Income Taxes

12 Months Ended

Dec. 31, 2020

Pretax income for 2020, 2019 and 2018 was taxed in the following jurisdictions:


	2020		2019		2018
	(In thousands)
U.S.	$	296,355	$	377,166	$	357,585
Foreign	173,985		155,737		171,354
Total	$	470,340	$	532,903	$	528,939

The provision (benefit) for income taxes for 2020, 2019 and 2018 was as follows:


	2020		2019		2018
	(In thousands)
Current
U.S.	$	29,548	$	49,819	$	67,793
State and local	4,603		9,074		8,056
Foreign	50,173		41,864		46,862
Total current	84,324		100,757		122,711
Deferred
U.S.	10,066		10,158		(5,471)
State and local	1,522		(115)		(17)
Foreign	(3,350)		(3,418)		1,143
Total deferred	8,238		6,625		(4,345)
Total provision for income taxes	$	92,562	$	107,382	$	118,366

Deferred tax assets (liabilities) at December 31, 2020 and 2019 were:


	2020		2019
	(In thousands)
Employee and retiree benefit plans	$	26,872	$	28,097
Capital loss and other carryforwards	16,316		16,035
Operating lease assets	24,705		20,036
Operating lease liabilities	(23,945)		(19,530)
Depreciation and amortization	(188,993)		(175,904)
Inventories	8,780		7,699
Allowances and accruals	7,343		7,765
Interest rate exchange agreement	745		2,113
Other	(16,946)		(14,998)
Total gross deferred tax (liabilities)	(145,123)		(128,687)
Valuation allowance	(16,316)		(16,035)
Total deferred tax (liabilities), net of valuation allowances	$	(161,439)	$	(144,722)

The deferred tax assets and liabilities recognized in the Company’s Consolidated Balance Sheets as of December 31, 2020 and 2019 were:


	2020		2019
	(In thousands)

Noncurrent deferred tax asset - Other noncurrent assets	$	2,424	$	1,852

Noncurrent deferred tax liabilities - Deferred income taxes	(163,863)		(146,574)
Net deferred tax liabilities	$	(161,439)	$	(144,722)

The Company had prepaid income taxes, recorded within Other current assets on the Consolidated Balance Sheets, of $20.9 million and $13.4 million as of December 31, 2020 and 2019, respectively.

The provision for income taxes differs from the amount computed by applying the statutory federal income tax rate to pretax income. The computed amount and the differences for 2020, 2019 and 2018 are as follows:


	2020		2019		2018
	(In thousands)
Pretax income	$	470,340	$	532,903	$	528,939
Provision for income taxes:
Computed amount at statutory rate	$	98,771	$	111,910	$	111,077
State and local income tax (net of federal tax benefit)	5,954		8,163		8,280
Taxes on non-U.S. earnings-net of foreign tax credits	7,048		5,003		5,725
Global Intangible Low-Taxed Income	(2,731)		2,324		2,725
Foreign-Derived Intangible Income Deduction	(4,928)		(5,811)		(5,410)
Effect of flow-through entities	1,308		1,316		1,215

U.S. business tax credits	(3,163)		(3,193)		(3,056)



Share-based payments	(9,743)		(11,011)		(9,348)
Valuation allowance	70		(117)		—
Impact of Tax Act	—		(334)		10,298
Other	(24)		(868)		(3,140)
Total provision for income taxes	$	92,562	$	107,382	$	118,366

On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) was enacted into law as a response to the COVID-19 pandemic. The CARES Act includes various provisions including, but not limited to, changes to Federal net operating losses, expanding the applicability of the interest limitation rules under Internal Revenue Code Section 163(j) and amending the 2017 Tax Cuts and Jobs Act to provide for a 15-year recovery period for qualified improvement property. In addition to the CARES Act, on December 27, 2020, the Consolidated Appropriations Act was enacted into law which enhances and expands certain provisions of the CARES Act. The Company has determined that neither of these enacted laws have a material impact for the year ending December 31, 2020.

The Company has $28.6 million and $26.5 million of permanently reinvested earnings of non-U.S. subsidiaries as of December 31, 2020 and 2019, respectively. No deferred U.S. income taxes have been provided on the $28.6 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 $4.3 million and $5.4 million as of December 31, 2020 and 2019, respectively.

During the years ended December 31, 2020, 2019 and 2018, the Company repatriated $27.0 million, $99.0 million and $135.0 million of foreign earnings, respectively. These actual distributions resulted in no incremental income tax expense for the years ended December 31, 2020, 2019 and 2018. These repatriations represent distributions of previously taxed income as well as distributions from liquidating subsidiaries.

A reconciliation of the beginning and ending amount of unrecognized tax benefits for 2020, 2019 and 2018 is as follows:


	2020		2019		2018
	(In thousands)
Beginning balance January 1	$	3,680	$	4,070	$	2,722

Gross increases for tax positions of prior years	—		—		2,308
Gross decreases for tax positions of prior years	—		—		(229)
Settlements	(2,608)		(140)		(160)
Lapse of statute of limitations	—		(250)		(571)
Ending balance December 31	$	1,072	$	3,680	$	4,070

The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. As of December 31, 2020, there was no accrued interest related to uncertain tax positions. As of December 31, 2019 and 2018, the Company had approximately $0.2 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 any of these years.

The total amount of unrecognized tax benefits that would affect the Company’s effective tax rate if recognized is $1.1 million, $3.7 million and $4.1 million as of December 31, 2020, 2019 and 2018, respectively. The tax years 2015-2019 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. However, these unrecognized tax benefits are long-term in nature and are not expected to change within the next 12 months.

The Company had net operating loss and general business credit carryforwards related to prior acquisitions for U.S. federal purposes at December 31, 2020 and 2019 of $0.1 million and $0.4 million, respectively. The U.S. federal business credit carryforwards are available for use against the Company’s consolidated U.S. federal taxable income and expire between 2025 and 2028. For non-U.S. purposes, the Company had net operating loss carryforwards at December 31, 2020 and 2019 of $7.4 million and $16.5 million, respectively, the majority of which relate to acquisitions. The entire balance of the non-U.S. net operating losses is available to be carried forward indefinitely. At December 31, 2020 and 2019, the Company had U.S. state net operating loss carryforwards of approximately $14.7 million and $17.4 million, respectively. If unutilized, the U.S. state net operating loss will expire between 2033 and 2039. At December 31, 2020 and 2019, 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, 2020 and 2019 of approximately $45.9 million and $45.6 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 between 2021 and 2025. At December 31, 2020 and 2019, 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 $9.6 million, respectively. At December 31, 2020 and 2019, the Company had U.S. state capital loss carryovers of $45.9 million and $62.1 million, respectively. If unutilized, the U.S. state capital loss carryovers will expire between 2021 and 2040. At December 31, 2020 and 2019, the Company recorded a valuation allowance against the deferred tax assets attributable to the U.S. state capital loss carryovers of $0.9 million and $0.8 million, respectively. At December 31, 2020 and 2019, the Company had a foreign capital loss carryforward of approximately $14.3 million and $13.8 million, respectively. The foreign capital loss can be carried forward indefinitely. At both December 31, 2020 and 2019, 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, 2020 and 2019 of approximately $3.3 million and $3.3 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 between 2029 and 2030. At December 31, 2020, the Company recorded a full valuation allowance against the deferred tax asset attributable to the U.S. federal foreign tax credit carryover.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

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