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INCOME TAXES
 12 Months Ended
Dec. 31, 2022
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
The U.S. and International components of income (loss) before income taxes consisted of the following:
In millions
Year Ended December 31,
202220212020
U.S.$84.6 $(14.0)$65.6 
International(5.7)14.7 (121.6)
Total income (loss) before income taxes$78.9 $0.7 $(56.0)
Significant components of the Company’s income tax (expense) benefit are as follows:
In millions
Year Ended December 31,
202220212020
Current
U.S. - federal$8.1 $4.9 $108.3 
U.S. - state and local(2.3)(1.4)(2.9)
International(4.6)(6.4)(6.0)
1.2 (2.9)99.4 
Deferred
U.S. - federal(23.7)(17.0)(85.9)
U.S. - state and local(1.9)(4.6)(13.7)
International2.0 (3.0)0.3 
(23.6)(24.6)(99.3)
Total (expense) benefit$(22.4)$(27.5)$0.1 
A reconciliation of the income tax provision computed at the U.S. federal statutory rate to the effective tax rate is as follows:
Year Ended December 31,
202220212020
U.S. federal statutory income tax rate21.0 %21.0 %21.0 %
Effect of:
State and local taxes, net of federal tax effect1.9 %204.2 %(15.1 %)
International tax rates(4.2 %)(864.4 %)10.9 %
FCPA Settlement accrual and other penalty matters3.2 %3,118.2 %— %
CARES Act and other tax matters— %(268.4 %)79.2 %
Valuation allowance11.0 %1,727.9 %(26.5 %)
Divestitures(0.8 %)(708.4 %)(62.7 %)
Stock-based compensation and executive compensation disallowance9.4 %908.6 %(11.9 %)
Statute of limitations lapses(13.0 %)(584.7 %)12.6 %
Other(0.1 %)275.0 %(7.3 %)
Effective tax rate28.4 %3,829.0 %0.2 %
Deferred tax liabilities and assets were as follows:
In millions
December 31,
20222021
Deferred tax liabilities:
Property, plant and equipment$(94.4)$(87.2)
Goodwill and intangibles(400.6)(394.4)
Leases - right of use asset(94.8)(89.9)
Other(17.3)(15.7)
Total deferred tax liabilities(607.1)(587.2)
Deferred tax assets:
Accrued liabilities59.5 58.6 
Leases - right of use liability100.2 95.1 
Net operating tax loss carry-forwards63.4 73.4 
Interest expense carry-forward23.4 15.3 
Other14.0 11.7 
Less: valuation allowance(67.2)(61.4)
Total deferred tax assets193.3 192.7 
Net deferred tax liabilities$(413.8)$(394.5)
The valuation allowance increased $5.8 million, during the year ended December 31, 2022, primarily due to non-benefited international losses.
In 2020, in response to the pandemic, the President signed into law the CARES Act, which was a substantial tax-and-spending package. As a result of the corresponding legislative changes, in 2020, we recognized a $44.4 million tax benefit related to our ability to carryback net operating losses to prior years that had higher tax rates. The Company received related cash refunds of $112.2 million during 2020, and $1.0 million during 2021. Other tax provisions and stimulus measures have been enacted by U.S. and international jurisdictions, either before or after December 31, 2022, which the Company continues to evaluate and apply, as applicable.
The Company filed a PFA with the IRS related to a claim under Internal Revenue Code Section 1341 concerning the tax rate to be applied to the SQ Settlement on the Company’s 2018 tax return. As a result of the enactment of the CARES Act, the Company was able to realize a benefit at the higher tax rate in prior years on a portion of the SQ Settlement. In 2020, in consideration of the CARES Act, the Company revised the PFA, a portion of the long-term receivable previously established for the Section 1341 claim was reclassified to a current income tax receivable and the related uncertain tax position was released as part of the tax benefit recognized in 2020 (in part as described above).
