Income Taxes

12 Months Ended

Dec. 31, 2023

Income Tax Disclosure [Abstract]

Income Taxes

13. INCOME TAXES

Loss from continuing operations before income taxes includes the results from domestic and international operations as follows:

	Year Ended December 31,
	2023			2022			2021
U.S. companies	$	(811.6	)	$	(1,253.5	)	$	(409.0	)
Non-U.S. companies		93.7			53.8			19.8
Loss from continuing operations before income taxes	$	(717.9	)	$	(1,199.7	)	$	(389.2	)

The components of income tax expense (benefit) were as follows:

	Year Ended December 31,
	2023			2022			2021
Current:
Federal	$	80.7		$	38.3		$	(16.4	)
Foreign		68.0			32.4			74.8
State		0.4			15.6			7.7
Current income tax expense	$	149.1		$	86.3		$	66.1
Deferred:
Federal	$	0.3		$	(83.7	)	$	(97.1	)
Foreign		(23.3	)		(7.7	)		(1.8	)
State		7.3			(9.9	)		(6.4	)
Deferred income tax benefit		(15.7	)		(101.3	)		(105.3	)
Total income tax expense (benefit)	$	133.4		$	(15.0	)	$	(39.2	)

The reconciliation of income taxes calculated at the statutory U.S. federal income tax rate to the Company’s expense (benefit) for income taxes was as follows:

	Year Ended December 31,
	2023			2022			2021
Benefit for income taxes at federal statutory rate	$	(150.8	)	$	(251.9	)	$	(81.8	)
State income taxes, net of federal tax effect		(1.3	)		(9.9	)		(18.0	)
Other permanent items		4.9			11.6			6.9
Equity-based compensation		8.1			(5.6	)		7.0
Other changes in tax laws and tax rulings		(4.1	)		4.7			37.4
Goodwill related items		113.4			232.0			—
Base erosion and anti-abuse tax		—			—			10.2
Foreign-derived intangible income deduction		(1.9	)		(7.4	)		(7.5	)
Federal tax credits		(20.0	)		(24.3	)		(19.5	)
Change in unrecognized tax benefits		(4.1	)		(7.6	)		(13.8	)
Withholding taxes and Subpart F income, net of foreign tax credits		15.2			26.7			19.3
Foreign earnings taxed at other than federal rate		5.9			6.5			5.2
Tax provision adjustments and revisions to prior yearsʾ returns		2.7			(3.2	)		(5.3	)
Change in valuation allowances		165.4			13.4			20.7
Total expense (benefit) for income taxes	$	133.4		$	(15.0	)	$	(39.2	)

The components of deferred income tax assets and liabilities and the classification of deferred tax balances on the balance sheet were as follows:

	December 31,
	2023			2022
Deferred tax assets:
Accounts receivable, inventory and warranty reserves	$	210.3		$	136.8
Employee benefits		42.1			59.0
Foreign net operating loss and tax credit carryforwards		593.4			565.0
Federal net operating loss and tax credit carryforwards		24.2			22.0
State net operating loss and tax credit carryforwards		105.7			103.6
Unrecognized tax benefits		27.9			30.8
Interest limitation		158.8			75.4
Capitalized research and development costs		506.2			471.6
Other		82.9			92.1
Total deferred tax assets		1,751.5			1,556.3
Valuation allowance		(838.5	)		(642.0	)
Total deferred tax assets, net of valuation allowance	$	913.0		$	914.3
Deferred tax liabilities:
Intangible assets	$	(353.9	)	$	(485.3	)
Property, plant and equipment		(14.3	)		(16.4	)
Undistributed foreign earnings		(21.4	)		(20.6	)
Other		(18.5	)		(12.9	)
Total deferred tax liabilities		(408.1	)		(535.2	)
Net deferred tax asset	$	504.9		$	379.1
Deferred taxes recognized on the balance sheet:
Noncurrent deferred tax asset	$	615.6		$	494.6
Noncurrent deferred tax liability		(110.7	)		(115.5	)
Net deferred tax asset	$	504.9		$	379.1

The deferred tax asset for foreign net operating loss and tax credit carryforwards as of December 31, 2023 includes foreign net operating loss carryforwards (net of federal tax effects) of $582.4 million, which begin to expire in 2024, and foreign tax credit carryforwards (net of federal tax effects) of $11.0 million, which begin to expire in 2024. Certain of these foreign net operating loss carryforwards are subject to local restrictions limiting their utilization. Valuation allowances of $569.3 million have been established related to these foreign deferred tax assets.

