Income Taxes

12 Months Ended

Dec. 31, 2023

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Income (loss) before taxes consisted of the following:

	2023		2022		2021
United States	$	(389.5)	$	221.2	$	61.7
Foreign	387.9		392.6		248.8
Total	$	(1.6)	$	613.8	$	310.5

The provision for income taxes is summarized as follows:

	2023		2022		2021
Current
Federal	$	39.6	$	101.6	$	18.2
State	6.4		10.2		10.6
Foreign	122.0		87.2		54.6
	$	168.0	$	199.0	$	83.4
Deferred
Federal	$	(84.3)	$	(50.7)	$	6.7
State	(9.4)		(12.1)		(2.0)
Foreign	(21.6)		(17.3)		(13.4)
	(115.3)		(80.1)		(8.7)
Total	$	52.7	$	118.9	$	74.7

A reconciliation of the federal statutory expense (benefit) and the income tax expense reflected in the Consolidated Statements of Income (Loss) follows:

	2023	2022	2021
Federal Statutory Expense (Benefit)	(0.4)	128.9	65.2
State Income Taxes, Net of Federal Benefit	(8.6)	3.2	2.6
Effect of Impairment Charges	35.0	—	8.4
Foreign Rate Differential	(10.8)	(1.4)	0.4
Research and Development Credit	(8.7)	(9.7)	(8.4)
Valuation Allowance	4.3	0.2	(1.4)
Tax on Repatriation	25.8	7.2	0.8
Transaction Costs	6.9	—	6.3
US Tax on Foreign Operations	14.2	6.7	3.9
Deferred Tax Remeasurement	3.4	(2.4)	0.7
Other	(8.4)	(13.8)	(3.8)
Income Tax Expense	52.7	118.9	74.7

Deferred taxes arise primarily from differences in amounts reported for tax and financial statement purposes. The Company's net deferred tax liability was $978.9 million as of December 31, 2023, classified on the Consolidated Balance Sheet as a net non-current deferred income tax benefit of $33.8 million and a net non-current deferred income tax liability of $1,012.7 million. For the fiscal year ended December 31, 2023, the Company reclassified $4.6 million of deferred income tax liabilities to Noncurrent Liabilities Held for Sale. As of December 31, 2022, the Company's net deferred tax liability was $547.9 million classified on the Consolidated Balance Sheet as a net non-current deferred income tax asset of $44.0 million and a net non-current deferred income tax liability of $591.9 million.

The components of this net deferred tax liability are as follows:

	December 31, 2023		December 31, 2022
Accrued Benefits	$	65.4	$	52.1
Bad Debt Allowances	7.9		7.2
Warranty Accruals	8.4		6.2
Inventory	8.6		—
Tax Loss Carryforward	16.1		7.6
Operating Lease Liability	67.4		47.1
Deferred Interest	43.7		20.4
Other	32.3		21.8
Deferred Tax Assets before Valuation Allowance	249.8		162.4
Valuation Allowance	(11.0)		(5.2)
Total Deferred Tax Assets	238.8		157.2
Property Related	(92.5)		(57.9)
Intangible Items	(1,026.6)		(585.5)
Accrued Liabilities	(29.9)		(11.6)
Derivative Instruments	(8.3)		(5.6)
Inventory	—		(5.4)
Operating Lease Asset	(60.4)		(39.1)
Deferred Tax Liabilities	(1,217.7)		(705.1)
Net Deferred Tax Liability	$	(978.9)	$	(547.9)

Following is a reconciliation of the beginning and ending amount of unrecognized tax benefits:

Unrecognized Tax Benefits, January 2, 2021	$	6.8
Gross Increases from Prior Period Tax Positions	0.1
Gross Increases from Current Period Tax Positions	0.6
Gross Increases from Acquisitions	5.3
Lapse of Statute of Limitations	(4.0)
Unrecognized Tax Benefits, January 1, 2022	$	8.8
Gross Increases from Current Period Tax Positions	0.6
Settlements with Taxing Authorities	(2.0)
Lapse of Statute of Limitations	(1.7)
Unrecognized Tax Benefits, December 31, 2022	$	5.7
Gross Increases from Current Period Tax Positions	0.3
Gross Increases from Acquisitions	3.8
Lapse of Statute of Limitations	(1.3)
Unrecognized Tax Benefits, December 31, 2023	$	8.5

Unrecognized tax benefits as of December 31, 2023 amount to $8.5 million, all of which would impact the effective income tax rate if recognized.

Potential interest and penalties related to unrecognized tax benefits are recorded in income tax expense. During fiscal years 2023, 2022 and 2021, the Company recognized approximately $(0.1) million, $(0.1) million and $(1.4) million of net interest income, respectively. The Company had approximately $1.1 million, $1.2 million and $1.3 million of accrued interest as of December 31, 2023, December 31, 2022 and January 1, 2022, respectively.

Due to statute expirations, approximately $1.9 million of the unrecognized tax benefits, including accrued interest, could reasonably change in the coming year.

With few exceptions, the Company is no longer subject to US federal and state/local income tax examinations by tax authorities for years prior to 2020, and the Company is no longer subject to non-US income tax examinations by tax authorities for years prior to 2020.

As of December 31, 2023 and December 31, 2022 the Company had approximately $16.1 million and $7.6 million, respectively, of tax effected net operating losses in various jurisdictions with a portion expiring over a period of up to 15 years and the remaining without expiration.

Valuation allowances totaling $11.0 million and $5.2 million as of December 31, 2023 and December 31, 2022, respectively, have been established for deferred income tax assets primarily related to certain subsidiary loss carryforwards that may not be realized. Realization of the net deferred income tax assets is dependent on generating sufficient taxable income prior to their expiration. Although realization is not assured, management believes it is more-likely-than-not that the net deferred income tax assets will be realized. The amount of the net deferred income tax assets considered realizable, however, could change in the near term if future taxable income during the carryforward period fluctuates.

The Company has been granted tax holidays for some of its Chinese subsidiaries. The majority of these tax holidays expired at the end of 2022. All tax holidays will be renewed subject to certain conditions with which the Company expects to comply. In 2023 and 2022, these holidays decreased the Provision for Income Taxes by $3.4 million and $4.3 million, respectively.

The Company continues to treat approximately $160.0 million of earnings from certain foreign entities as permanently reinvested and has not recorded a deferred tax liability for the local withholding taxes of approximately $15.7 million on those earnings.