foreign rate differential and other foreign tax expense |  | 0.4 |  |  | 5.9 |  |  | 3.2 |
Income tax withholdings |  | 13.5 |  |  | 16.8 |  |  | 17.6 |
Permanent items |  | (1.8) |  |  | 0.8 |  |  | (2.5) |
Enacted rate changes |  | (17.1) |  |  | (4.0) |  |  | 0.5 |
Change in uncertain tax positions |  | (0.3) |  |  | 3.6 |  |  | 0.2 |
Change in valuation allowances due to changes in judgment |  | (0.8) |  |  | 2.9 |  |  | (2.3) |
Income tax credits, U.S. |  | — |  |  | (2.1) |  |  | (0.2) |
(Benefit) provision for income taxes |  | $ | (11.9) |  |  | $ | 45.4 |  |  | $ | 27.7 |
The tax effects of temporary differences and carryforwards that give rise to significant portions of deferred tax assets and liabilities were as follows:
As of December 31, |  | 2021 |  | 2020
Deferred tax assets |  |  |  |
Tax loss carryforwards |  | $ | 840.4 |  |  | $ | 795.2 |
Postretirement benefits |  | 211.8 |  |  | 253.0 |
Foreign tax credit carryforwards |  | 145.9 |  |  | 201.3 |
Other tax credit carryforwards |  | 31.9 |  |  | 29.2 |
Deferred revenue |  | 35.8 |  |  | 31.1 |
Employee benefits and compensation |  | 25.8 |  |  | 25.3 |
Purchased capitalized software |  | 24.2 |  |  | 24.1 |
Depreciation |  | 31.6 |  |  | 28.2 |
Warranty, bad debts and other reserves |  | 7.5 |  |  | 10.5 |
Capitalized costs |  | 3.9 |  |  | 8.1 |
Other |  | 46.1 |  |  | 52.0 |
|  | 1,404.9 |  |  | 1,458.0 |
Valuation allowance |  | (1,226.2) |  |  | (1,271.5) |
Total deferred tax assets |  | $ | 178.7 |  |  | $ | 186.5 |
Deferred tax liabilities |  |  |  |
Capitalized research and development |  | $ | 43.1 |  |  | $ | 47.4 |
Other |  | 29.5 |  |  | 29.8 |
Total deferred tax liabilities |  | $ | 72.6 |  |  | $ | 77.2 |
Net deferred tax assets |  | $ | 106.1 |  |  | $ | 109.3 |
During 2021, the company’s valuation allowance declined by $45.3 million principally due to the recognition of a net income tax expense of $(102.1) million including net tax benefit of $0.8 million, expired net operating losses/tax credits of $50.0 million, translation adjustments of $18.4 million and other activity of $79.0 million. During 2020, the company’s valuation allowance declined by $253.2 million principally due to the recognition of a net income tax benefit of $189.0 million including net tax expense of $2.9 million, expired net operating losses/tax credits of $28.9 million, translation adjustments of $(20.9) million and other activity of $56.2 million. At December 31, 2021, the company has tax effected tax loss carryforwards as follows:
As of December 31, |  | 2021
U.S. Federal |  | $ | 370.7 |
State and local |  | 203.4 |
Foreign |  | 266.3 |
Total tax loss carryforwards |  | $ | 840.4 |
These carryforwards will expire as follows:
Year |
2022 | $ | 13.8 |
2023 | 13.0 |
2024 | 13.0 |
2025 | 15.5 |
2026 | 10.3 |
Thereafter | 502.3 |
Unlimited | 272.5 |
Total | $ | 840.4 |
The company also has available tax credit carryforwards, which will expire as follows:
Year |
2022 | $ | 38.1 |
2023 | 27.0 |
2024 | 22.5 |
2025 | 20.7 |
2026 | 33.7 |
Thereafter | 35.8 |
Total | $ | 177.8 |
The realization of the company’s net deferred tax assets as of December 31, 2021 is primarily dependent on the ability to generate sustained taxable income in various jurisdictions. Judgment is required to estimate forecasted future taxable income, which may be impacted by future business developments, actual results, strategic operational and tax initiatives, legislative, and other economic factors and developments. It is at least reasonably possible that the company’s judgment about the need for, and level of, existing valuation allowances could change in the near term based on changes in objective evidence such as further sustained income or loss in certain jurisdictions, as well as the other factors discussed above, primarily in certain jurisdictions outside of the United States. As such, the company will continue to monitor income levels and mix among jurisdictions, potential changes to the company’s operating and tax model, and other legislative or global developments in its determination. It is reasonably possible that such changes could result in a material impact to the company’s valuation allowance within the next 12 months. Any increase or decrease in the valuation allowance would result in additional or lower income tax expense in such period and could have a significant impact on that period’s earnings. Under U.S. tax law, distributions from foreign subsidiaries to U.S. shareholders are generally exempt from taxation. Consequently, the deferred income tax liability on undistributed earnings is generally limited to any foreign withholding or other foreign taxes that will be imposed on such distributions. As the company currently intends to indefinitely reinvest the earnings of certain foreign subsidiaries, no provision has been made for income taxes that may become payable upon distribution of the earnings of such subsidiaries. The unrecognized deferred income tax liability at December 31, 2021 approximated $28.0 million. Cash paid for income taxes, net of refunds was as follows:
