Income Taxes (Tables)

12 Months Ended

Dec. 31, 2020

Income Tax Disclosure [Abstract]

Schedule of Components of Income Tax Expense

Tax Expense. Income tax expense consists of the following components (in millions):

	2020		2019		2018
Current:
Federal	$	(1.9)	$	22.3	$	(10.5)
State and local	1.6		1.8		0.7
Foreign	155.0		170.4		175.6
Total current	154.7		194.5		165.8
Deferred:
Federal	49.4		27.5		77.6
State and local	13.8		14.8		9.1
Foreign	(13.8)		10.8		5.0
Total deferred	49.4		53.1		91.7
Total income tax expense	$	204.1	$	247.6	$	257.5

Schedule of Income before Income Taxes, Domestic and Foreign

Income before income taxes consists of the following (in millions):

	2020		2019		2018
Income before income taxes:
U.S.	$	329.0	$	250.3	$	366.2
Foreign	494.2		538.1		520.7
Total income before income taxes	$	823.2	$	788.4	$	886.9

Schedule of Deferred Tax Assets and Liabilities

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31 follow (in millions):

	2020		2019
Assets:
Reserves not currently deductible for tax	$	44.6	$	36.8
Tax credit and loss carryovers	25.4		21.5
Compensation and benefits	24.7		23.1
Lease liability	19.7		35.1
Other	12.6		22.4
Gross deferred tax assets before valuation allowance	127.0		138.9
Valuation allowance	(3.5)		(4.4)
Net deferred tax assets	123.5		134.5
Liabilities:
Property	(1,233.8)		(1,181.3)
Investments	(54.9)		(52.4)
Other	(20.2)		(28.8)
Gross deferred tax liabilities	(1,308.9)		(1,262.5)
Net deferred tax liability	$	(1,185.4)	$	(1,128.0)

Schedule of Effective Income Tax Rate Reconciliation

Tax Rates. Differences between the Company’s effective income tax rate and the U.S. federal statutory income tax rate of 21% follow (in millions):

	2020				2019				2018
	Dollars		Percent		Dollars		Percent		Dollars		Percent
Income tax expense using the statutory rate in effect	$	172.9	21.0	%	$	165.6	21.0	%	$	186.2	21.0	%
Tax effect of:
Difference between U.S. and foreign tax rate	44.1		5.4	%	47.6		6.0	%	46.1		5.2	%
GILTI tax, net	(14.5)		(1.8	%)	2.7		0.3	%	11.8		1.3	%
Tax credits	(13.8)		(1.7	%)	(16.8)		(2.1	%)	(14.2)		(1.6	%)
State and local income tax provision, net	12.5		1.5	%	11.5		1.5	%	7.5		0.8	%
Withholding tax	9.9		1.2	%	9.5		1.2	%	11.2		1.3	%
Foreign exchange (i)	(3.4)		(0.4	%)	35.9		4.6	%	21.8		2.5	%
Mexican fuel excise tax credit, net (ii)	—		—		(12.8)		(1.6	%)	—		—
Change in U.S. tax rate	—		—		—		—		(2.2)		(0.3	%)
Deemed mandatory repatriation	—		—		—		—		(18.7)		(2.1	%)
Other, net	(3.6)		(0.4	%)	4.4		0.5	%	8.0		0.9	%
Income tax expense	$	204.1	24.8	%	$	247.6	31.4	%	$	257.5	29.0	%

_____________________

(i)Mexican income taxes are paid in Mexican pesos, and as a result, the effective income tax rate reflects fluctuations in the value of the Mexican peso against the U.S. dollar. The foreign exchange impact on income taxes includes the gain or loss from the revaluation of the Company’s net U.S. dollar-denominated monetary liabilities into Mexican pesos

which is included in Mexican taxable income under Mexican tax law. As a result, a strengthening of the Mexican peso against the U.S. dollar for the reporting period will generally increase the Mexican cash tax obligation and the effective income tax rate, and a weakening of the Mexican peso against the U.S. dollar for the reporting period will generally decrease the Mexican cash tax obligation and the effective tax rate. To hedge its exposure to this cash tax risk, the Company enters into foreign currency derivative contracts, which are measured at fair value each period and any change in fair value is recognized in foreign exchange gain (loss) within the consolidated statements of income. Refer to Note 11, Derivative Instruments in the consolidated financial statements for further information.

(ii)Not eligible for Mexican fuel excise tax credit subsequent to April 30, 2019. See previous discussion within footnote.

Schedule of Change in Unrecognized Tax Benefits

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in millions):

	2020		2019
Balance at January 1,	$	2.2	$	2.2
Additions for tax positions of prior years	—		—
Balance at December 31,	$	2.2	$	2.2