Income Taxes

12 Months Ended

Dec. 31, 2019

Income Tax Disclosure [Abstract]

Income Taxes [Text Block]

Income Taxes

The provision for income taxes for the years ended December 31 consists of the following:

	2019			2018			2017
Current:
Federal	$	3,887		$	(12,345	)	$	119,298
State	(69		)	20,141			(6,156		)
International	134,808			178,767			134,987
	$	138,626		$	186,563		$	248,129
Deferred:
Federal	$	(54,356	)	$	19,207		$	31,167
State	(2,710		)	312			13,535
International	6,778			(18,283		)	(6,290		)
	(50,288		)	1,236			38,412
	$	88,338		$	187,799		$	286,541

The principal causes of the difference between the U.S. federal statutory tax rate of 21% and effective income tax rates for the years ended December 31 are as follows:

	2019			2018			2017
United States	$	(557,592	)	$	186,677		$	115,664
International	445,762			722,696			578,253
Income (loss) before income taxes	$	(111,830	)	$	909,373		$	693,917
Provision (benefit) at statutory tax rate	$	(23,484	)	$	190,968		$	242,415
State taxes, net of federal benefit	(2,051		)	18,888			5,184
International effective tax rate differential	17,474			7,480			(88,444		)
U.S. tax (benefit) on foreign earnings	26,013			—			—
Deductible loss on wind down of business (c)	(11,311		)	—			—
Capital loss	—			60,757			—
Change in valuation allowance	1,305			(66,557		)	1,408
Other non-deductible expenses	1,585			14,128			12,700
Changes in tax accruals	10,418			(3,968		)	(7,973		)
Tax credits	(3,034		)	(7,884		)	(8,170		)
Non-deductible portion of impairment of goodwill	75,900			—			—
Tax Act's transition tax (a)	—			(28,323		)	196,010
Tax Act's impact on deferred taxes (b)	—			—			(71,261		)
Other	(4,477		)	2,310			4,672
Provision for income taxes	$	88,338		$	187,799		$	286,541

(a) For the year ended December 31, 2017, the company accrued a provisional estimate of $196,010 of tax expense for the Tax Act's one-time transition tax on the foreign subsidiaries' accumulated, unremitted earnings in accordance with U.S. Securities and Exchange Commission's Staff Accounting Bulletin (“SAB 118”). Additionally, during the fourth quarter of 2018 the company recorded a $28,323 benefit upon finalizing its analysis of the impact from the Tax Act.

(b) For the year ended December 31, 2017, the company accrued $71,261 in provisional tax benefit related to the net change in deferred tax liabilities stemming from the Tax Act's reduction of the U.S. federal tax rate from 35% to 21%, and disallowance of certain incentive based compensation tax deductibility under Internal Revenue Code Section 162(m).

(c) The wind of down of the company’s personal computer and mobility asset disposition business resulted in the net tax benefit of $11,311 for the year ended December 31, 2019.

With the effective date of January 1, 2018, the Tax Act also introduced a provision to tax global intangible low-taxed income (“GILTI”) of foreign subsidiaries and a measure to tax certain intercompany payments under base erosion anti-abuse tax (“BEAT”) regime. For the period ended December 31, 2019, the company did not generate intercompany transactions that met BEAT threshold, but did generate federal GILTI tax in the amount of $31,042 for the year ended December 31, 2019, which was adversely affected by losses from the wind down of the personal computer and mobility asset disposition business. The company elected to account for GILTI tax as a current period cost.

After considering the impact of taxable losses, tax payments, tax credits, and other tax accruals, as of December 31, 2019, the company's remaining cash tax payable for the transition tax on foreign unremitted earnings is $30,857, which is reported as a long-term tax payable due to the company's intent to pay this federal transition tax over a period of eight years as permitted by the Tax Act.

At December 31, 2019, the company had a liability for unrecognized tax position of $52,986. The timing of the resolution of these uncertain tax positions is dependent on the tax authorities' income tax examination processes. Material changes are not expected, however, it is possible that the amount of unrecognized tax benefits with respect to uncertain tax positions could increase or decrease during 2020. Currently, the company is unable to make a reasonable estimate of when tax cash settlement would occur and how it would impact the effective tax rate.

