XML 46 R25.htm IDEA: XBRL DOCUMENT v3.22.0.1
Income taxes
 12 Months Ended
Dec. 31, 2021
Income Tax Disclosure [Abstract]  
Income taxes Income taxes
The following table summarizes the components of the provision for income taxes from continuing operations:
202120202019
Current:
Federal$134,336 $11,148 $19,374 
State16,970 9,644 8,220 
Non-U.S.35,399 35,042 23,690 
Deferred:
Federal(85,272)(9,475)(2,041)
State(16,933)(13,734)(28,277)
Non-U.S.(10,151)(10,694)(143,044)
$74,349 $21,931 $(122,078)
At December 31, 2021, the cumulative unremitted earnings of subsidiaries outside the U.S. that are considered non-permanently reinvested and for which taxes have been provided approximated $1.3 billion. At December 31, 2021, the cumulative unremitted earnings of subsidiaries outside the U.S. that are considered permanently reinvested approximated $1.0 billion. Earnings considered permanently reinvested are expected to be reinvested indefinitely and, as a result, no additional deferred tax liability has been recognized with regard to these earnings. It is not practical to determine the deferred income tax liability on these earnings if, in the future, they are remitted to the U.S. because the income tax liability to be incurred, if any, is dependent on circumstances existing when remittance occurs.
The following table summarizes the U.S. and non-U.S. components of income from continuing operations before taxes:
202120202019
U.S.$209,231 $233,034 $89,021 
Non-U.S.350,237 124,698 250,882 
$559,468 $357,732 $339,903 
Reconciliations between the statutory federal income tax rate and the effective income tax rate are as follows:
202120202019
Federal statutory rate21.0 %21.0 %21.0 %
Tax effect of international items(6.0)(5.3)(11.3)
Foreign merger - deferred taxes (1)
— — (38.0)
Excess tax benefits related to share-based compensation(1.1)(4.9)(4.5)
State taxes, net of federal benefit0.1 (0.3)(4.9)
Uncertain tax contingencies(0.1)(0.5)— 
Contingent consideration0.2 (2.2)3.4 
Intellectual property impairment charge— (1.2)— 
Research and development tax credit(0.8)(1.1)(1.1)
Other, net— 0.6 (0.5)
13.3 %6.1 %(35.9)%
(1)During 2019, we recognized a discrete tax benefit of $129.0 million resulting from a non-U.S. legal entity restructuring that eliminated the requirement to provide for withholding taxes on the future repatriation of certain non-permanently reinvested earnings.
The effective income tax rate for 2021 was 13.3% compared to 6.1% for 2020. The effective income tax rate for 2021 reflects tax expense associated with the Respiratory business divestiture. The effective tax rate for 2020 reflects non-taxable contingent consideration adjustments, recognized in connection with a decrease in the fair value of our contingent consideration liabilities. Additionally, the effective tax rates for both 2021 and 2020 reflect a net excess tax benefit related to share-based compensation and a tax benefit relating to the revaluation of state deferred tax assets and liabilities due to business integrations and other changes.
We are routinely subject to examinations by various taxing authorities. In conjunction with these examinations and as a regular practice, we establish and adjust reserves with respect to its uncertain tax positions to address developments related to those positions. We realized a net benefit of $0.8 million, $1.7 million and $0.1 million in 2021, 2020 and 2019 respectively, as a result of reducing our reserves with respect to uncertain tax positions, principally due to the expiration of a number of applicable statutes of limitations.
The following table summarizes significant components of our deferred tax assets and liabilities at December 31, 2021 and 2020:
20212020
Deferred tax assets:
Tax loss and credit carryforwards$168,113 $180,782 
Lease Liabilities32,127 25,429 
Pension350 12,237 
Reserves and accruals64,421 72,931 
Other4,379 7,996 
Less: valuation allowances(143,177)(155,008)
Total deferred tax assets126,213 144,367 
Deferred tax liabilities:
Property, plant and equipment24,479 25,633 
Intangibles — stock acquisitions (1)
352,139 476,150 
Unremitted non-U.S. earnings73,385 91,539 
Lease Assets32,127 25,429 
Other7,387 2,221 
Total deferred tax liabilities489,517 620,972 
Net deferred tax liability$(363,304)$(476,605)
(1)In December of 2021, we executed an intra-company transfer in which certain intellectual property rights held by several of our subsidiaries were contributed to a non-U.S. subsidiary. The transfer accelerated certain taxable income into the year ended December 31, 2021; however, the related current tax expense of $73.2 million, which is payable in 2022, was substantially offset by the reversal of existing deferred tax liabilities.
