Income Taxes (Tables)

12 Months Ended

Dec. 31, 2019

Income Taxes

Schedule of domestic and foreign components of income before taxes

The domestic and foreign components of income before taxes are as follows for the years ended December 31, (dollars in millions):

	2019		2018		2017
Domestic	$	3.8	$	(15.4)	$	(14.0)
Foreign		276.6		260.1		211.8
	$	280.4	$	244.7	$	197.8

Components of income tax provision

The components of the income tax provision are as follows for the years ended December 31, (dollars in millions):

	2019		2018		2017
Current income tax expense:
Federal	$	0.6	$	10.1	$	32.2
State		2.2		1.0		2.0
Foreign		82.1		61.8		42.7
Total current income tax expense		84.9		72.9		76.9
Deferred income tax (benefit) expense:
Federal		(2.2)		(15.4)		35.5
State		0.3		(0.3)		(0.4)
Foreign		(0.6)		6.5		5.5
Total deferred income tax (benefit) expense		(2.5)		(9.2)		40.6
Income tax provision	$	82.4	$	63.7	$	117.5

Schedule of significant components due to which income tax provision differs from the tax provision computed at the U.S. federal statutory rate

The income tax provision differs from the tax provision computed at the U.S. federal statutory rate due to the following significant components for the years ended December 31:

	2019		2018		2017
Statutory tax rate	21.0	%	21.0	%	35.0	%
Foreign tax rate differential	5.9		4.6		(11.7)
Permanent differences	1.1		0.7		(0.5)
Mandatory Repatriation	(0.6)		1.7		27.0
Tax contingencies	1.4		0.9		(1.3)
Change in tax rates	0.3		1.1		0.9
Withholding taxes	(0.1)		0.1		2.2
Permanent reinvestment assertion accrual	0.3		(4.9)		7.8
State income taxes, net of federal benefits	0.7		(0.4)		1.3
Purchase accounting	—		0.1		0.5
Tax credits	(0.6)		—		(0.3)
Other	—		0.6		(1.2)
Change in valuation allowance for unbenefitted losses	—		0.5		(0.3)
Effective tax rate	29.4	%	26.0	%	59.4	%

Schedule of tax effect of temporary items that give rise to significant portions of deferred tax assets and liabilities

The tax effect of temporary items that give rise to significant portions of the deferred tax assets and liabilities as of December 31, 2019 and 2018 are as follows (dollars in millions):

	2019		2018
Deferred tax assets:
Accrued expenses	$	7.5	$	5.3
Compensation		32.6		26.9
Investments		0.1		—
Deferred revenue		8.4		—
Net operating loss carryforwards		21.2		24.3
Fixed assets		2.9		3.9
Foreign tax and other tax credit carryforwards		11.0		8.3
Unrealized currency gain/loss		6.1		1.1
Lease obligations		16.3		—
Gross deferred tax assets		106.1		69.8
Less valuation allowance		(4.2)		(4.3)
Total deferred tax assets		101.9		65.5
Deferred tax liabilities:
Accounts receivable		0.6		1.2
Investments		—		0.5
Inventory		13.3		1.8
Deferred revenue		—		5.9
Fixed assets		4.9		—
Foreign statutory reserves		2.2		0.4
Intangibles		40.1		47.6
Accrued expenses		0.9		0.3
Accrued Withholding Tax		5.2		4.8
Right of use asset		15.6		—
Other		7.4		3.2
Total deferred tax liabilities		90.2		65.7
Net deferred tax assets	$	11.7	$	(0.2)

Schedule of changes in the valuation allowance for deferred tax assets

Changes in the valuation allowance for deferred tax assets during the years ended December 31, 2019, 2018 and 2017 were as follows:

Balance at December 31, 2016	$	0.5
Decreases recorded as a benefit to income tax provision		(0.5)
Balance at December 31, 2017	$	—
Increases recorded as a loss to income tax provision		1.3
Increases recorded as part of acquisition purchase accounting		3.0
Balance at December 31, 2018	$	4.3
Decreases recorded as a benefit to income tax provision		(0.1)
Balance at December 31, 2019	$	4.2

Tabular reconciliation of the beginning and ending amount of unrecognized tax benefits

A tabular reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (dollars in millions):

Gross unrecognized tax benefits at December 31, 2016	$	6.2
Lapse of statutes		(1.8)
Gross unrecognized tax benefits at December 31, 2017		4.4
Gross increases - tax positions in prior periods		3.1
Lapse of statutes		(0.9)
Gross unrecognized tax benefits at December 31, 2018		6.6
Gross increases - tax positions in prior periods		4.7
Gross increases - current period tax positions		4.7
Lapse of statutes		(0.1)
Gross unrecognized tax benefits at December 31, 2019	$	15.9