Income Taxes

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Income (loss) before provision for income taxes consisted of:

	Successor						Predecessor
	Year ended December 31, 2021		Year ended December 31, 2020		Period from January 1 to December 31, 2019		Period from January 1 to February 7, 2019
U.S.	$	(266.0)	$	(401.1)	$	(810.8)	$	(131.7)
Non-U.S	220.8		174.7		134.6		28.9
Income (loss) before provision for income taxes and equity in net income of affiliates	$	(45.2)	$	(226.4)	$	(676.2)	$	(102.8)

	Successor						Predecessor
	Year ended December 31, 2021		Year ended December 31, 2020		Period from January 1 to December 31, 2019		Period from January 1 to February 7, 2019
Current tax provision:
U.S. Federal	$	56.9	$	(29.9)	$	(0.3)	$	(11.1)
State and local	13.8		7.2		1.6		(3.4)
Non-U.S.	40.1		28.0		15.7		4.8
Total current tax provision	$	110.8	$	5.3	$	17.0	$	(9.7)
Deferred tax provision:
U.S. Federal	$	(92.6)	$	(100.7)	$	(109.8)	$	(14.8)
State and local	15.1		(16.9)		(23.5)		(3.0)
Non-U.S.	(9.9)		(0.1)		(2.0)		—
Total deferred tax provision	$	(87.4)	$	(117.7)	$	(135.3)	$	(17.8)
Provision (benefit) for income taxes	$	23.4	$	(112.4)	$	(118.3)	$	(27.5)

The following table summarizes the significant differences between the U.S. Federal statutory tax rate and our effective tax rate for financial statement purposes:

	Successor						Predecessor
	Year ended December 31, 2021		Year ended December 31, 2020		Period from January 1 to December 31, 2019		Period from January 1 to February 7, 2019
Statutory tax rate	21.0	%	21.0	%	21.0	%	21.0	%
State and local taxes, net of U.S. Federal tax benefits (1)	(58.0)		5.7		3.4		7.0
Nondeductible charges (2)	(5.3)		(1.2)		(3.7)		(1.4)
Change in fair value of make-whole derivative liability (3)	—		(3.0)		(5.4)		—
U.S. taxes on foreign income	(9.5)		(0.9)		(0.4)		(0.2)
Non-U.S. taxes (6)	23.2		3.6		1.4		1.2
Valuation allowance	(2.9)		(0.2)		4.0		—
Legacy transaction costs (4)	—		—		—		6.8
Interest	0.5		(0.2)		(0.1)		—
Tax credits and deductions (6)	30.4		6.7		1.8		0.5
Tax contingencies related to uncertain tax positions (4)	0.7		(0.8)		(0.4)		(8.2)
GILTI tax (6)	(51.6)		(8.2)		(4.4)		—
CARES Act (5)	—		25.5		—		—
Other	(0.3)		1.6		0.3		—
Effective tax rate	(51.8)	%	49.6	%	17.5	%	26.7	%

(1)The impact for 2021 reflects the impact of state apportionment changes to our net U.S. deferred taxes as a result of our corporate headquarter move.

(2)The impact for 2021 reflects non-deductible compensation costs. The impact for 2020 reflects non-deductible transaction costs associated with our Initial Public Offering in July 2020. The impact for the 2019 Successor and Predecessor periods reflects non-deductible transaction costs associated with the Take-Private Transaction.

(3)The impact was due to the non-deductible mark to market expense for tax purposes. The change in fair value of make-whole derivative liability expense was associated with the make-whole provision liability for the Series A Preferred Stock.

(4)The impact for the Predecessor period from January 1 to February 8, 2019 was primarily related to deductible legacy transaction costs incurred in predecessor historical periods.

(5)The impact was due to the CARES Act which was signed into law on March 27, 2020. Among other provisions, the law provides that net operating losses arising in a tax year beginning in 2018, 2019, or 2020 can be carried back five years.

(6)Primarily due to the impact of lower consolidated pre-tax loss for the year ended December 31, 2021 compared to the year ended December 31, 2020.

Income taxes paid were $81.9 million, $118.2 million, $34.8 million and $3.3 million for the years ended December 31, 2021 and 2020 (Successor), the period from January 1 to December 31, 2019 (Successor) and the period from January 1, 2019 to February 7, 2019 (Predecessor), respectively. Income taxes refunded were $69.2 million, $1.3 million, $0.5 million and less than $0.1 million for the years ended December 31, 2021 and 2020 (Successor), the period from January 1 to December 31, 2019 (Successor) and the period from January 1, 2019 to February 7, 2019 (Predecessor), respectively.

