Income Taxes

12 Months Ended

Dec. 31, 2020

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Income from Continuing Operations Before Income Taxes

Income from continuing operations before income taxes consists of the following:

	Year Ended December 31,
	2020		2019		2018
United States	$	48.0	$	24.4	$	8.2
Foreign	37.2		10.2		33.5
Income from continuing operations before income taxes	$	85.2	$	34.6	$	41.7

Provision

Significant components of income tax expense (benefit), net are as follows: 

	Year Ended December 31,
	2020		2019		2018
Current:
Federal	$	(0.2)	$	4.9	$	(3.2)
State and local	1.9		2.7		(0.2)
Foreign	12.2		11.4		5.3
Total current	13.9		19.0		1.9
Deferred:
Federal	7.5		(2.0)		3.8
State and local	(2.9)		(5.5)		1.5
Foreign	(3.6)		(8.7)		—
Total deferred	1.0		(16.2)		5.3
Total income tax expense (benefit), net	$	14.9	$	2.8	$	7.2

Effective Tax Rate Reconciliation

The reconciliation of income taxes computed at the U.S. federal statutory tax rate to income tax expense (benefit) is as follows:

	Year Ended December 31,
	2020		2019		2018
Income tax expense at U.S. statutory rate	$	17.9	$	7.3	$	8.7
State income taxes, net of federal tax benefit	(0.9)		(2.3)		1.2
Foreign income, net of credit on foreign taxes	—		(1.3)		0.7
Effective tax rate differential of earnings outside of U.S.	2.4		—		2.1
Change in valuation allowance	(4.2)		1.0		38.4
Research & experimentation credits	(1.0)		(0.9)		(0.8)
Foreign derived intangible income	(0.2)		(1.2)		—
Net non-deductible items	1.2		2.3		0.4
Change in uncertain tax positions	(0.6)		—		0.2
Share-based compensation	(1.7)		(2.8)		(3.3)
Capital loss carryover	—		—		(29.7)
Tax effect of 2017 tax reform federal rate change	(0.2)		—		(11.3)
Tax effect of carryforward foreign tax credits	—		—		(0.6)
Other items	2.2		0.7		1.2
Income tax expense	$	14.9	$	2.8	$	7.2

Deferred Taxes

Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of our deferred tax assets and liabilities are as follows:

	December 31,
	2020		2019
Deferred tax assets:
Accruals and reserves	$	15.7	$	19.4
Pensions	2.6		2.9
Inventory	3.5		2.3
Share-based compensation	4.4		5.3
Tax credit carryforwards	10.6		15.5
Foreign net operating loss carryforwards	22.4		24.4
State net operating loss carryforwards	1.9		0.3
Capital loss carryover	—		29.4
Convertible notes	0.7		0.7
Operating leases	8.1		8.5
Other – net	7.4		5.5
Total deferred tax assets before valuation allowances	77.3		114.2
Valuation allowances	(33.9)		(68.2)
Total deferred tax assets, net of valuation allowances	$	43.4	$	46.0
Deferred tax liabilities:
Property, plant and equipment	$	27.8	$	22.2
Goodwill and intangible assets	69.1		74.9
Other – net	5.2		1.0
Total deferred tax liabilities	$	102.1	$	98.1
Net deferred tax liabilities	$	58.7	$	52.1
The net deferred tax liability is classified as follows:
Other assets	$	(1.5)	$	—
Long-term deferred tax liabilities	60.2		52.1
Net deferred tax liabilities	$	58.7	$	52.1

As of December 31, 2020, we have $128.4 of state and foreign net operating losses, of which approximately $47.3 expire between 2021 and 2030.

We routinely review valuation allowances recorded against deferred tax assets on a more likely than not basis as to whether we have the ability to realize the deferred tax assets. As of December 31, 2020, we have valuation allowances totaling $33.9 consisting primarily of $23.8 associated with our operations in China.

Other Tax Information

On December 22, 2017, the Tax Cuts and Jobs Act (“Tax Act”) was signed into law.  The Tax Act, among other things, reduced the U.S. federal corporate tax rate from 35% to 21%, requires companies to pay a one-time transition tax on certain unrepatriated earnings of foreign subsidiaries, requires a current inclusion in U.S. federal taxable income of certain earnings of foreign corporations, and created a new limitation on deductible interest expense. Consequently, we recorded a $22.5 net favorable tax benefit during the year ended December 31, 2017 primarily due to the remeasurement of deferred tax assets to the 21% federal corporate tax rate.  In accordance with SAB 118, we recorded an additional tax benefit $1.8 during the year ended December 31, 2018 primarily related to the remeasurement of deferred tax assets to the 21% federal corporate tax rate based on the completion of our analysis to determine the effect of the Tax Act.

We previously considered the earnings in our non-U.S. subsidiaries to be indefinitely reinvested and, accordingly, recorded no deferred income taxes. We have analyzed our global working capital and cash requirements as of December 31, 2020 and have determined that we do not plan to repatriate any earnings at this time.

Cash paid for income taxes during the years ended December 31, 2020, 2019 and 2018 was $12.5, $16.8, and $13.2, respectively.

Unrecognized Income Tax Benefits

The reconciliation of beginning to ending unrecognized tax benefits is as follows:

	Year Ended December 31,
	2020		2019		2018
Unrecognized tax benefits at beginning of the year	$	2.4	$	2.3	$	0.8
(Reductions) additions for tax positions taken during the prior period	(0.6)		(0.1)		0.9
Additions for tax positions taken during the current period	0.2		0.2		1.4
Reductions relating to settlements with taxing authorities	(0.1)		—		(0.8)
Unrecognized tax benefits at end of the year	$	1.9	$	2.4	$	2.3

Included in the balance of unrecognized tax benefits at December 31, 2020 and 2019 were $1.3 and $1.7 of income tax (benefit)/expenses, respectively, which, if ultimately recognized, would impact our annual effective tax rate.

We accrued approximately $0.3 and $0.4 of interest and penalties at December 31, 2020 and 2019, respectively. Due to the expiration of various statutes of limitation, it is reasonably possible our unrecognized tax benefits at December 31, 2020 may decrease within the next twelve months by $0.4. We are subject to income taxes in the U.S. federal jurisdiction and various state and foreign jurisdictions. With few exceptions, we are no longer subject to U.S. federal, state and local or non-U.S. income tax examinations by tax authorities for years prior to 2016.