XML 47 R19.htm IDEA: XBRL DOCUMENT v3.25.0.1
Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The sources of Earnings before income taxes were as follows:
(in millions)202420232022
United States$89.9 $364.4 $603.2 
Foreign113.4 264.5 250.4 
Earnings before income taxes$203.3 $628.9 $853.6 
The Income tax provision consisted of the following:
(in millions)202420232022
Current tax expense:
U.S. Federal$20.2 $88.7 $109.8 
State and local7.8 17.3 20.3 
Foreign41.6 73.9 61.1 
Total current69.6 179.9 191.2 
Deferred tax (benefit) expense:
U.S. Federal(13.1)17.2 (24.6)
State and local11.7 10.2 1.5 
Foreign(14.2)(11.0)4.2 
Total deferred(15.6)16.4 (18.9)
Income tax provision$54.0 $196.3 $172.3 

Temporary differences and carryforwards giving rise to deferred tax assets and liabilities as of December 31, 2024, and 2023 are summarized in the table below:
(in millions)20242023
Deferred tax assets:
Loss carryforwards$60.5 $59.9 
Tax credit carryforwards53.0 56.1 
Deferred revenue40.2 38.0 
Product warranties34.4 35.4 
Interest expense33.5 17.6 
Sales incentives and discounts30.3 33.3 
Operating lease liabilities30.1 29.8 
Equity compensation13.0 13.1 
Other82.5 73.2 
Gross deferred tax assets377.5 356.4 
Valuation allowance(75.1)(71.3)
Deferred tax assets302.4 285.1 
Deferred tax liabilities:
Depreciation and amortization(54.3)(54.5)
Operating lease assets(28.3)(27.6)
State and Local income taxes(22.6)(22.7)
Other(10.1)(5.9)
Deferred tax liabilities(115.3)(110.7)
Total net deferred tax assets$187.1 $174.4 
As of December 31, 2024, the Company had a total valuation allowance against its deferred tax assets of $75.1 million. The remaining realizable value of deferred tax assets as of December 31, 2024 was determined by evaluating the potential to recover the value of these assets through the utilization of tax loss and credit carrybacks, the reversal of existing taxable temporary differences and carryforwards, certain tax planning strategies and future taxable income exclusive of reversing temporary differences and carryforwards. As of December 31, 2024, the Company retained valuation allowance reserves of $57.3 million against deferred tax assets in the U.S. primarily related to state tax credits that are subject to restrictive rules for future utilization, various state operating loss carryforwards, and non-amortizable intangibles and valuation allowances of $17.8 million for deferred tax assets related to foreign jurisdictions, primarily Luxembourg.

As of December 31, 2024, the tax benefit of loss carryforwards totaling $60.6 million was available to reduce future tax liabilities. This deferred tax asset was comprised of $1.0 million for the tax benefit of federal net operating loss (NOL) carryforwards, $23.2 million for the tax benefit of state NOL carryforwards and $36.4 million for the tax benefit of foreign NOL carryforwards. NOL carryforwards of $41.2 million expire at various intervals between the years 2025 and 2044, while $19.4 million have an unlimited life.

As of December 31, 2024, tax credit carryforwards totaling $53.0 million were available to reduce future tax liabilities. This deferred tax asset was comprised of $1.4 million related to federal tax credits, $49.8 million of various state tax credits related to research and development, capital investment and job incentives and $1.8 million related to foreign tax credits. These tax credit carryforwards expire at various intervals between the years 2025 and 2043.

No deferred income taxes have been provided as of December 31, 2024 or 2023 on the applicable undistributed earnings of the non-U.S. subsidiaries where the indefinite reinvestment assertion has been applied. If at some future date these earnings cease to be indefinitely reinvested and are repatriated, the Company may be subject to additional U.S. income taxes and foreign withholding and other taxes on such amounts. Remittances from foreign subsidiaries are generally not subject to U.S. income taxation. These remittances are either excluded from U.S. taxable income as earnings that have already been subjected to taxation or in the alternative are subject to a 100 percent foreign dividends received deduction. The Company continues to provide deferred taxes, primarily related to foreign withholding taxes, on the undistributed net earnings of foreign subsidiaries and unconsolidated affiliates that are not deemed to be indefinitely reinvested in operations outside the United States, although such amounts were immaterial as of December 31, 2024, and 2023. We have not provided for deferred taxes on the outside basis differences in our investments in our foreign subsidiaries. A determination of the unrecognized deferred taxes related to these outside basis differences is not practicable.

The balance of gross unrecognized tax benefits and related activity were not material in any period presented. The Company is regularly audited by federal, state and foreign tax authorities. The Internal Revenue Service (IRS) has completed its field examination and has issued its Revenue Agents Report through the 2014 tax year and all open issues have been resolved. The Company is currently open to tax examinations by the IRS for the 2020 through 2022 tax years. The Company is open to state and local tax audits in major tax jurisdictions dating back to the 2017 taxable year. The Company is no longer subject to income tax examinations by any major foreign tax jurisdiction for years prior to 2015.

The Company has evaluated the effects of the Global Anti-Base Erosion Model Rules set forth by the Organization for Economic Co-operation and Development (OECD), referred to as “Pillar Two”, which establishes a global minimum corporate tax rate of 15 percent. The Company has determined that Pillar Two legislation has been enacted in one or more of the jurisdictions in which we operate and the Company is within the scope of the legislation. The Company assessed such enacted legislation, and, as applicable, the transitional safe harbor provisions of Pillar Two, and concluded that the tax effects are not material to the Company's consolidated financial statements.
The difference between the actual income tax provision and the tax provision computed by applying the statutory Federal income tax rate to Earnings before income taxes is attributable to the following:
(in millions)202420232022
Income tax provision at 21 percent$42.7 $132.1 $179.3 
State and local income taxes, net of federal income tax effect4.2 13.3 19.5 
Deferred tax asset valuation allowance5.0 17.8 (10.4)
Change in estimates related to prior years and prior years amended tax return filings3.4 1.8 (1.3)
Federal and state tax credits(10.2)(15.2)(16.6)
Taxes related to foreign income, net of credits2.6 (4.5)12.1 
Deferred tax reassessment7.3 2.5 6.4 
Tax reserve reassessment(3.4)0.8 (0.1)
Asset impairment6.8 — — 
FDII deduction(8.7)(16.6)(18.4)
Intercompany sales of intellectual property rights— 53.1 — 
Nondeductible loss on intercompany sale— 6.9 — 
Other4.3 4.3 1.8 
Actual income tax provision$54.0 $196.3 $172.3 
Effective tax rate26.6 %31.2 %20.2 %

For the year ended December 31, 2024, the Company recorded $5.0 million of income tax expense related to an increase in its valuation allowance on deferred tax assets and $6.8 million of income tax expense related to the impairment of the Navico Group reporting unit's goodwill. The valuation allowance increase is primarily due to certain federal tax credits, state credits and NOLs that may not be realized in future years.

For the year ended December 31, 2023, the Company recorded $17.8 million of income tax expense related to an increase in its valuation allowance on deferred tax assets and $53.1 million of income tax expense related to the intercompany sales of intellectual property (IP) rights. The valuation allowance increase is primarily due to certain federal tax credits, impairment of certain investments, and state credits and NOLs that may not be realized in future years. The sales of the IP rights were to better align the ownership of these rights with how our business operates.