Subsequently in 2020, the Company amended the 2018 tax return to reduce the Section 1341 benefit as a result of discussions with the IRS as part of the PFA program. Consequently, the remaining long-term receivable established for the Section 1341 claim and the corresponding uncertain tax position were reclassified to a current income tax receivable and current income tax liability, respectively. In 2021, the Company was advised that the IRS completed its review of the 2018 tax return and took no exception to the originally recorded Section 1341 benefit. Consequently, the Company recorded a tax benefit of approximately $5.5 million in 2021, associated with the Section 1341 claim and received the related refund in 2021.
As of December 31, 2022, the Company plans to repatriate any undistributed earnings of its first-tier international subsidiaries back to the U.S. only to the extent that they were previously taxed under the Tax Act, and future repatriations may take the form of distributions from previously taxed earnings and profits and/or return of capital distributions. All other undistributed earnings, to the extent there are any, will remain permanently reinvested to support existing working capital needs in the international subsidiaries. A withholding tax, unrealized foreign exchange gain, and state income tax accrual has been recorded, as applicable. The Company has not provided for deferred taxes on outside basis differences for investments in its international subsidiaries that are unrelated to unremitted earnings as these basis differences will be indefinitely reinvested. A determination of the unrecognized deferred taxes related to these other components of outstanding basis difference is not practicable to calculate.
At December 31, 2022, the NOL carry-forwards from both international and U.S. operations are approximately $223.6 million and certain of these NOL carry-forwards begin to expire in 2023. The tax benefits of these NOLs are approximately $63.4 million at December 31, 2022, on which valuation allowances of $42.3 million were recognized offsetting such tax benefits. After the recognition of valuation allowances, the majority of the remaining NOLs are attributable to the Company’s U.S. operations.
The changes in the valuation allowance on deferred tax assets is as follows:
In millions
Year Ended December 31,
202220212020
Balances at beginning of period$61.4 $52.0 $39.4 
Additions Charged to Income Tax Expense(1)
6.8 10.5 17.8 
Other Changes to Reserves (2)
(1.0)(1.1)(5.2)
Balances at end of period$67.2 $61.4 $52.0 
(1)2022 and 2021 amounts include valuation allowances on business operations (including the U.K., Brazil, and Spain). 2020 amount includes valuation allowances on business operations (including the U.K. and Brazil).
(2)2022, 2021 and 2020 amounts consist primarily of currency translation adjustments.
The Company files income tax returns in the U.S., in various states and in certain international jurisdictions. We generally are no longer subject to U.S. federal, state, local, or international income tax examinations by tax authorities for years prior to 2015.
The Company has recognized liabilities to cover certain uncertain tax positions. Such uncertain tax positions relate to additional taxes that the Company may be required to pay in various tax jurisdictions. During the course of examinations by various taxing authorities, proposed adjustments may be asserted. The Company evaluates such items on a case-by-case basis and adjusts the accrual for uncertain tax positions as deemed necessary, including
presenting the accrual as a reduction of a deferred tax asset for a tax loss or tax credit carryforward, when such carryforward is available and permitted to be utilized to settle the tax liability.
The total amount of unrecognized tax benefit at December 31, 2022, is $10.0 million. The amount of uncertain tax positions that, if recognized, would affect the effective tax rate is approximately $8.2 million. We recognized interest and penalties related to income tax reserves as a benefit in the amount of $1.8 million, a charge of $0.4 million, and a benefit of $1.5 million for the years ended December 31, 2022, 2021, and 2020, respectively, as a component of income tax expense. It is reasonably possible that our unrecognized tax benefits will decrease by as much as $1.0 million to $5.0 million in the next 12 months primarily due to statute lapses and the progress of U.S. federal, state, and international audits.
The following table summarizes the aggregate changes in unrecognized tax benefits:
In millions
Unrecognized tax positions as of December 31, 2020$24.3 
Gross decreases - tax positions in prior periods(5.7)
Gross increases - current period tax positions5.3 
Settlements(0.2)
Lapse of statute of limitations(4.0)
Unrecognized tax positions as of December 31, 202119.7 
Gross decreases - tax positions in prior periods(0.6)
Gross increases - current period tax positions0.6 
Settlements(1.4)
Lapse of statute of limitations(8.3)
Unrecognized tax positions as of December 31, 2022$10.0