Income Taxes (Tables)

12 Months Ended

Nov. 03, 2019

Income Taxes

Tax Reform Measurement Period Adjustments and Effects on Results

In 2019 and 2018, the Company recorded discrete tax adjustments related to the remeasurement of the Company’s net deferred tax liabilities to the new corporate income tax rate and for the repatriation tax. The income tax expense (benefit) for the net deferred tax liability remeasurement and the repatriation tax adjustments were as follows (in millions of dollars):

	2019		2018
Net deferred tax liability remeasurement	$	4.8	$	(362.9)
Deemed earnings repatriation tax		(13.9)		20.6
Total discrete tax expense (benefit)	$	(9.1)	$	(342.3)

Provision (Credit) for Income Taxes by Taxing Jurisdiction and by Significant Component

The provision (credit) for income taxes by taxing jurisdiction and by significant component consisted of the following (in millions of dollars):

	2019		2018		2017
Current:
U.S.:
Federal	$	351.1	$	(244.5)	$	50.0
State		1.9		6.0		3.1
Foreign		29.0		17.6		25.6
Total current		382.0		(220.9)		78.7
Deferred:
U.S.:
Federal		(279.9)		(3.4)		93.5
State		(.6)		4.2		.3
Foreign		(6.0)		2.9		(1.0)
Total deferred		(286.5)		3.7		92.8
Provision (credit) for income taxes	$	95.5	$	(217.2)	$	171.5

Pro forma Provision (Credit) for Income Taxes and Net Income

The pro forma provision (credit) for income taxes and net income on this basis would have been as follows (in millions of dollars):

	2018
Provision (credit) for income taxes assuming computation on an unmodified, separate return basis	$	(198.2)
Pro forma net income attributable to the Company		780.2

Comparison of Statutory and Effective Income Tax Provision

A comparison of the statutory and effective income tax provision and reasons for related differences follows (in millions of dollars):

	2019		2018		2017
U.S. federal income tax provision at a statutory rate (2019 - 21 percent, 2018 - 23.3 percent, 2017 - 35 percent)	$	107.7	$	135.3	$	174.6
Increase (decrease) resulting from:
Net deferred tax liability remeasurement		4.8		(362.9)
Deemed earnings repatriation tax		(13.9)		20.6
Other effects of tax reform				(8.5)
Tax rates on foreign earnings		4.4		2.1		(6.8)
Municipal lease income not taxable		(.8)		(.8)		(1.3)
State and local income taxes, net of federal income tax benefit		1.0		7.8		2.2
Other – net		(7.7)		(10.8)		2.8
Provision (credit) for income taxes	$	95.5	$	(217.2)	$	171.5

Analysis of Deferred Income Tax Assets and Liabilities

Deferred income taxes arise because there are certain items that are treated differently for financial accounting than for income tax reporting purposes. An analysis of deferred income tax assets and liabilities at November 3, 2019 and October 28, 2018 was as follows (in millions of dollars):

	2019				2018
	Deferred		Deferred		Deferred		Deferred
	Tax		Tax		Tax		Tax
	Assets		Liabilities		Assets		Liabilities
Lease transactions			$	571.5			$	856.5
Tax over book depreciation				4.7				5.2
Deferred retail note finance income				3.2				1.6
Accrual for retirement and other benefits	$	4.9						.5
Accrual for other employee benefits		11.6
Allowance for credit losses		29.1			$	31.8
Tax loss and tax credit carryforwards		24.6				33.6
Federal taxes on deferred state tax deductions		10.8				13.4
Miscellaneous accruals and other		9.1		2.5		4.1		3.9
Less valuation allowances		(2.7)				(2.6)
Deferred income tax assets and liabilities	$	87.4	$	581.9	$	80.3	$	867.7

Reconciliation of Total Amounts of Unrecognized Tax Benefits

A reconciliation of the total amounts of unrecognized tax benefits at November 3, 2019, October 28, 2018, and October 29, 2017 was as follows (in millions of dollars):

	2019		2018		2017
Beginning of year balance	$	36.3	$	35.5	$	36.5
Increases to tax positions taken during the current year		6.9		9.1		7.6
Increases to tax positions taken during prior years		.8		.9		1.2
Decreases to tax positions taken during prior years		(7.1)		(4.6)		(5.9)
Decreases due to lapse of statute of limitations		(4.4)		(4.6)		(3.9)
End of year balance	$	32.5	$	36.3	$	35.5