Income Taxes

12 Months Ended

Dec. 31, 2023

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

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

	Year Ended December 31,
	2023		2022		2021
U.S.	$	(360.7)	$	(266.6)	$	(266.0)
Non-U.S	279.6		239.4		220.8
Income (loss) before provision for income taxes and equity in net income of affiliates	$	(81.1)	$	(27.2)	$	(45.2)

	Year Ended December 31,
	2023		2022		2021
Current tax provision:
U.S. Federal	$	29.2	$	62.8	$	56.9
State and local	10.1		11.8		13.8
Non-U.S.	58.4		49.3		40.1
Total current tax provision	$	97.7	$	123.9	$	110.8
Deferred tax provision:
U.S. Federal	$	(99.9)	$	(94.1)	$	(92.6)
State and local	(14.9)		(42.8)		15.1
Non-U.S.	(17.1)		(15.8)		(9.9)
Total deferred tax provision	$	(131.9)	$	(152.7)	$	(87.4)
Provision (benefit) for income taxes	$	(34.2)	$	(28.8)	$	23.4

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

	Year Ended December 31,
	2023		2022		2021
Statutory tax rate	21.0	%	21.0	%	21.0	%
State and local taxes, net of U.S. Federal tax benefits (1)	8.5		123.2		(58.0)
Nondeductible charges (2)	(13.5)		(34.0)		(5.3)
U.S. taxes on foreign income	(5.2)		(11.3)		(9.5)
Non-U.S. taxes (3)	25.6		65.7		23.2
Valuation allowance	(1.0)		(2.4)		(2.9)
Interest	(1.0)		(0.5)		0.5
Tax credits and deductions	21.9		32.6		30.4
Tax contingencies related to uncertain tax positions	1.7		(4.4)		0.7
GILTI tax (4)	(18.1)		(80.9)		(51.6)
Other	2.3		(3.0)		(0.3)
Effective tax rate	42.2	%	106.0	%	(51.8)	%

(1)Primarily related to the impact of state apportionment changes in each year. The impact for 2021 also reflects the state apportionment changes to our net U.S. deferred taxes as a result of the relocation of our corporate headquarters.

(2)The impact for 2023, 2022 and 2021 reflects non-deductible compensation costs.

(3)For the year ended December 31, 2023, the impact was primarily due to higher non-U.S. pre-tax income. For the year ended December 31, 2022, the impact was primarily the effect of lower consolidated pre-tax loss, compared to the prior year.

(4)Primarily due to a reduction to the Global intangible low-taxed income ("GILTI") inclusion in the U.S. due to an election allowing for the exclusion of certain income.

Income taxes paid were $101.8 million, $143.8 million and $81.9 million for the years ended December 31, 2023, 2022 and 2021, respectively. Income taxes refunded were $1.6 million, $4.0 million and $69.2 million for the years ended December 31, 2023, 2022 and 2021, respectively.

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

	December 31,
	2023		2022
Deferred tax assets:
Operating losses	$	69.7	$	62.3
Interest expense carryforward	183.3		153.5
Bad debts	6.5		5.1
Accrued expenses	12.9		9.5
Capital loss and credit carryforwards	13.6		15.4
Pension and postretirement benefits	28.5		33.9
Foreign exchange	1.9		9.0
ASC 842 - Lease liability	10.2		16.0
Equity Compensation	11.6		10.5
Other	5.4		9.3
Total deferred tax assets	$	343.6	$	324.5
Valuation allowance	(39.2)		(37.0)
Net deferred tax assets	$	304.4	$	287.5
Deferred tax liabilities:
Intangibles	$	(1,109.0)	$	(1,230.8)
Commission Assets	(39.2)		(35.6)
Fixed assets	(14.7)		(12.5)
ASC 842 - ROU asset	(9.8)		(15.1)
Other	(1.8)		(1.2)
Total deferred tax liabilities	$	(1,174.5)	$	(1,295.2)
Net deferred tax (liabilities) assets	$	(870.1)	$	(1,007.7)

As a result of the enactment of the 2017 Tax Cuts and Jobs 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 $69.7 million as of December 31, 2023. Of the $69.7 million, $50.5 million have an indefinite carry-forward period with the remainder of $19.2 million expiring at various times between 2024 and 2043. Additionally, we have non-U.S. capital loss carryforwards. The associated tax effect was $12.6 million and $11.9 million as of December 31, 2023 and 2022, 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 $39.2 million and $36.5 million as of December 31, 2023 and 2022, 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 2019. In state and local jurisdictions, with a few exceptions, we are no longer subject to examinations by tax authorities for years prior to 2019. In foreign jurisdictions, with a few exceptions, we are no longer subject to examinations by tax authorities for years prior to 2016.

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

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 (1)	(1.0)
Gross unrecognized tax benefits as of December 31, 2021	$	18.6
Additions for current year’s tax positions	1.0
Increase in prior years’ tax positions	0.4
Settlements with taxing authority	(0.3)
Reduction due to expired statute of limitations (2)	(0.8)
Gross unrecognized tax benefits as of December 31, 2022	$	18.9
Additions for current year’s tax positions	0.5
Increase in prior years’ tax positions	0.2
Reduction due to expired statute of limitations (3)	(2.2)
Gross unrecognized tax benefits as of December 31, 2023	$	17.4

(1)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.

(2)The decrease was primarily due to the release of reserves as a result of the expiration of the statute of limitations for the 2018 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 2019 tax year.

The amount of gross unrecognized tax benefits of $17.4 million that, if recognized, would impact the effective tax rate is $16.7 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, 2023, 2022 and 2021 was $1.5 million $0.8 million and $0.8 million, respectively. The total amount of accrued interest, net of tax benefits, as of December 31, 2023 and 2022 was $3.1 million and $1.8 million, respectively.