Income Taxes (Tables)

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Source of pre-tax income and components of income tax expense

The source of pre-tax income and the components of income tax expense are as follows:

	Year Ended December 31,
(in millions)	2021			2020			2019
Income (loss) components:
Domestic	$	45		$	(33)		$	203
Foreign	466			318			213
Total pre-tax income	$	511		$	285		$	416
Income tax expense components:
Current:
Domestic – federal	$	16		$	24		$	39
Domestic – state and local	5			5			13
Foreign	53			33			40
Total Current	74			62			92
Deferred:
Domestic – federal	$	(2)		$	(21)		$	7
Domestic – state and local	—			(8)			(1)
Foreign	12			(2)			(83)
Total Deferred	10			(31)			(77)
Total income tax provision	$	84		$	31		$	15
Effective income tax rate	16.3		%	10.9		%	3.7		%

Schedule of effective income tax rate reconciliation

Reconciliations between taxes at the U.S. federal income tax rate and taxes at our effective income tax rate on earnings before income taxes are as follows:

	Year Ended December 31,
	2021		2020		2019
Tax provision at U.S. statutory rate	21.0	%	21.0	%	21.0	%
Increase (decrease) in tax rate resulting from:
State income taxes	0.8		0.7		2.7
Uncertain tax positions	(0.1)		(3.9)		0.4
Valuation allowance	0.9		0.5		1.2
Net interest deductions	(2.4)		(4.5)		(3.0)
Foreign income taxed at different rates	(0.2)		(0.9)		0.7
US tax on foreign earnings	2.2		5.3		1.6
Tax incentives	(5.5)		(7.4)		(9.6)
Rate change	0.9		(1.3)		(18.1)
Goodwill impairment	—		2.9		7.8
Federal R&D tax credit	(0.7)		(1.3)		(1.2)
Stock compensation	(0.6)		(2.4)		(1.5)
Other—net	—		2.2		1.7
Effective income tax rate	16.3	%	10.9	%	3.7	%

Components of net deferred tax assets and liabilities

The following is a summary of the components of the net deferred tax assets and liabilities recognized in the Consolidated Balance Sheets:

	December 31,
(in millions)	2021		2020
Deferred tax assets:
Employee benefits	$	111	$	127
Accrued expenses	35		35
Loss and other tax credit carryforwards	250		270
Inventory	6		6
Lease Liabilities	70		64
Other	8		41
	480		543
Valuation allowance	(201)		(217)
Net deferred tax asset	$	279	$	326
Deferred tax liabilities:
Intangibles	$	155	$	138
Investment in foreign subsidiaries	4		5
Property, plant and equipment	77		77
Lease right-of-use assets	69		62
Other	35		30
Total deferred tax liabilities	$	340	$	312

Reconciliation of Deferred Tax Asset Valuation Allowance

A reconciliation of the change in valuation allowance on deferred tax assets is as follows:

(in millions)	2021		2020		2019
Valuation allowance — January 1	$	217	$	191	$	234
Change in assessment (a)	—		1		(2)
Current year operations	4		4		3
Other comprehensive income	(4)		3		(1)
Foreign currency and other (b)	(16)		18		(43)
Valuation allowance — December 31	$	201	$	217	$	191

(a)    Increase in assessment in 2020 is primarily attributable to loss positions in various jurisdictions. Decrease in assessment in 2019 is primarily attributable to profitability of certain jurisdictions.

(b)    Included in foreign currency and other in 2019 is a decrease in net operating losses due primarily to the liquidation of a foreign subsidiary for which a valuation allowance was maintained.

Deferred taxes classification

Deferred taxes are classified in the Consolidated Balance Sheets as follows:

	December 31,
(in millions)	2021		2020
Non-current assets	$	226	$	256
Non-current liabilities	(287)		(242)
Total net deferred tax liabilities	$	(61)	$	14

Tax attributes available to reduce future taxable income

Tax attributes available to reduce future taxable income begin to expire as follows:

(in millions)	December 31, 2021		First Year of Expiration
U.S. net operating loss	$	6	December 31, 2025
State net operating loss	101		December 31, 2024
State excess interest expense	17		Indefinite
State tax credits	1		Indefinite
Foreign net operating loss	1,068		December 31, 2022
Foreign tax credits	4		December 31, 2030

Reconciliation of the beginning and ending amount of unrecognized tax benefits

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

(in millions)	2021		2020		2019
Unrecognized tax benefits — January 1	$	114	$	129	$	136
Gross Increases - Current year tax positions	—		—		3
Gross Increases - Prior year tax positions	—		—		—
Gross Decreases - Prior year tax positions	(1)		(3)		(5)
Settlements	—		(12)		(5)
Lapse of Statute of Limitations	(1)		—		—
Currency Translation Adjustment	(1)		—		—
Unrecognized tax benefits — December 31	$	111	$	114	$	129

Earliest open tax years by major jurisdiction

The following table summarizes our earliest open tax years by major jurisdiction:

Jurisdiction	Earliest Open Year
Italy	2015
Luxembourg	2017
Sweden	2013
Germany	2012
United Kingdom	2015
United States	2017
Switzerland	2019