Income Taxes

12 Months Ended

Dec. 31, 2021

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,
	2021		2020		2019
United States	$	25.9	$	48.0	$	24.4
Foreign	48.2		37.2		10.2
Income from continuing operations before income taxes	$	74.1	$	85.2	$	34.6

Provision

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

	Year Ended December 31,
	2021		2020		2019
Current:
Federal	$	1.7	$	(0.2)	$	4.9
State and local	3.2		1.9		2.7
Foreign	16.5		12.2		11.4
Total current	21.4		13.9		19.0
Deferred:
Federal	(5.8)		7.5		(2.0)
State and local	1.1		(2.9)		(5.5)
Foreign	(3.2)		(3.6)		(8.7)
Total deferred	(7.9)		1.0		(16.2)
Total income tax expense (benefit), net	$	13.5	$	14.9	$	2.8

Effective Tax Rate Reconciliation

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

	Year Ended December 31,
	2021		2020		2019
Income tax expense at U.S. statutory rate	$	15.6	$	17.9	$	7.3
State income taxes, net of federal tax benefit	3.6		(0.9)		(2.3)
Foreign income, net of credit on foreign taxes	2.1		—		(1.3)
Effective tax rate differential of earnings outside of U.S.	1.8		2.4		—
Change in valuation allowance	(5.9)		(4.2)		1.0
Research & experimentation credits	(0.9)		(1.0)		(0.9)
Foreign derived intangible income	(0.8)		(0.2)		(1.2)
Net non-deductible items	1.6		1.2		2.3
Change in uncertain tax positions	(0.2)		(0.6)		—
Share-based compensation	(2.2)		(1.7)		(2.8)
Tax effect of 2017 tax reform federal rate change	—		(0.2)		—
Other items	(1.2)		2.2		0.7
Income tax expense	$	13.5	$	14.9	$	2.8

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,
	2021		2020
Deferred tax assets:
Accruals and reserves	$	16.8	$	15.7
Pensions	0.5		2.6
Inventory	42.3		3.5
Share-based compensation	4.5		4.4
Tax credit carryforwards	17.6		10.6
Foreign net operating loss carryforwards	16.3		22.4
State net operating loss carryforwards	2.3		1.9
Convertible notes	6.3		0.7
Operating leases	7.5		8.1
Other – net	11.1		7.4
Total deferred tax assets before valuation allowances	125.2		77.3
Valuation allowances	(21.6)		(33.9)
Total deferred tax assets, net of valuation allowances	$	103.6	$	43.4
Deferred tax liabilities:
Property, plant and equipment	$	37.9	$	27.8
Goodwill and intangible assets	82.2		69.1
Other – net	(0.1)		5.2
Investments	3.8		—
Deferred revenue	37.9		—
Total deferred tax liabilities	$	161.7	$	102.1
Net deferred tax liabilities	$	58.1	$	58.7
The net deferred tax liability is classified as follows:
Other assets	$	(1.7)	$	(1.5)
Long-term deferred tax liabilities	59.8		60.2
Net deferred tax liabilities	$	58.1	$	58.7

As of December 31, 2021, we have $133.5 of state and foreign net operating losses, of which approximately $24.6 expire between 2022 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, 2021, we have valuation allowances totaling $21.6 consisting primarily of $16.6 associated with our operations in China.

Other Tax Information

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, 2021 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, 2021, 2020 and 2019 was $57.2, $12.5, and $16.8, respectively.

Unrecognized Income Tax Benefits

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

	Year Ended December 31,
	2021		2020		2019
Unrecognized tax benefits at beginning of the year	$	1.9	$	2.4	$	2.3
Additions (reductions) for tax positions taken during the prior period	0.4		(0.6)		(0.1)
Additions for tax positions taken during the current period	—		0.2		0.2
Reductions relating to settlements with taxing authorities	—		(0.1)		—
Lapse of statutes of limitation	(0.6)		—		—
Unrecognized tax benefits at end of the year	$	1.7	$	1.9	$	2.4

Included in the balance of unrecognized tax benefits at December 31, 2021 and 2020 was $1.2 and $1.3, respectively of income tax (benefit)/expenses, which, if ultimately recognized, would impact our annual effective tax rate.

We accrued approximately $0.3 of interest and penalties at both December 31, 2021 and 2020. Due to the expiration of various statutes of limitation, it is reasonably possible our unrecognized tax benefits at December 31, 2021 may decrease within the next twelve months by $0.1. 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 2017.