A reconciliation of the beginning and ending amount of unrecognized tax benefits for the years ended December 31 is as follows:

	2019			2018			2017
Balance at beginning of year	$	35,879		$	24,361		$	31,534
Additions based on tax positions taken during a prior period	13,018			583			2,342
Reductions based on tax positions taken during a prior period	(86		)	(1,248		)	(1,242		)
Additions related to positions taken upon finalization of Tax Act during the current period	—			16,506			—
Additions based on tax positions taken during the current period	8,926			3,133			6,543
Reductions based on tax positions taken during the current period	(259		)	(233		)	—
Reductions related to settlement of tax matters	—			(136		)	(2,921		)
Reductions related to a lapse of applicable statute of limitations	(4,492		)	(7,087		)	(11,895		)
Balance at end of year	$	52,986		$	35,879		$	24,361

Interest costs related to unrecognized tax benefits are classified as a component of “Interest and other financing expense, net” in the company's consolidated statements of operations. In 2019, 2018, and 2017, the company recognized $1,469, $945, and $(2,792), respectively, of interest expense (benefit) related to unrecognized tax benefits. At December 31, 2019 and 2018, the company had accrued a liability of $5,639 and $4,189, respectively, for the payment of interest related to unrecognized tax benefits.

In many cases the company's uncertain tax positions are related to tax years that remain subject to examination by tax authorities. The following describes the open tax years, by major tax jurisdiction, as of December 31, 2019:

United States - Federal	2016 - present
United States - States	2013 - present
Germany (d)	2013 - present
Hong Kong	2013 - present
Italy (d)	2013 - present
Sweden	2014 - present
United Kingdom	2018 - present

(d) Includes federal as well as local jurisdictions.

Deferred income taxes are provided for the effects of temporary differences between the tax basis of an asset or liability and its reported amount in the consolidated balance sheets. These temporary differences result in taxable or deductible amounts in future years.

The deferred tax assets and liabilities consist of the following at December 31:

	2019			2018
Deferred tax assets:
Net operating loss carryforwards	$	96,605		$	129,641
Capital loss carryforwards	57,031			60,606
Inventory adjustments	54,500			52,094
Allowance for doubtful accounts	12,797			17,016
Accrued expenses	27,998			27,088
Interest carryforward	13,059			5,008
Stock-based compensation awards	11,006			12,824
Other comprehensive income items	984			—
Integration and restructuring	788			2,547
Lease liability	74,935			—
Intangible assets	4,266			—
Other	13,913			—
	367,882			306,824
Valuation allowance	(81,037		)	(80,471		)
Total deferred tax assets	$	286,845		$	226,353
Deferred tax liabilities:
Goodwill	$	(109,131	)	$	(121,346	)
Depreciation	(115,459		)	(131,848		)
Intangible assets	—			(18,754		)
Lease right-of-use assets	(69,491		)	—
Other comprehensive income items	—			(8,301		)
Other	—			(6,634		)
Total deferred tax liabilities	$	(294,081	)	$	(286,883	)
Total net deferred tax assets (liabilities)	$	(7,236	)	$	(60,530	)

At December 31, 2019, the company had international tax loss carryforwards of approximately $352,336, of which $11,010 have expiration dates ranging from 2020 to 2039, and the remaining $341,327 have no expiration date. Deferred tax assets related to these international tax loss carryforwards were $89,130 with a corresponding valuation allowance of $6,037. At December 31, 2019, the company had a valuation allowance of $4,835 related to other deferred tax assets.

At December 31, 2019, the company also had deferred tax assets of $485 related to U.S. Federal net operating loss carryforwards from acquired subsidiaries. These U.S. Federal net operating losses expire in various years beginning after 2028. Additionally, as of December 31, 2019, the company had U.S. state net operating loss carryforwards related to deferred tax assets of approximately $6,990 with a corresponding valuation allowance of $6,500. Valuation allowances are needed when deferred tax assets may not be realized due to the uncertainty of the timing and the ability of the company to generate sufficient future taxable income in certain tax jurisdictions.

The company historically considered the undistributed earnings of its foreign subsidiaries to be indefinitely reinvested and as a result had not provided for taxes on foreign earnings. However, to achieve greater cash management agility and to further advance business objectives, during the fourth quarter of 2019, the company reversed its assertion to indefinitely reinvest $3,300,000 of its foreign earnings, of which $761,000 was distributed to the U.S. by December 31, 2019. As a result, the company is no longer indefinitely reinvesting the residual identified $2,500,000 equivalent of foreign earnings as of December 31, 2019. Due to the change in the indefinite reinvestment assertion on $3,300,000 in foreign earnings, the company recorded a net tax benefit of $1,800 in 2019, caused by the fluctuation in foreign exchange rates used to convert these foreign earnings to U.S. dollars.

The company continues to indefinitely reinvest the remaining $1,100,000 of undistributed earnings of its foreign subsidiaries and recognizes that it may be subject to additional foreign withholding taxes and U.S. state income taxes, if it reverses its indefinite reinvestment assertion on these foreign earnings.

Income taxes paid, net of income taxes refunded, amounted to $188,601, $226,422, and $231,183 in 2019, 2018, and 2017, respectively.