XML 39 R19.htm IDEA: XBRL DOCUMENT v3.22.0.1
INCOME TAXES
 12 Months Ended
Dec. 31, 2021
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
The U.S. and International components of income (loss) before income taxes consisted of the following for the years ended, December 31:
In millions
202120202019
U.S.$(14.0)$65.6 $(150.5)
International14.7 (121.6)(212.3)
Total income (loss) before income taxes$0.7 $(56.0)$(362.8)
Significant components of the Company’s income tax (expense) benefit for the years ended December 31, are as follows:
In millions
202120202019
Current
U.S. - federal$4.9 $108.3 $— 
U.S. - state and local(1.4)(2.9)(10.7)
International(6.4)(6.0)(6.4)
(2.9)99.4 (17.1)
Deferred
U.S. - federal(17.0)(85.9)23.9 
U.S. - state and local(4.6)(13.7)8.0 
International(3.0)0.3 2.0 
(24.6)(99.3)33.9 
Total (expense) benefit$(27.5)$0.1 $16.8 

A reconciliation of the income tax provision computed at the U.S. federal statutory rate to the effective tax rate for the years ended December 31, are as follows:
202120202019
U.S. federal statutory income tax rate21.0 %21.0 %21.0 %
Effect of:
State and local taxes, net of federal tax effect(317.2 %)(11.2 %)1.2 %
International tax rates(938.5 %)14.3 %5.1 %
Permanent - other items248.2 %(2.1 %)(4.2 %)
Permanent - goodwill impairment— %— %(14.1 %)
FCPA settlement accrual3,118.2 %— %— %
CARES Act and other tax matters(268.4 %)79.2 %— %
Valuation allowance1,727.9 %(26.5 %)(1.2 %)
Divestitures(708.4 %)(62.7 %)1.2 %
Stock-based compensation and executive compensation disallowance908.6 %(11.9 %)(1.0 %)
Other37.6 %0.1 %(3.4 %)
Effective tax rate3,829.0 %0.2 %4.6 %

The comparability of the Company’s current year effective tax rate to the effective tax rates from previous years was impacted by the Company’s near-nil income before taxes in 2021, resulting in a magnification of the percentage point impact for each rate reconciling item, rendering the 2021 effective tax rate not meaningful. Accordingly, the Company has included a reconciliation in both dollars and percentages below. Both the Company’s near-nil income before taxes and the Company’s magnified effective tax rate are driven by the FCPA settlement accrual and its non-deductibility for tax purposes (see Note 19 – Legal Proceedings for further information).
2021 Tax Expense (Benefit)Tax Rate
U.S. federal tax expense (benefit) at statutory income tax rate$0.2 21.0 %
Effect of:
State and local taxes, net of federal tax effect(2.3)(317.2 %)
International tax rates(6.8)(938.5 %)
Permanent - other items1.8 248.2 %
FCPA settlement accrual22.5 3,118.2 %
CARES Act and other tax matters(1.9)(268.4 %)
Valuation allowance12.5 1,727.9 %
Divestitures(5.1)(708.4 %)
Stock-based compensation and executive compensation disallowance6.5 908.6 %
Other0.1 37.6 %
Effective tax expense (benefit)$27.5 3,829.0 %
Deferred tax liabilities and assets at December 31, were as follows:
In millions
20212020
Deferred tax liabilities:
Property, plant and equipment$(87.2)$(49.0)
Goodwill and intangibles(394.4)(391.2)
Leases - right of use asset(89.9)(91.3)
Other(15.7)(17.1)
Total deferred tax liabilities(587.2)(548.6)
Deferred tax assets:
Accrued liabilities58.6 63.1 
Leases - right of use liability95.1 96.5 
Net operating tax loss carry-forwards73.4 49.0 
Interest expense carry-forward15.3 11.3 
Other11.7 15.0 
Less: valuation allowance(61.4)(52.0)
Total deferred tax assets192.7 182.9 
Net deferred tax liabilities$(394.5)$(365.7)
The valuation allowance increased $9.4 million, net of divestitures, during the year ended December 31, 2021, primarily due to non-benefited international losses.
In response to the COVID-19 pandemic the government took the following tax-related government actions:
•On March 11, 2021, the President signed into law the ARP Act, a legislative package which is generally not significant to the Company's current business; however, the Company will continue to assess the ARP Act on an ongoing basis.
•On December 27, 2020, the President signed the CAA 2021, which provides several business tax relief provisions, which are generally not significant to the Company's current business; however, the Company will continue to assess the CAA 2021 on an ongoing basis.
•On March 27, 2020, the President signed into law the CARES Act, which was a substantial tax-and-spending package. As a result of the CARES Act tax law changes, for the year ended December 31, 2020, we recognized a $44.4 million tax benefit related to our ability to carryback net operating losses to prior years that had higher tax rates. Note that in the first quarter of 2020, the Company recognized an initial $39.4 million tax benefit; in the fourth quarter of 2020, upon finalizing the 2019 U.S. federal income tax return which impacted the carryback to prior years, the Company recognized an incremental $5.0 million tax benefit. In July 2020, the Company received a cash refund of $48.0 million, and in December 2020, the Company received $64.2 million (of which $62.0 million was the cash refund claim, and $2.2 million was interest income). A remaining carryback claim of less than $1.0 million associated with the finalization of the 2019 U.S. federal income tax return was filed with the IRS and the refund was received in June of 2021.