Year ended December 31, |  | 2021 |  | 2020 |  | 2019
Cash paid for income taxes, net of refunds |  | $ | 53.7 |  |  | $ | 24.7 |  |  | $ | 37.6 |
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
Year ended December 31, |  | 2021 |  | 2020 |  | 2019
Balance at January 1 |  | $ | 30.9 |  |  | $ | 25.6 |  |  | $ | 18.9 |
Additions based on tax positions related to the current year |  | 3.5 |  |  | 8.5 |  |  | 11.1 |
Changes for tax positions of prior years |  | (8.8) |  |  | (0.7) |  |  | (0.6) |
Reductions as a result of a lapse of applicable statute of limitations |  | (2.6) |  |  | (2.3) |  |  | (2.3) |
Settlements |  | (0.3) |  |  | (1.8) |  |  | (1.1) |
Changes due to foreign currency |  | (1.1) |  |  | 1.6 |  |  | (0.4) |
Balance at December 31 |  | $ | 21.6 |  |  | $ | 30.9 |  |  | $ | 25.6 |
The company recognizes penalties and interest accrued related to income tax liabilities in the provision for income taxes in its consolidated statements of income (loss). At December 31, 2021 and 2020, the company had an accrual of $3.8 million and $3.9 million, respectively, for the payment of penalties and interest. At December 31, 2021, all of the company’s liability for unrecognized tax benefits, if recognized, would affect the company’s effective tax rate. Within the next 12 months, the company believes that it is reasonably possible that the amount of unrecognized tax benefits may decrease by $1.9 million related to a statute of limitation expiration; however, various events could cause this belief to change in the future. The company and its subsidiaries file income tax returns in the U.S. federal jurisdiction, and various states and foreign jurisdictions. Several U.S. state and foreign income tax audits are in process. The company is under an audit in India, for which years prior to 2007 are closed. For the most significant jurisdictions outside the U.S., the audit periods through 2016 are closed for Brazil, and the audit periods through 2017 are closed for the United Kingdom. All of the various ongoing income tax audits throughout the world are not expected to have a material impact on the company’s financial position. Internal Revenue Code Sections 382 and 383 provide annual limitations with respect to the ability of a corporation to utilize its net operating loss (as well as certain built-in losses) and tax credit carryforwards, respectively (Tax Attributes), against future U.S. taxable income, if the corporation experiences an “ownership change.” In general terms, an ownership change may result from transactions increasing the ownership of certain stockholders in the stock of a corporation by more than 50 percentage points over a three-year period. The company regularly monitors ownership changes (as calculated for purposes of Section 382). The company has determined that, for purposes of the rules of Section 382 described above, an ownership change occurred in February 2011. Any future transaction or transactions and the timing of such transaction or transactions could trigger additional ownership changes under Section 382. As a result of the February 2011 ownership change, utilization for certain of the company’s Tax Attributes, U.S. net operating losses and tax credits, is subject to an overall annual limitation of $70.6 million. The cumulative limitation as of December 31, 2021 is approximately $462.4 million. This limitation will be applied to any net operating losses and then to any other Tax Attributes. Any unused limitation may be carried over to later years. Based on presently available information and the existence of tax planning strategies, the company does not expect to incur a U.S. cash tax liability in the near term. The company maintains a full valuation allowance against the realization of all U.S. deferred tax assets as well as certain foreign deferred tax assets in excess of deferred tax liabilities.

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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=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 http://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 http://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 http://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 http://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 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 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 http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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