Income Taxes (Tables)

12 Months Ended

Dec. 31, 2019

Income Tax Disclosure [Abstract]

Earnings (loss) from continuing operations before income taxes

Following is a summary of earnings before income taxes for United States and foreign operations:

	2019		2018	2017
United States	$	163,764	387,564	754,562
Foreign	585,781		661,637	563,295
Earnings before income taxes	$	749,545	1,049,201	1,317,857

Income tax expense (benefit)

Income tax expense (benefit) for the years ended December 31, 2019, 2018 and 2017 consists of the following:

	2019			2018	2017
Current income taxes:
U.S. federal	$	19,936		22,700	327,697
State and local	12,659			14,521	17,811
Foreign	80,221			58,669	73,248
Total current	112,816			95,890	418,756
Deferred income taxes:
U.S. federal	11,993			54,983	(17,419	)
State and local	15,371			19,076	(3,046	)
Foreign	(135,206		)	14,397	(55,126	)
Total deferred	(107,842		)	88,456	(75,591	)
Total	$	4,974		184,346	343,165

Reconciliation of income tax expense (benefit)

Income tax expense (benefit) attributable to earnings before income taxes differs from the amounts computed by applying the U.S. statutory federal income tax rate to earnings before income taxes as follows:

	2019			2018		2017
Income taxes at statutory rate	$	157,404		220,332		461,250
State and local income taxes, net of federal income tax benefit	22,185			22,315		10,133
Foreign income taxes(a)	(17,276		)	(39,915	)	(113,520	)
Change in valuation allowance	(21,975		)	2,472		10,008
European Restructuring(b)	(136,194		)	—		—
Manufacturing deduction	—			—		(11,911	)
2017 revaluation of deferred tax assets and liabilities (c)	—			—		(150,546	)
Transition Tax	—			28,201		105,165
Transition tax planning initiatives	—			(18,706	)	14,825
Tax contingencies and audit settlements, net	6,686			(31,874	)	23,097
Other, net	(5,856		)	1,521		(5,336	)
	$	4,974		184,346		343,165

(a) Foreign income taxes include statutory rate differences, financing arrangements, withholding taxes, local income taxes, notional deductions, and other miscellaneous items. The significant decrease in foreign income taxes for 2018 is primarily due to the impact of the U.S. statutory rate reduction from 35% to 21% as a result of the Tax Cuts and Jobs Act (“TCJA”) discussed below.

(b) The Company implemented select operational, administrative and financial restructurings that centralized certain business processes and intangible assets in various European jurisdictions into a new entity. The European Restructuring resulted in a current income tax liability of $148,240, calculated in part by measuring the fair value of intangible assets transferred. The Company offset the income tax liability with the utilization of $148,240 of deferred tax assets from accumulated net operating loss carry forwards. The European Restructuring also resulted in the Company recording a $136,194 deferred tax asset, and a corresponding deferred tax benefit, related to the tax basis of the intangible assets in the new entity.

(c) 2017 revaluation of deferred tax assets and liabilities includes $106,107 related to the TCJA and $44,439 related to Belgium tax reform.

Deferred tax assets and deferred tax liabilities

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities as of December 31, 2019 and 2018 are presented below:

	2019			2018
Deferred tax assets:
Accounts receivable	$	7,063		8,312
Inventories	50,585			47,212
Employee benefits	36,068			37,335
Accrued expenses and other	67,638			71,621
Deductible state tax and interest benefit	3,665			2,904
Intangibles	146,953			16,134
Lease liabilities	86,717			—
Federal, foreign and state net operating losses and credits	376,375			575,625
Gross deferred tax assets	775,064			759,143
Valuation allowance	(232,196		)	(347,786	)
Net deferred tax assets	542,868			411,357
Deferred tax liabilities:
Inventories	(12,885		)	(18,332	)
Plant and equipment	(510,952		)	(477,734	)
Intangibles	(182,424		)	(181,436	)
Right of use assets	(83,271		)	—
Other liabilities	(24,220		)	(96,134	)
Gross deferred tax liabilities	(813,752		)	(773,636	)
Net deferred tax liability	$	(270,884	)	(362,279	)

Reconciliation of unrecognized tax benefits

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

	2019			2018
Balance as of January 1	$	1,330,713		65,631
Additions based on tax positions related to the current year (a)	2,302			1,304,447
Additions for tax positions of acquired companies	2,094			1,413
Additions for tax positions of prior years	4,744			5,098
Transition tax planning initiatives	—			(27,470	)
Reductions resulting from the lapse of the statute of limitations	(2,729		)	(8,110	)
Reductions due to Luxembourg tax rate change	(46,841		)	—
Settlements with taxing authorities	(1,929		)	(9,773	)
Effects of foreign currency translation	(27,384		)	(523	)
Balance as of December 31	$	1,260,970		1,330,713

(a) 2018 includes tax effected loss of $1,298,737 on Luxembourg hybrid instruments redemptions. The tax effected loss was adjusted for tax rate and foreign currency translation changes in 2019, resulting in an updated balance of $1,224,545 as of December 31, 2019. This $1,224,545 of unrecognized benefit is presented as a reduction to the related deferred tax asset in the balance sheet.