Similar tax provisions and other stimulus measures have been granted either before or after December 31, 2021 by certain international and U.S. state jurisdictions, which the Company continues to evaluate and apply, if applicable.
The Company filed a PFA with the IRS related to a claim under Internal Revenue Code Section 1341 concerning the tax rate to be applied to the SQ Settlement on the Company’s 2018 tax return. As a result of the enactment of the CARES Act, the Company was able to realize a benefit at the higher tax rate in prior years on a portion of the SQ Settlement. In 2020, in consideration of the CARES Act, the Company revised the PFA, a portion of the long-term receivable previously established for the Section 1341 claim was reclassified to a current income tax receivable and the related uncertain tax position was released as part of the tax benefit recognized in 2020 (in part as described above).
Subsequently in late 2020, the Company amended the 2018 tax return to reduce the Section 1341 benefit as a result of discussions with the IRS as part of the PFA program. Consequently, the remaining long-term receivable established for the Section 1341 claim and the corresponding uncertain tax position was reclassified to a current income tax receivable and current income tax liability, respectively, as both were expected to settle in cash in 2021. In April 2021, the Company was advised that the IRS completed its review of the 2018 tax return and took no exception to the Section 1341 benefit. Consequently, the Company recorded a tax benefit of approximately $5.5 million in the second quarter of 2021 associated with the Section 1341 claim and received the related refund in December 2021.
As of December 31, 2021, the Company plans to repatriate any undistributed earnings of its first-tier international subsidiaries back to the U.S. only to the extent that they were previously taxed under the Tax Act, and future repatriations may take the form as distributions from previously taxed earnings and profits and/or return of capital distributions. All other undistributed earnings, to the extent there are any, will remain permanently reinvested to support existing working capital needs in the international subsidiaries. A withholding tax, unrealized foreign exchange gain, and state income tax accrual has been recorded, as applicable. The Company has not provided for deferred taxes on outside basis differences for investments in its international subsidiaries that are unrelated to unremitted earnings as these basis differences will be indefinitely reinvested. A determination of the unrecognized deferred taxes related to these other components of outstanding basis difference is not practicable to calculate.
At December 31, 2021, the net operating loss carry-forwards from both international and U.S. operations are approximately $281.6 million and certain of these net operating loss carry-forwards begin to expire in 2022.  The tax benefits of these net operating losses is approximately $73.4 million at December 31, 2021, on which valuation allowances of $33.9 million were recognized offsetting such tax benefits. After the recognition of valuation allowances, the majority of the remaining net operating losses are attributable to the Company’s U.S. operations.
The changes in the valuation allowance on deferred tax assets is as follows:
In millionsYear Ended December 31,
202120202019
Balances at beginning of period$52.0 $39.4 $35.3 
Additions Charged to Income Tax Expense(1)
10.5 17.8 13.3 
Other Changes to Reserves (2)
(1.1)(5.2)(9.2)
Balances at end of period$61.4 $52.0 $39.4 
(1)2021 amount includes valuation allowances on business operations (including the U.K., Brazil, and Spain). 2020 amount includes valuation allowances on business operations (including the U.K. and Brazil).
(2)2021 and 2020 amounts consist primarily of currency translation adjustments. 2019 amount consists primarily of divestiture valuation allowances for businesses in Mexico and Chile.
The Company files income tax returns in the U.S., in various states and in certain international jurisdictions. We generally are no longer subject to U.S. federal, state, local, or international income tax examinations by tax authorities for years prior to 2015.  
The Company has recognized liabilities to cover certain uncertain tax positions.  Such uncertain tax positions relate to additional taxes that the Company may be required to pay in various tax jurisdictions.  During the course of examinations by various taxing authorities, proposed adjustments may be asserted.  The Company evaluates such items on a case-by-case basis and adjusts the accrual for uncertain tax positions as deemed necessary, including presenting the accrual as a reduction of a deferred tax asset for a tax loss or tax credit carryforward, when such carryforward is available and permitted to be utilized to settle the tax liability.  
The total amount of unrecognized tax benefit at December 31, 2021 is $19.7 million.  The amount of uncertain tax positions that, if recognized, would affect the effective tax rate is approximately $18.0 million.  We recognized interest and penalties related to income tax reserves as a charge in the amount of $0.4 million, a benefit of $1.5 million, and a benefit of $0.7 million for the years ended December 31, 2021, 2020 and 2019, respectively, as a component of income tax expense. It is reasonably possible that our unrecognized tax benefits will decrease by as
much as $5.0 million to $10.0 million in the next 12 months primarily due to statute lapses and the progress of U.S. federal, state, and international audits.
The following table summarizes the aggregate changes in unrecognized tax benefits:
In millions
Unrecognized tax positions as of December 31, 2019$62.7 
Gross increases - tax positions in prior periods(33.5)
Gross increases - current period tax positions2.4 
Settlements(0.8)
Lapse of statute of limitations(6.5)
Unrecognized tax positions as of December 31, 202024.3 
Gross increases (decreases) - tax positions in prior periods(5.7)
Gross increases - current period tax positions5.3 
Settlements(0.2)
Lapse of statute of limitations(4.0)
Unrecognized tax positions as of December 31, 2021$19.7