

	2019			2018			2017
	(In thousands)
Current
U.S.	$	49,819		$	67,793		$	91,641
State and local	9,074			8,056			9,342
Foreign	41,864			46,862			50,775
Total current	100,757			122,711			151,758
Deferred
U.S.	10,158			(5,471		)	(36,390		)
State and local	(115		)	(17		)	3,305
Foreign	(3,418		)	1,143			(657		)
Total deferred	6,625			(4,345		)	(33,742		)
Total provision for income taxes	$	107,382		$	118,366		$	118,016



	2019			2018
	(In thousands)
Employee and retiree benefit plans	$	28,097		$	27,615
Capital loss and other carryforwards	16,035			12,754
Operating lease assets	20,036			—
Operating lease liabilities	(19,530		)	—
Depreciation and amortization	(175,904		)	(168,485		)
Inventories	7,699			5,969
Allowances and accruals	7,765			11,540
Interest rate exchange agreement	2,113			3,543
Other	(14,998		)	(6,388		)
Total gross deferred tax (liabilities)	(128,687		)	(113,452		)
Valuation allowance	(16,035		)	(12,754		)
Total deferred tax (liabilities), net of valuation allowances	$	(144,722	)	$	(126,206	)



	2019			2018			2017
	(In thousands)
Pretax income	$	532,903		$	528,939		$	455,273
Provision for income taxes:
Computed amount at statutory rate	$	111,910		$	111,077		$	159,346
State and local income tax (net of federal tax benefit)	8,163			8,280			5,841
Taxes on non-U.S. earnings-net of foreign tax credits	5,003			5,725			(24,914		)
Global Intangible Lowed-Taxed Income	2,324			2,725			—
Foreign-Derived Intangible Income Deduction	(5,811		)	(5,410		)	—
Effect of flow-through entities	1,316			1,215			192
U.S. business tax credits	(3,193		)	(3,056		)	(1,928		)
Domestic activities production deduction	—			—			(8,516		)
Capital loss on divestitures	—			—			(2,275		)
Share-based payments	(11,011		)	(9,348		)	(6,844		)
Valuation allowance	(117		)	—			(361		)
Impact of Tax Act	(334		)	10,298			(100		)
Other	(868		)	(3,140		)	(2,425		)
Total provision for income taxes	$	107,382		$	118,366		$	118,016

On December 22, 2017, the Tax Cuts and Jobs Act (the “Tax Act”) was enacted into law, which significantly changed existing U.S. tax law and includes many provisions applicable to the Company, including, but not limited to, reducing the U.S. federal statutory tax rate, imposing a one-time transition tax on deemed repatriation of deferred foreign income and adopting a territorial tax system. The Tax Act reduced the U.S. federal statutory tax rate from 35% to 21% effective January 1, 2018. The Tax Act also included a provision to tax global intangible low-taxed income of foreign subsidiaries, a special tax deduction for foreign-derived intangible income and a base erosion anti-abuse tax measure that may tax certain payments between a U.S. corporation and its subsidiaries. These additional provisions of the Tax Act were effective beginning January 1, 2018.

The Company has $26.5 million and $18.2 million of permanently reinvested earnings of non-U.S. subsidiaries as of December 31, 2019 and 2018, respectively. No deferred U.S. income taxes have been provided on the $26.5 million of permanently reinvested earnings, as these earnings are considered to be reinvested for an indefinite period of time. It should also be noted that the aforementioned earnings will not incur U.S. taxes when ultimately repatriated other than potentially U.S. state and local taxes and/or U.S. federal income taxes on foreign exchange gains or losses crystalized on the distribution of such earnings. Such distributions could also be subject to additional foreign withholding and foreign income taxes. The amount of unrecognized deferred income tax liabilities on currently permanently reinvested earnings is estimated to be $5.4 million and $3.7 million as of December 31, 2019 and 2018, respectively.

During the years ended December 31, 2019, 2018 and 2017, the Company repatriated $99.0 million, $135.0 million and $3.3 million of foreign earnings, respectively. These actual distributions resulted in no incremental income tax expense for the years ended December 31, 2019 and 2018, and $6.4 million of incremental income tax benefit for the year ended December 31, 2017. These repatriations represent distributions of previously taxed income as well as distributions from liquidating subsidiaries.

