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Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Following is a summary of earnings (loss) before income taxes for operations:
(In millions)202420232022
United States$292.0 (440.5)(233.2)
Foreign354.0 86.0 417.1 
Earnings (loss) before income taxes$646.0 (354.5)183.9 

Income tax (benefit) expense for the years ended December 31, 2024, 2023 and 2022 consists of the following:
(In millions)202420232022
Current income taxes:
United States federal$86.2 67.0 92.0 
State and local6.0 11.9 11.2 
Foreign93.2 115.9 106.0 
Total current185.4 194.8 209.2 
Deferred income taxes:
United States federal(26.3)(50.1)(27.7)
State and local(7.3)(5.2)9.6 
Foreign(23.6)(54.6)(33.0)
Total deferred(57.2)(109.9)(51.1)
Total income tax expense$128.2 84.9 158.1 

The geographic dispersion of earnings and losses contributes to the annual changes in the Company’s effective tax rates. Approximately 45% of the Company’s current year earnings before income taxes was generated in the U.S. The Company is also subject to taxation in other jurisdictions where it has operations, including Australia, Belgium, Brazil, Bulgaria, France, Ireland, Italy, Luxembourg, Malaysia, Mexico, the Netherlands, New Zealand, Poland, Russia, Spain and the United Kingdom. The effective tax rates that the Company accrues in these jurisdictions vary widely, but they are generally lower than the Company’s overall effective tax rate. The Company’s domestic effective tax rates for the years ended December 31, 2024, 2023 and 2022 were 20.1%, (5.3)%, and (36.5)%, respectively, and its non-U.S. effective tax rates for the years ended December 31, 2024, 2023 and 2022 were 19.7%, 71.2%, and 17.5%, respectively. The difference in rates applicable in foreign jurisdictions results from many factors, including lower statutory rates, increase in valuation allowance, historical loss carry-forwards, financing arrangements, and other factors. The Company’s effective tax rate has been and will continue to be impacted by the geographical dispersion of the Company’s earnings and losses. To the extent that domestic earnings increase while the foreign earnings remain flat or decrease, or increase at a lower rate, the Company’s effective tax rate will increase.
Income tax expense (benefit) attributable to earnings before income taxes differs from the amounts computed by applying the United States statutory federal income tax rate to earnings before income taxes as follows:
(In millions)202420232022
Income taxes at statutory rate$135.7 (74.4)38.6 
State and local income taxes, net of federal income tax benefit(1.1)5.7 4.9 
Foreign income taxes (1)
(173.0)(59.0)(50.5)
Change in valuation allowance218.7 302.8 44.8 
Impairment of non-deductible goodwill— 183.1 132.5 
Fixed asset adjustments(5.9)(6.6)(7.3)
Non-deductible expenses10.3 9.3 11.2 
General business credits and incentives(16.6)(316.3)(21.8)
Global intangible low-taxed income1.8 0.2 7.2 
Prior period adjustments3.6 (5.6)4.5 
Tax impact of restructuring
(50.8)25.4 — 
Tax contingencies and audit settlements, net13.2 26.3 (0.1)
Impact of tax law changes on deferred taxes6.3 0.8 — 
Impact of foreign disregarded entities(28.5)— — 
Other, net14.5 (6.8)(5.9)
Income tax expense$128.2 84.9 158.1 
(1) Foreign income taxes include statutory rate differences, financing arrangements, withholding taxes, local income taxes, notional deductions, and other miscellaneous items.
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities as of December 31, 2024 and 2023 are presented below:
(In millions)20242023
Deferred tax assets:
Accounts receivable$13.9 26.2 
Inventories55.4 54.6 
Employee benefits53.5 49.7 
Accrued expenses and other142.3 124.0 
Deductible state tax and interest benefit15.8 12.2 
Intangibles56.1 122.6 
Lease liabilities103.2 100.4 
Interest expense53.3 44.1 
Federal, foreign and state net operating losses and credits940.3 814.4 
Gross deferred tax assets1,433.8 1,348.2 
Valuation allowance(760.5)(582.7)
Net deferred tax assets673.3 765.5 
Deferred tax liabilities:
Inventories(20.8)(18.3)
Plant and equipment(431.7)(477.1)
Intangibles(108.1)(181.4)
Right of use operating lease assets(96.6)(93.8)
Prepaids(52.0)(52.5)
Other liabilities(43.7)(75.7)
Gross deferred tax liabilities(752.9)(898.8)
Net deferred tax liability$(79.6)(133.3)