The deferred tax asset for federal net operating loss and tax credit carryforwards as of December 31, 2023 relates to $4.2 million of net operating loss carryforwards, which begin to expire in 2031, and $20.0 million of U.S. foreign tax credit carryforwards, which begin to expire in 2029. A valuation allowance of $20.0 million has been established against these deferred tax assets.

The deferred tax asset for state net operating loss and tax credit carryforwards as of December 31, 2023 includes state net operating loss carryforwards (net of federal tax impact) of $38.3 million, which begin to expire in 2024, and state tax credit carryforwards (net of federal tax impact) of $67.4 million, which begin to expire in 2024. A valuation allowance of $87.8 million has been established against these and other state income tax related deferred tax assets.

The deferred tax asset for federal and state interest limitation carryforwards as of December 31, 2023 are $158.8 million which have an indefinite carryforward. During 2023, a valuation allowance of $158.8 million has been established against these federal and state deferred tax assets.

In addition to the valuation allowances detailed above, the Company has also established a valuation allowance of $2.6 million against other deferred tax assets.

Under current U.S. tax regulations, repatriation of foreign earnings to the U.S. can generally be completed with no incremental U.S. tax. However, repatriation of foreign earnings could subject the Company to U.S. state and non-U.S. jurisdictional taxes (including withholding taxes) on distributions. As of December 31, 2023, the Company has a deferred tax liability of $21.4 million for the estimated foreign and state tax costs associated with the expected repatriation of the Company’s undistributed foreign earnings. The unrecorded deferred tax liability for foreign and state tax costs associated with earnings considered permanently reinvested is not material as of December 31, 2023.

The following table reflects a reconciliation of the beginning and end of period amounts of gross unrecognized tax benefits, excluding interest and penalties:

	Year Ended December 31,
	2023			2022			2021
Balance at beginning of period	$	145.5		$	176.6		$	190.5
Increase related to prior periods		0.1			1.1			0.7
Decrease related to prior periods		(7.9	)		(23.3	)		(0.3	)
Increase related to current periods		5.5			5.1			5.9
Decrease related to settlements with taxing authorities		(0.3	)		(13.4	)		(7.5	)
Decrease related to lapse in statutes of limitations		(3.2	)		(0.6	)		(12.7	)
Balance at end of period	$	139.7		$	145.5		$	176.6

The Company’s liability for unrecognized tax benefits that, if recognized, would favorably affect the effective tax rate in future periods was $110.7 million as of December 31, 2023. The Company operates in numerous jurisdictions worldwide and is subject to routine tax audits on a regular basis. The determination of the Company’s unrecognized tax benefits involves significant management judgment regarding interpretation of relevant facts and tax laws in each of these jurisdictions.

Unrecognized tax benefits are reviewed and evaluated on an ongoing basis and may be adjusted for changing facts and circumstances including the lapse of applicable statutes of limitation and closure of tax examinations. Although the timing and outcome of such events are difficult to predict, the Company estimates that the balance of unrecognized tax benefits, excluding the impact of accrued interest and penalties, may be reduced by up to $8.0 million within the next twelve months.

The Company provides for interest and penalties related to unrecognized tax benefits as income tax expense. The Company accrued $5.4 million and $9.4 million for interest and penalties as of December 31, 2023 and 2022, respectively. During the years ended December 31, 2023, 2022 and 2021, the net expense (benefit) for interest and penalties recognized through income tax expense (benefit) was $(4.0) million, $0.1 million and $(0.1) million, respectively.

The Company files federal, state and local tax returns with statutes of limitation generally ranging from 3 to 4 years. The Company is currently undergoing a U.S. federal income tax audit for the 2019 tax year and is generally no longer subject to state and local tax examinations for years prior to 2020. Tax returns filed by the Company’s significant foreign subsidiaries are generally subject to statutes of limitation of 3 to 7 years and are generally no longer subject to examination for years prior to 2018. In many jurisdictions, tax authorities retain the ability to review prior years’ tax returns and to adjust any net operating loss or tax credit carryforwards from these years that are available to be utilized in subsequent periods. During 2023, the Company recognized $(2.3) million (net of payments) related to the lapse of applicable statutes of limitations and the conclusion of various domestic and foreign examinations.

The following table presents income tax expense (benefit) related to amounts presented in other comprehensive income (loss):

	Year Ended December 31,
	2023			2022		2021
Foreign currency translation	$	(2.9	)	$	1.2	$	1.2
Defined benefit plans		(0.3	)		0.8		6.6
Total	$	(3.2	)	$	2.0	$	7.8