Income Taxes (Tables)

12 Months Ended

Dec. 31, 2018

Components of Deferred Tax Assets and Liabilities

Significant components of the Company’s deferred tax assets and liabilities are as follows:



	2018			2017
Deferred tax assets related to:
Expenses not yet deducted for tax purposes	$	266,628		$	256,728
Pension liability not yet deducted for tax purposes	277,929			257,766
Net operating loss	29,785			31,046
	574,342			545,540
Deferred tax liabilities related to:
Employee and retiree benefits	218,124			210,429
Inventory	95,280			93,067
Other intangible assets	296,736			287,018
Property, plant, and equipment	72,463			66,727
Other	32,978			35,859
	715,581			693,100
Net deferred tax liability before valuation allowance	(141,239		)	(147,560		)
Valuation allowance	(26,095		)	(5,590		)
Total net deferred tax liability	$	(167,334	)	$	(153,150	)

Components of Income before Income Taxes

The components of income before income taxes are as follows:



	2018		2017		2016
United States	$	790,592	$	813,078	$	934,476
Foreign	285,020		196,190		139,864
Income before income taxes	$	1,075,612	$	1,009,268	$	1,074,340

Components of Income Tax Expense

The components of income tax expense are as follows:



	2018			2017			2016
Current:
Federal	$	144,615		$	252,337		$	284,199
State	39,326			29,288			41,083
Foreign	77,306			44,896			28,593
Deferred:
Federal	15,167			71,238			26,684
State	5,770			13,663			3,857
Foreign	(17,046		)	(18,911		)	2,684
	$	265,138		$	392,511		$	387,100

Difference Between Total Tax Expense and Amount Computed by Applying Statutory Federal Income Tax Rate

The reasons for the difference between total tax expense and the amount computed by applying the statutory Federal income tax rate to income before income taxes are as follows:



	2018			2017			2016
Statutory rate applied to income (1)	$	225,879		$	353,259		$	376,019
Plus state income taxes, net of Federal tax benefit	35,626			27,918			29,211
Taxation of foreign operations, net (2)	(7,639		)	(33,984		)	(18,057		)
U.S. tax reform - transition tax	4,875			37,132			—
U.S. tax reform - deferred tax remeasurement	424			13,854			—
Foreign rate change - deferred tax remeasurement	(1,461		)	(9,338		)	—
Book tax basis difference in investment	(11,944		)	—			—
Valuation allowance	20,505			1,273			371
Other	(1,127		)	2,397			(444		)
	$	265,138		$	392,511		$	387,100


(1)	U.S. statutory rates applied to income are as follows: 2018 at 21%, 2017 and 2016 at 35%.


(2)	The Company's effective tax rate reflects the net benefit of having operations outside of the U.S. which are taxed at statutory rates different from the U.S. statutory rate, with some income being fully or partially exempt from income taxes due to various operating and financing activities.

Reconciliation of Beginning and Ending Amount of Unrecognized Tax Benefits

A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows:



	2018			2017			2016
Balance at beginning of year	$	14,697		$	15,190		$	15,815
Additions based on tax positions related to the current year	2,034			2,644			2,184
Additions for tax positions of prior years	4,787			1,511			1,317
Reductions for tax positions for prior years	(725		)	(430		)	(1,369		)
Reduction for lapse in statute of limitations	(2,338		)	(3,917		)	(2,516		)
Settlements	(27		)	(301		)	(241		)
Balance at end of year	$	18,428		$	14,697		$	15,190