The Company evaluates its ability to realize the tax benefits associated with deferred tax assets by analyzing its forecasted taxable income using both historic and projected future operating results, the reversal of existing temporary differences, taxable income in prior carry-back years (if permitted) and the availability of tax planning strategies. The valuation allowance as of December 31, 2024, and 2023 is $760.5 million and $582.7 million, respectively. The valuation allowance as of December 31, 2024 relates to the net deferred tax assets of certain of the Company’s foreign subsidiaries as well as certain state net operating losses and tax credits. The total change in the 2024 valuation allowance was an increase of $177.8 million related to increased losses, foreign currency translation and other activities. The total change in the 2023 valuation allowance was an increase of $298.4 million primarily related to a $300.0 million credit received in Switzerland where realizability is uncertain as of December 31, 2023.
Management believes it is more likely than not that the Company will realize the benefits of its deferred tax assets, net of valuation allowances, based upon the expected reversal of deferred tax liabilities and the level of historic and forecasted taxable income over periods in which the deferred tax assets are deductible.
As of December 31, 2024, the Company has state net operating loss carry forwards and state tax credits with potential tax benefits of $49.5 million, net of federal income tax benefit. A valuation allowance totaling $30.8 million has been recorded against these state deferred tax assets as of December 31, 2024. In addition, as of December 31, 2024, the Company has credits and net operating loss carry forwards in the U.S. with potential tax benefits of $7.4 million and in various foreign jurisdictions with potential tax benefits of $1,976.3 million. A valuation allowance of $6.3 million and $723.4 million, respectively, has been recorded against these deferred tax assets as of December 31, 2024. A portion of the carryforwards expire over various periods beginning in 2024 and the remaining carryforwards have an indefinite life.
The Company has no intentions or plans to repatriate foreign earnings and continues to assert that historical earnings of its foreign subsidiaries as of December 31, 2024 are permanently reinvested. Should the remaining earnings be distributed in the form of dividends in the future, the Company might be subject to withholding taxes (possibly offset by United States foreign tax credits) in various foreign jurisdictions, but the Company would not expect incremental United States federal or state taxes to be accrued on these previously taxed earnings.

Tax Uncertainties

In the normal course of business, the Company’s tax returns are subject to examination by various taxing authorities. Such examinations may result in future tax and interest assessments by these taxing jurisdictions. Accordingly, the Company accrues liabilities when it believes that it is not more likely than not that it will realize the benefits of tax positions that it has taken in its tax returns or for the amount of any tax benefit that exceeds the cumulative probability threshold in accordance with ASC 740-10. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company records interest and penalties related to unrecognized tax benefits in income tax expense (benefit). Differences between the estimated and actual amounts determined upon ultimate resolution, individually or in the aggregate, are not expected to have a material adverse effect on the Company’s consolidated financial position but could possibly be material to the Company’s consolidated results of operations or cash flow in any given quarter or annual period.

As of December 31, 2024, the Company’s gross amount of unrecognized tax benefits is $1,195.7 million, excluding interest and penalties. If the Company were to prevail on all uncertain tax positions, $83.0 million of the unrecognized tax benefits would affect the Company’s effective tax rate, exclusive of any benefits related to interest and penalties.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
(In millions)20242023
Balance as of January 1$1,304.7 1,230.6 
Additions based on tax positions related to the current year5.8 4.1 
Additions for tax positions of acquired companies— 11.7 
Additions for tax positions of prior years6.8 21.7 
Reductions resulting from change in tax rate(45.7)— 
Reductions resulting from the lapse of the statute of limitations(0.4)(0.4)
Settlements with taxing authorities(3.0)(0.9)
Effects of foreign currency translation(72.5)37.9 
Balance as of December 31$1,195.7 1,304.7 
As a result of the redemption of hybrid instruments in response to changes in global tax regimes, the Company has an ASC 740-10 liability for the full tax effected loss on hybrid instruments. This ASC 740-10-45 liability is recorded as a reduction to the related deferred tax asset in the financial statements as a result of management’s determination that it is not more likely than not that the benefit will be realized. The tax effected loss was adjusted for foreign currency translation changes and a Luxembourg tax rate change in 2024, resulting in an updated balance of $1,092.9 million as of December 31, 2024.

As of December 31, 2024 and 2023, the Company has $31.3 million and $26.9 million, respectively, accrued for the payment of interest and penalties, excluding the federal tax benefit of interest deductions where applicable. During the years ended December 31, 2024, 2023 and 2022, the Company accrued interest and penalties through income tax expense of $5.1 million, $6.5 million and $0.4 million, respectively.

The Company believes that its unrecognized tax benefits could decrease by $29.9 million within the next twelve months. The Company’s 2018, 2019 and 2020 federal tax returns are currently under audit by the Internal Revenue Service. As permitted by the CARES Act, the company carried back its 2020 taxable losses to tax years before the corporate income tax rate was lowered by the Tax Cut and Jobs Act. Federal income tax matters related to years prior to 2014 have been effectively settled. Various other state and foreign income tax returns are open to examination for various years.
Belgian Tax Matter

The Company is in a dispute with the Belgian Tax Authority (the “BTA”) in relation to certain intercompany loans owed by IVC BV, one of the Company’s subsidiaries in Belgium. The BTA has asserted that these liabilities were not genuine liabilities for Belgian tax purposes. The BTA issued assessments for the years ended December 31 2017, 2018, 2020 and 2021 totaling EUR 1.0 billion (including penalties but excluding late payment interests) on IVC BV, whereby it rejected certain interest deductions and the deduction for dividends received from one of its subsidiaries and asserted the inclusion of income related to these loans. These disputed assessments are still in the administrative phase and have been or will be appealed administratively before the BTA by IVC BV. The Company believes that its tax position in Belgium was correct and intends to vigorously defend its position.