Deferred tax assets (liabilities) are comprised of the following:

	December 31,
	2021		2020
Deferred tax assets:
Operating losses	$	69.3	$	63.9
Interest expense carryforward	121.4		93.5
Restructuring charges	3.6		2.3
Bad debts	5.3		4.9
Accrued expenses	15.4		9.3
Capital loss and credit carryforwards	15.7		14.0
Pension and postretirement benefits	30.9		70.8
ASC 842 - Lease liability	4.9		18.3
Other	11.4		9.2
Total deferred tax assets	$	277.9	$	286.2
Valuation allowance	(39.4)		(36.6)
Net deferred tax assets	$	238.5	$	249.6
Deferred tax liabilities:
Intangibles	$	(1,417.5)	$	(1,319.6)
Foreign exchange	—		(6.3)
Fixed assets	(5.1)		—
ASC 842 - ROU asset	(3.2)		(16.2)
Other	(1.4)		—
Total deferred tax liabilities	$	(1,427.2)	$	(1,342.1)
Net deferred tax (liabilities) assets	$	(1,188.7)	$	(1,092.5)

On December 22, 2017, the 2017 Act was signed into law in the U.S. Among other significant changes, the 2017 Act reduced the statutory federal income tax rate for U.S. corporate taxpayers from a maximum of 35 percent to 21 percent and required the deemed repatriation of foreign earnings not previously subject to U.S. taxation. As a result of the enactment of the 2017 Act, we no longer assert indefinite reinvestment for any historical unrepatriated earnings through December 31, 2017. We intend to reinvest indefinitely all earnings from our China and India subsidiaries earned after December 31, 2017 and therefore have not provided for deferred income and foreign withholding taxes related to these jurisdictions.

We have federal, state and local, and foreign tax loss carryforwards, the tax effect of which was $69.3 million as of December 31, 2021. Of the $69.3 million, $38.5 million have an indefinite carry-forward period with the remainder of $30.8 million expiring at various times between 2022 and 2041. Additionally, we have non-U.S. capital loss carryforwards. The associated tax effect was $13.3 million and $10.2 million as of December 31, 2021 and 2020, respectively.

We have established valuation allowances against certain U.S. state and non-U.S. net operating losses and capital loss carryforwards in the amounts of $38.8 million and $36.1 million as of December 31, 2021 and 2020, respectively. In our opinion, certain U.S. state and non-U.S. net operating losses and capital loss carryforwards are more likely than not to expire before we can utilize them.

We or one of our subsidiaries file income tax returns in the U.S. federal, and various state, local and foreign jurisdictions. In the U.S. federal jurisdiction, we are no longer subject to examination by the Internal Revenue Service (“IRS”) for years prior to 2018. In state and local jurisdictions, with a few exceptions, we are no longer subject to examinations by tax authorities for years prior to 2018. In foreign jurisdictions, with a few exceptions, we are no longer subject to examinations by tax authorities for years prior to 2015.

The following is a reconciliation of the gross unrecognized tax benefits:

Predecessor:
Gross unrecognized tax benefits as of December 31, 2018	$	5.4
Additions for current year’s tax positions	8.9
Gross unrecognized tax benefits as of February 7, 2019	$	14.3
Successor:
Gross unrecognized tax benefits as of January 1, 2019	$	—
Impact of purchase accounting	14.3
Additions for current year’s tax positions	5.3
Settlements with taxing authority	(1.6)
Reduction in prior years’ tax positions	(0.1)
Reduction due to expired statute of limitations (1)	(0.8)
Gross unrecognized tax benefits as of December 31, 2019	$	17.1
Additions for current year’s tax positions	2.3
Increase in prior years’ tax positions	0.3
Reduction due to expired statute of limitations (2)	(0.8)
Gross unrecognized tax benefits as of December 31, 2020	$	18.9
Additions for current year’s tax positions	0.5
Increase in prior years’ tax positions	0.6
Settlements with taxing authority	(0.4)
Reduction due to expired statute of limitations (3)	(1.0)
Gross unrecognized tax benefits as of December 31, 2021	$	18.6

(1)The decrease was primarily due to the release of reserves as a result of the expiration of the statute of limitations for the 2015 tax year.

(2)The decrease was primarily due to the release of reserves as a result of the expiration of the statute of limitations for the 2016 tax year.

(3)The decrease was primarily due to the release of reserves as a result of the expiration of the statute of limitations for the 2017 tax year.

The amount of gross unrecognized tax benefits of the $18.6 million that, if recognized, would impact the effective tax rate is $17.9 million, net of tax benefits.

We recognize accrued interest expense related to unrecognized tax benefits in the Provision (Benefit) for Income Taxes line in the consolidated statement of operations and comprehensive income (loss). The total amount of interest expense, net of tax benefits, recognized for the years ended December 31, 2021 and 2020 (Successor), the period from January 1 to December 31, 2019 (Successor) and the period from January 1, 2019 to February 7, 2019 (Predecessor) was $0.8 million, $0.6 million,

$0.3 million and $0.1 million, respectively. The total amount of accrued interest as of December 31, 2021 and 2020 was $1.3 million and $0.7 million, respectively.