Under the tax laws of various jurisdictions in which we operate, deductions or credits that cannot be fully utilized for tax purposes during the current year may be carried forward, subject to statutory limitations, to reduce taxable income or taxes payable in a future tax year. At December 31, 2021, the tax effect of such carryforwards approximated $168.1 million. Of this amount, $15.7 million has no expiration date, $19.2 million expires after 2021 but before the end of 2026 and $133.2 million expires after 2026. A portion of these carryforwards consists of tax losses and credits obtained by us as a result of acquisitions; the utilization of these carryforwards are subject to an annual limitation imposed by Section 382 of the Internal Revenue Code, which limits a company’s ability to deduct prior net operating losses following a more than 50 percent change in ownership. It is not expected that the Section 382 limitation will prevent us ultimately from utilizing the applicable loss carryforwards. The determination of state net operating loss carryforwards is dependent upon the U.S. subsidiaries’ taxable income or loss, the state’s proportion of each subsidiary's taxable net income and the application of state laws, which can change from year to year and impact the amount of such carryforward.
The valuation allowance for deferred tax assets of $143.2 million and $155.0 million at December 31, 2021 and 2020, respectively, relates principally to the uncertainty of our ability to utilize certain deferred tax assets, primarily tax loss and credit carryforwards in various jurisdictions. The valuation allowance was calculated in accordance with applicable accounting standards, which require that a valuation allowance be established and maintained when it is “more likely than not” that all or a portion of deferred tax assets will not be realized.
Uncertain Tax Positions: The following table is a reconciliation of the beginning and ending balances for liabilities associated with unrecognized tax benefits for the years ended December 31, 2021, 2020 and 2019:
202120202019
Balance at January 1
$7,230 $7,561 $8,106 
Increase in unrecognized tax benefits related to prior years
— 1,286 351 
Decrease in unrecognized tax benefits related to prior years
— — (201)
Unrecognized tax benefits related to the current year
— — 1,237 
Reductions in unrecognized tax benefits due to lapse of applicable statute of limitations
(956)(1,864)(1,881)
Increase (decrease) in unrecognized tax benefits due to foreign currency translation
(169)247 (51)
Balance at December 31
$6,105 $7,230 $7,561 
The total liabilities associated with the unrecognized tax benefits that, if recognized, would impact the effective tax rate for continuing operations, were $3.8 million at December 31, 2021.
We accrue interest and penalties associated with unrecognized tax benefits in income tax expense in the consolidated statements of income, and the corresponding liability is included in the consolidated balance sheets. The net interest expense (benefit) and penalties reflected in income from continuing operations for the year ended December 31, 2021 was $0.2 million and $(0.3) million, respectively; for the year ended December 31, 2020 was $0.2 million and $(0.5) million, respectively; and for the year ended December 31, 2019 was $0.2 million and $(0.1) million, respectively. The liabilities in the consolidated balance sheets for interest and penalties at December 31, 2021 were $0.8 million and $1.8 million, respectively, and at December 31, 2020 were $0.7 million and $2.1 million, respectively.
The taxable years for which the applicable statute of limitations remains open by major tax jurisdictions are as follows:
 BeginningEnding
U.S.20182021
Canada20172021
China20162021
Czech Republic20182021
France20192021
Germany20112021
India20022021
Ireland20172021
Italy20162021
Malaysia20172021
Singapore20172021
We are routinely subject to income tax examinations by various taxing authorities. As of December 31, 2021, the most significant tax examinations in process were in Ireland and Germany. The date at which these examinations may be concluded and the ultimate outcome of the examinations are uncertain. As a result of the uncertain outcome of this ongoing examinations, future examinations or the expiration of statutes of limitation, it is reasonably possible that the related unrecognized tax benefits for tax positions taken could materially change from those recorded as liabilities at December 31, 2021. Due to the potential for resolution of certain examinations, and the expiration of various statutes of limitations, it is reasonably possible that our unrecognized tax benefits may change within the next year by a range of zero to $1.1 million.
Supplemental cash flow information
Year Ended December 31,
202120202019
Income taxes paid, net of refunds$108,609 $77,163 $73,632