Because the changes included in the Tax Act were broad and complex, on December 22, 2017, the SEC issued Staff Accounting Bulletin (“SAB 118”), which provided guidance on accounting for the tax effects of the Tax Act. SAB 118 provided a measurement period that should not extend beyond one year from the Tax Act enactment date for companies to complete the accounting under ASC 740. In accordance with SAB 118, a company was required to reflect the income tax effects of those aspects of the Tax Act for which the accounting under ASC 740 was complete. To the extent that a company’s accounting for certain income tax effects of the Tax Act was incomplete but it was able to determine a reasonable estimate, it was required to record a provisional estimate to be included in the financial statements. As of December 31, 2018, the Company, as required under SAB 118, completed the

Deemed Repatriation Transition Tax: The Deemed Repatriation Transition Tax (“Transition Tax”) is a tax on previously untaxed accumulated and current earnings and profits of certain foreign subsidiaries. To determine the amount of the Transition Tax, the Company had to determine, in addition to other factors, the amount of post-1986 earnings and profits of the relevant subsidiaries, as well as the amount of non-U.S. income taxes paid on such earnings. The Company was able to make a reasonable estimate of the Transition Tax and recorded a provisional Transition Tax obligation of $30.3 million for the year ended December 31, 2017. During the first quarter of 2018, the IRS released Revenue Procedure 2018-17 and Notice 2018-26, the effects of which increased the provisional Transition Tax by $0.1 million. The Company updated its Transaction Tax obligation in the fourth quarter of 2018 recording a $3.9 million tax benefit which, together with the first quarter adjustment, resulted in an updated Transition Tax obligation of $26.5 million. The Company finalized its Transition Tax obligation in the fourth quarter of 2019 for an adjustment and foreign tax credit carrybacks which resulted in a final Transition Tax obligation of$20.6 million.

Reduction of U.S. federal corporate tax rate: The Tax Act reduces the corporate tax rate to 21%, effective January 1, 2018. The Company recorded a decrease in its deferred tax liability of $40.6 million, with a corresponding adjustment to deferred income tax benefit of $40.6 million for the year ended December 31, 2017. The Company finalized the impact of the rate change on its deferred tax liability in the fourth quarter of 2018 recording an additional $1.1 million tax benefit. The total reduction to the deferred tax liability related to the rate change was $41.7 million.

Removal of Permanent Reinvestment Representation on certain undistributed foreign earnings: As a result of the enactment of the Tax Act, the Company had decided to remove the Permanent Reinvestment Representation with respect to certain of its subsidiaries in Canada, Italy and Germany as of December 31, 2017. Under the mandatory repatriation provisions of the Tax Act, post-1986 undistributed earnings were taxed in the U.S. as if they were distributed before December 31, 2017. However, with the removal of the Permanent Reinvestment Representation with respect to select subsidiaries in Canada, Italy and Germany, the non-creditable withholding taxes and any local country taxes associated with future dividends from these subsidiaries were required to be recorded as deferred tax liabilities as of the end of 2017. The Company recorded a provisional increase in its deferred tax liability of $9.2 million, with a corresponding adjustment to deferred income tax expense of $9.2 million for the year ended December 31, 2017. During the second quarter of 2018, the deferred tax liability was reduced by $1.4 million to $7.8 million. No adjustments were made to the deferred tax liability during the third quarter of 2018. The Company removed the Permanent Reinvestment Representation during the fourth quarter of 2018 for all remaining non-U.S. subsidiaries except for its entity in India. This change resulted in an additional $9.1 million increase to its deferred tax liability with a corresponding adjustment to deferred tax expense.

Global intangible low taxed income (“GILTI”): The Tax Act creates a new requirement that certain income (i.e. GILTI) earned by controlled foreign corporations (“CFCs”) must be included currently in the gross income of the CFC’s U.S. shareholder. GILTI is the excess of the U.S. shareholder’s “net CFC tested income” over the net deemed intangible income return, which is currently defined as the excess of (1) 10% of the aggregate of the U.S. shareholder’s pro rata share of the qualified business asset investment of each CFC with respect to which it is a U.S. shareholder over (2) the amount of certain interest expense taken into account in the determination of net CFC-tested income. In January 2018, FASB released guidance on the accounting for the GILTI tax. The guidance indicates that either accounting for deferred taxes related to GILTI tax inclusions or treating the GILTI tax as a period cost are both acceptable methods subject to an accounting policy election. The Company treats the GILTI tax as a period cost.

