Income Taxes

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Significant components of the Company’s deferred tax assets and liabilities are as follows:

	2021		2020
Deferred tax assets related to:
Expenses not yet deducted for tax purposes	$	301,302	$	343,308
Operating lease liabilities	300,705		289,114
Pension liability not yet deducted for tax purposes	171,256		257,526
Capital loss	7,333		10,875
Net operating loss	48,865		56,028
	829,461		956,851
Deferred tax liabilities related to:
Employee and retiree benefits	235,847		226,356
Inventory	87,062		90,213
Operating lease assets	295,801		282,486
Other intangible assets	365,557		365,825
Property, plant and equipment	72,740		73,333
Other	18,176		29,961
	1,075,183		1,068,174
Net deferred tax liability before valuation allowance	(245,722)		(111,323)
Valuation allowance	(34,227)		(35,930)
Total net deferred tax liability	$	(279,949)	$	(147,253)

The Company currently holds approximately $183,852 in gross net operating losses, of which approximately $121,792 will carry forward indefinitely. The remaining net operating losses of approximately $62,060 will begin to expire in 2024.

The components of income before income taxes are as follows:

	2021		2020		2019
United States	$	762,472	$	706,594	$	613,910
Foreign	437,874		(327,226)		245,373
Income before income taxes	$	1,200,346	$	379,368	$	859,283

The components of income tax expense are as follows:

	2021		2020		2019
Current:
Federal	$	116,425	$	130,680	$	162,883
State	34,311		35,474		45,488
Foreign	119,144		77,541		60,376
Deferred:
Federal	24,233		2,048		(21,617)
State	9,485		801		(11,273)
Foreign	(2,042)		(30,571)		(23,049)
	$	301,556	$	215,973	$	212,808

 The reasons for the difference between total tax expense and the amount computed by applying the statutory Federal income tax rate to income before income taxes are as follows:

	2021		2020		2019
Statutory rate applied to income (1)	$	252,073	$	79,667	$	180,449
Plus state income taxes, net of Federal tax benefit	34,599		28,658		27,030
Taxation of foreign operations, net (2)	2,299		(9,072)		(17,663)
U.S. tax reform - transition tax (3)	—		—		4,492
Non-deductible goodwill impairment tax effect	—		106,411		—
Foreign rate change - deferred tax remeasurement	17,032		9,045		6,215
Valuation allowance	(2,486)		1,995		4,503
Other	(1,961)		(731)		7,782
	$	301,556	$	215,973	$	212,808

(1)U.S. statutory rates applied to income are as follows: 2021, 2020 and 2019 at 21%.

(2)The Company's effective tax rate reflects the impact of having operations outside of the U.S. which are taxed at statutory rates different from the U.S. statutory rate, with some income being fully or partially exempt from income taxes due to various operating and financing activities.

(3)Impact of the Tax Cuts and Jobs Act, enacted December 22, 2017.

The Company accounts for Global Intangible Low Taxed income in the year the tax is incurred as a period cost.

The Company, or one of its subsidiaries, files income tax returns in the U.S., various states, and foreign jurisdictions. With few exceptions, the Company is no longer subject to federal, state and local tax examinations by tax authorities for years before 2018 or subject to non-United States income tax examinations for years ended prior to 2013. The Company is currently under audit in the U.S. and some of its foreign jurisdictions. Some audits may conclude in the next 12 months and the unrecognized tax benefits recorded in relation to the audits may differ from actual settlement amounts. It is not possible to estimate the effect, if any, of the amount of such change during the next 12 months to previously recorded uncertain tax positions in connection with the audits; however, the Company does not anticipate that total unrecognized tax benefits will significantly change in the next 12 months.

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

	2021		2020		2019
Balance at beginning of year	$	23,237	$	21,461	$	18,428
Additions based on tax positions related to the current year	2,196		3,771		3,701
Additions for tax positions of prior years	156		3,480		620
Reductions for tax positions for prior years	(733)		(1,382)		(965)
Reduction for lapse in statute of limitations	(2,843)		(3,765)		—
Settlements	(2,512)		(328)		(323)
Balance at end of year	$	19,501	$	23,237	$	21,461

The amount of gross unrecognized tax benefits, including interest and penalties, as of December 31, 2021 and 2020 was approximately $20,406 and $25,870, respectively, of which approximately $18,595 and $21,426, respectively, if recognized, would affect the effective tax rate.

During the tax years ended December 31, 2021, 2020 and 2019, the Company paid, received refunds, or accrued insignificant interest and penalties. The Company recognizes potential interest and penalties related to unrecognized tax benefits as a component of income tax expense.

As of December 31, 2021, the Company estimates that it has an outside basis difference in certain foreign subsidiaries of approximately $731,000, which includes the cumulative undistributed earnings from the Company's foreign subsidiaries. The Company continues to be indefinitely reinvested in this outside basis difference. Determining the amount of net unrecognized deferred tax liability related to any additional outside basis difference in these entities is not practicable. This is due to the complexities associated with the calculation to determine residual taxes on the undistributed earnings, including the availability of foreign tax credits, applicability of any additional local withholding tax and other indirect tax consequences that may arise due to the distribution of these earnings.