
	Years Ended December 31,
	2020		2019		2018
Current:
Federal	$	455.3	$	126.7	$	225.8
State	172.8		40.2		61.2
Foreign	81.0		83.9		64.3
	$	709.1	$	250.8	$	351.3
Deferred:
Federal	$	(6.7)	$	38.2	$	(2.5)
State	(28.1)		2.5		30.0
Foreign	(12.2)		(11.5)		5.6
	(47.0)		29.2		33.1
	$	662.1	$	280.0	$	384.4


	Years Ended December 31,
	2020		2019		2018
Statutory U.S. rate	21.0	%	21.0	%	21.0	%
State and local income taxes, net of U.S. Federal income tax effect	5.3		3.2		3.4
Foreign earnings taxed at lower rates than the statutory U.S. rate	(0.4)		(0.1)		(0.3)
Restructuring and acquisition items	—		0.7		1.9
Re-measurement of deferred taxes	—		—		2.4
Repatriation tax	—		—		1.2
Impairment of assets	4.0		—		—
GILTI	(0.1)		1.1		1.0
Other	—		(0.6)		(0.3)
Effective rate	29.8	%	25.3	%	30.3	%

On December 22, 2017, the U.S. Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin No. 118 (SAB 118), which allowed companies one year to finalize the tax accounting for the 2017 enacted Tax Cuts and Jobs Act (TCJA) in its financial statements. Under SAB 118, in 2018 the Company recorded a total tax expense of $45.0, $14.8 related to the TCJA repatriation tax and $30.1 for the remeasurement of deferred taxes.

The TCJA includes provisions relating to global low-taxed intangible income (GILTI). The Company finalized its decision on accounting policy during the fourth quarter of 2018. The Company will account for GILTI as a periodic charge in the period it arises.


	December 31, 2020		December 31, 2019
Deferred tax assets:
Accounts receivable	$	20.0	$	16.9
Employee compensation and benefits	115.6		105.1
Operating lease liability	187.6		191.4


Acquisition and restructuring reserves	22.6		9.9
Tax loss carryforwards	206.8		207.1
Other	126.8		62.9
	679.4		593.3
Less: valuation allowance	(167.6)		(145.4)
Deferred tax assets, net of valuation allowance	$	511.8	$	447.9

Deferred tax liabilities:

Right of use asset	$	(179.5)	$	(177.3)
Intangible assets	(912.5)		(910.5)
Property, plant and equipment	(203.9)		(194.6)

Other	(46.3)		(57.4)
Total gross deferred tax liabilities	(1,342.2)		(1,339.8)
Net deferred tax liabilities	$	(830.4)	$	(891.9)


	December 31, 2020		December 31, 2019		December 31, 2018
Beginning balance	$	145.4	$	156.9	$	153.5
Additions charged to expense	5.8		—		3.4
Reductions and other adjustments	16.4		(11.5)		—
Ending balance	$	167.6	$	145.4	$	156.9

The Company has U.S. federal tax loss carryforwards of approximately $185.2, which expire periodically through 2036, as well as post 2017 carryovers of $0.1 that are limited to 80% of taxable income and have an indefinite carryover. The utilization of tax loss carryforwards is limited due to change of ownership rules; however, at this time, the Company expects to fully utilize substantially all U.S. federal tax loss carryforwards with the exception of approximately $3.9 for which a full valuation

allowance has been provided. The Company has U.S. state tax loss carryforwards of $540.3, which also expire periodically through 2038, and on which a valuation allowance of $340.0 has been provided. In addition to federal and state tax loss carryforwards, the Company has other federal and state attribute carry forwards of $288.6. These attribute carryforwards have indefinite lives and a valuation allowance of $229.6. The Company has foreign tax loss carryforwards of $59.1 which have an indefinite life and on which a valuation allowance of $25.9 has been provided, as well as foreign tax loss carryforwards of $502.9 which expire periodically through 2034 that have a full valuation allowance. In addition to the foreign net operating losses, the Company has a foreign capital loss carryforward of $6.9. The foreign capital loss carryforward has an indefinite life and has a full valuation allowance.

The valuation allowance increased from $145.4 in 2019 to $167.6 in 2020 primarily due to capital loss disallowances during the year that are not expected to be realized for tax purposes and for Swiss net operating losses not expected to be realized as a result of the finalization of the Envigo acquisition.

Unrecognized income tax benefits were $48.8 and $31.7 at December 31, 2020, and 2019, respectively. It is anticipated that the amount of the unrecognized income tax benefits will change within the next 12 months; however, these changes are not expected to have a significant impact on the results of operations, cash flows or the financial position of the Company.

The Company recognizes interest and penalties related to unrecognized income tax benefits in income tax expense. Accrued interest and penalties related to uncertain tax positions totaled $8.3 and $5.5 as of December 31, 2020, and 2019, respectively. During the years ended December 31, 2020, 2019 and 2018, the Company recognized $4.4, $2.0 and $1.8, respectively, in interest and penalties expense, which was offset by a benefit from reversing previous accruals for interest and penalties of $3.0, $5.8 and $0.5, respectively. As of December 31, 2020 and 2019 interest expense of $1.4, and $0.8, respectively, was added to accrued interest from the opening balance sheet of an acquisition.

The following table shows a reconciliation of the unrecognized income tax benefits, excluding interest and penalties, from uncertain tax positions for the years ended December 31, 2020, 2019 and 2018:


	2020		2019		2018
Balance as of January 1	$	31.7	$	18.0	$	19.5
Increase in reserve for tax positions taken in the current year	17.3		10.3		3.1
Increase in reserve from an acquisition's opening balance sheet	8.2		8.4		—
Decrease in reserve as a result of payments	(0.3)		(0.8)		(4.6)

Decrease in reserve as a result of lapses in the statute of limitations	(8.1)		(4.2)		—
Balance as of December 31	$	48.8	$	31.7	$	18.0

Also included in the balance of unrecognized tax benefits as of December 31, 2020, 2019 and 2018, are $2.1, $0.0 and $0.0, respectively, of tax benefits that, if recognized, would result in adjustments to other tax accounts, primarily deferred taxes. As of December 31, 2020, 2019 and 2018 there are $46.7, $31.7 and $18.0, respectively, of tax benefits that, if recognized would favorably affect the effective income tax rate.

The Company has substantially concluded all U.S. federal income tax matters for years through 2016. Substantially all material state and local and foreign income tax matters have been concluded through 2014 and 2010, respectively.

The Company is appealing a Canada Revenue Agency assessment related to the 2014 income tax return. The Company believes adequate reserves have been established for the assessment. The Company has various state and foreign income tax examinations ongoing throughout the year. The Company believes adequate provisions have been recorded related to all open tax years.

As a result of the TCJA, the Company was effectively taxed on all of its previously unremitted foreign earnings. The TCJA also enacts a territorial tax system that allows, for the most part, tax-free repatriation of foreign earnings. The Company still considers the earnings of its foreign subsidiaries to be permanently reinvested, but if repatriation were to occur the Company would be required to accrue U.S. taxes, if any, and remit applicable withholding taxes as appropriate. The Company has unremitted earnings and profits of $702.4 and $601.4 that are permanently reinvested in its foreign subsidiaries as of December 31, 2020, and 2019, respectively. A determination of the amount of the unrecognized deferred tax liability related to these undistributed earnings is not practicable due to the complexity and variety of assumptions necessary based on the manner in which the undistributed earnings would be repatriated.