Income Taxes (Tables)

12 Months Ended

Dec. 31, 2018

Schedule of Income before Income Tax, Related to Domestic and Foreign

A summary of income (loss) before taxes related to U.S. and foreign operations are as follows:



	Years Ended December 31,
(In millions)	2018		2017			2016
U.S.	$	319	$	278		$	(70	)
Foreign	247		(17		)	177
Income before income tax provision (benefit)	$	566	$	261		$	107

Schedule of Components of Income Tax Expense (Benefit)

The components of the income tax provision (benefit) consist of the following:



	Years Ended December 31,
(In millions)	2018			2017			2016
Current:
U.S. Federal	$	2		$	2		$	(11	)
State	6			(3		)	6
Foreign	69			59			48
Total current income tax provision	$	77		$	58		$	43
Deferred:
U.S. Federal⁽¹⁾	$	57		$	(134	)	$	1
State	2			(2		)	(2		)
Foreign ⁽²⁾	(14		)	(21		)	(20		)
Total deferred income tax provision (benefit)	45			(157		)	(21		)
Total income tax provision (benefit)	$	122		$	(99	)	$	22

(1)

On December 22, 2017, the Tax Act was signed into law. The Tax Act includes numerous changes to existing U.S. tax law, including a permanent reduction in the federal corporate income tax rate from 35% to 21%. The rate reduction became effective January 1, 2018. As a result, the Company recorded a tax benefit of $173 million in the fourth quarter of 2017 related to the revaluation of its net deferred tax liabilities. The Company did not record any changes during the measurement period.

(2)

On December 31, 2017, a law was published in France enacting a rate reduction from 34.43% to 25.83% to be phased in over five years starting in 2018. On December 29, 2017, a law was published in Belgium enacting a tax rate reduction from 33.99% to 25% to be phased in over three years starting in 2018. Consequently, the Company recorded a tax benefit of $10 million in the fourth quarter of 2017 related to the revaluation of its net deferred tax liabilities.

Schedule of Effective Income Tax Rate Reconciliation

The effective tax rate reconciliations are as follows:



	Years Ended December 31,
	2018		2017		2016
U.S. federal statutory tax rate	21.0	%	35.0	%	35.0	%
State taxes, net of U.S. federal benefit	1.2		(1.2	)	4.8
Foreign rate differential	(1.1	)	(6.7	)	(13.2	)
Foreign operations ⁽¹⁾	8.3		(0.1	)	2.4
Valuation allowance	(3.7	)	0.8		11.2
Changes in uncertain tax positions	—		5.1		(0.1	)
Effect of law changes ⁽²⁾	—		(70.2	)	(12.3	)
Stock-based compensation	(3.8	)	(3.3	)	(4.7	)
Other	(0.3	)	2.4		(2.2	)
Effective tax rate	21.6	%	(38.2	)%	20.9	%


(1)	Foreign operations include the net impact of the changes to foreign valuation allowances, the cost of foreign inclusion net of foreign tax credits, and permanent items related to foreign operations.


(2)	2017 U.S., France and Belgium tax rate changes; 2016 France tax rate change.

Schedule of Deferred Tax Assets and Liabilities

The tax effects of temporary differences that give rise to significant portions of the deferred tax asset and deferred tax liability are as follows:



	Years Ended December 31,
(In millions)	2018			2017
Deferred tax asset
Net operating loss and other tax attribute carryforwards	$	154		$	191
Accrued expenses	60			65
Pension and other retirement obligations	25			26
Other	62			64
Total deferred tax asset	301			346
Valuation allowance	(73		)	(93		)
Total deferred tax asset, net	228			253
Deferred tax liability
Intangible assets	(330		)	(371		)
Property and equipment	(299		)	(255		)
Other	(35		)	(38		)
Total deferred tax liability	(664		)	(664		)
Net deferred tax liability	$	(436	)	$	(411	)

The deferred tax asset and deferred tax liability above are reflected in the Consolidated Balance Sheets as follows:



	December 31,
(In millions)	2018			2017
Other long-term assets	$	8		$	8
Deferred tax liability	(444		)	(419		)
Net deferred tax liability	$	(436	)	$	(411	)

The following table presents a roll-forward of the valuation allowance for the years ended December 31, 2018, 2017 and 2016, respectively:



(In millions)	Balance at Beginning of Year		Additions		Reductions/ Charges			Balance at End of Year
Valuation allowance
Year Ended December 31, 2018	$	93	$	—	$	(20	)	$	73
Year Ended December 31, 2017	83		29		(19		)	93
Year Ended December 31, 2016	68		15		—			83

Schedule of Unrecognized Tax Benefits Roll Forward

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



	Years Ended December 31,
(In millions)	2018			2017			2016
Beginning balance	$	25		$	15		$	12
Additions for tax positions of the current period	1			2			—
Additions for tax positions from acquisitions	—			—			10
Additions for tax positions of prior years	2			17			1
Reductions for tax positions of prior years	(3		)	—			—
Settlements with tax authorities	—			(3		)	—
Reductions due to the statute of limitations	(1		)	(6		)	(8		)
Currency translation adjustment	(1		)	—			—
Ending balance	$	23		$	25		$	15
Interest and penalties	6			5			4
Gross unrecognized tax benefits	$	29		$	30		$	19

Total UTB that, if recognized, would impact the effective income tax rate as of the end of the year	$	22		$	23		$	11