Although the SAB 118 measurement period has closed, further technical guidance related to the Tax Act, including final regulations on a broad range of topics, is expected to be issued. In accordance with ASC 740, the Company will recognize any effects of the guidance in the period that such guidance is issued.



	2019			2018			2017
	(In thousands)
Beginning balance January 1	$	4,070		$	2,722		$	3,775
Gross increases for tax positions of prior years	—			2,308			537
Gross decreases for tax positions of prior years	—			(229		)	(587		)
Settlements	(140		)	(160		)	(604		)
Lapse of statute of limitations	(250		)	(571		)	(399		)
Ending balance December 31	$	3,680		$	4,070		$	2,722

The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. As of December 31, 2019, 2018 and 2017, we had approximately $0.2 million, $0.1 million and $0.1 million, respectively, of accrued interest related to uncertain tax positions. The Company had no accrued penalties related to uncertain tax positions during these years.

The total amount of unrecognized tax benefits that would affect the Company’s effective tax rate if recognized is $3.0 million, $3.0 million and $0.9 million as of December 31, 2019, 2018 and 2017, respectively. The tax years 2013-2018 remain open to examination by major taxing jurisdictions. Due to the potential for resolution of federal, state and foreign examinations, and the expiration of various statutes of limitation, it is reasonably possible that the Company’s gross unrecognized tax benefits balance may change within the next 12 months by a range of zero to $0.9 million.

The Company had net operating loss and general business credit carryforwards related to prior acquisitions for U.S. federal purposes at December 31, 2019 and 2018 of $0.4 million and $1.3 million, respectively. The U.S. federal net operating loss carryforwards are available for use against the Company’s consolidated U.S. federal taxable income and expire between 2021 and 2028. For non-U.S. purposes, the Company had net operating loss carryforwards at December 31, 2019 and 2018 of $16.5 million and $29.5 million, respectively, the majority of which relates to acquisitions. The entire balance of the non-U.S. net operating losses is available to be carried forward indefinitely. At December 31, 2019 and 2018, the Company had U.S. state net operating loss carryforwards of approximately $17.4 million and $15.8 million, respectively. If unutilized, the U.S. state net operating loss will expire between 2020 and 2039. At December 31, 2019 and 2018, the Company recorded a valuation allowance against the deferred tax asset attributable to the U.S. state net operating loss of $0.6 million and $0.6 million, respectively.

The Company had a capital loss carryover for U.S. federal purposes at December 31, 2019 and 2018 of approximately $45.6 million and $46.1 million, respectively. U.S. federal capital loss carryovers can be carried back three years and forward five years, thus, if unutilized, the U.S. federal capital loss carryover will expire in 2021. At December 31, 2019 and 2018, the Company recorded a valuation allowance against the deferred tax asset attributable to the U.S. federal capital loss carryover of $9.6 million and $9.7 million, respectively. At December 31, 2019 and 2018, the Company had U.S. state capital loss carryovers of $62.1 million and $62.7 million, respectively. If unutilized, the U.S. state capital loss carryovers will expire between 2021 and 2031. At December 31, 2019 and 2018, the Company recorded a valuation allowance against the deferred tax assets attributable to the U.S. state capital loss carryovers of $0.8 million and $0.8 million, respectively. At December 31, 2019 and 2018, the Company had a foreign capital loss carryforward of approximately $13.8 million and $13.4 million, respectively. The foreign capital loss can be carried forward indefinitely. At both December 31, 2019 and 2018, the Company has a full valuation allowance against the deferred tax asset attributable to the foreign capital loss.

The Company had a foreign tax credit carryover for U.S. federal purposes at December 31, 2019 and 2018 of approximately $3.3 million and $6.6 million, respectively. U.S. federal foreign tax credit carryovers can be carried back one year and forward ten years, thus, if unutilized, the U.S. federal foreign tax credit carryover will expire in 2029. At December 31, 2019, the Company recorded a full valuation allowance against the deferred tax asset attributable to the U.S. federal foreign tax credit carryover.