INCOME TAXES

12 Months Ended

Dec. 31, 2023

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

The sources of income before taxes, classified between domestic and foreign entities, are as follows:

	2023		2022		2021
Domestic	$	504.0	$	1,097.9	$	2,455.0
Foreign	64.9		139.5		432.6
Total pre-tax income	$	568.9	$	1,237.4	$	2,887.6

The components of income tax expense attributable to continuing operations are as follows:

	Years Ended December 31,
	2023		2022		2021
Current tax expense:
Federal	$	183.1	$	150.8	$	500.0
State	38.9		25.4		156.5
Foreign	44.6		34.0		71.9
	$	266.6	$	210.2	$	728.4
Deferred tax expense/(benefit):
Federal	$	(63.1)	$	15.8	$	(36.7)
State	(31.6)		0.6		(9.0)
Foreign	16.6		7.3		7.3
	(78.1)		23.7		(38.4)
Total income tax expense	$	188.5	$	233.9	$	690.0

The effective tax rates on earnings before income taxes are reconciled to statutory U.S. income tax rates as follows:

	Years Ended December 31,
	2023		2022		2021
Statutory U.S. rate	21.0	%	21.0	%	21.0	%
State and local income taxes, net of U.S. federal income tax effect	4.0		4.2		3.9
Foreign earnings taxed at lower rates than the statutory U.S. rate	(2.2)		(0.7)		(0.7)
Tax credits	(3.8)		(5.4)		(0.1)
Impairment of assets	10.8		3.7		—
Limitation of officer compensation	1.7		1.2		0.3
Worthless stock loss	(2.6)		—		—
Deferred tax adjustments	2.7		(2.4)		(0.1)
Other	1.5		(2.7)		(0.4)
Effective rate	33.1	%	18.9	%	23.9	%

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are as follows:

	December 31, 2023		December 31, 2022
Deferred tax assets:
Accounts receivable	$	27.9	$	19.4
Employee compensation and benefits	81.7		96.5
Operating lease liability	191.4		182.6
Acquisition and restructuring reserves	9.2		7.0
Capitalized R&D costs	142.9		44.1
Tax loss carryforwards	246.9		241.9
Other	95.1		95.1
Total gross deferred tax assets	795.1		686.6
Less: valuation allowance	(150.2)		(151.3)
Deferred tax assets, net of valuation allowance	$	644.9	$	535.3
Deferred tax liabilities:
Right of use asset	$	(175.3)	$	(170.2)
Intangible assets	(614.8)		(605.1)
Property, plant and equipment	(163.5)		(166.5)
Other	(66.2)		(62.7)
Total gross deferred tax liabilities	$	(1,019.8)	$	(1,004.5)
Net deferred tax liabilities	$	(374.9)	$	(469.2)

The table below provides a rollforward of the valuation allowance:

	December 31, 2023		December 31, 2022		December 31, 2021
Beginning balance	$	151.3	$	149.2	$	167.6
Movements charged to expense	(8.9)		10.2		6.8
Reductions and other adjustments	7.8		(8.1)		(25.2)
Ending balance	$	150.2	$	151.3	$	149.2

The Company has U.S. federal tax loss carryforwards of approximately $127.0, which expire periodically through 2037, as well as post-2017 carryforwards of $179.1 that are limited to 80% of taxable income and have an indefinite carryforward period. 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 $8.4 for which a full valuation allowance has been provided. The Company has U.S. state tax loss carryforwards of $442.8, a portion of which expire annually, and on which a valuation allowance of $403.0 has been provided. In addition to federal and state tax loss carryforwards, the Company has other federal and state attribute carryforwards of $114.4. A portion of these attribute carryforwards will expire through 2024 and have a valuation allowance of $69.2 while the remainder have indefinite carryforward periods. The Company has foreign tax loss carryforwards of $117.2, the majority of which have indefinite carryforward periods, but a valuation allowance of $7.9 has been provided for jurisdictions where the future tax benefits of the attributes are not more likely than not to be realized. Additionally, the Company has foreign tax loss carryforwards of $444.3 which expire periodically through 2038 and foreign tax loss carryforwards of $14.5 which expire periodically through 2043 that have full valuation allowances. In addition to the foreign net operating losses, the Company has a foreign capital loss carryforward of $27.4 with an indefinite carryforward period and a full valuation allowance.

The valuation allowance decreased from $151.3 in 2022 to $150.2 in 2023 primarily due to releases of valuation allowances on certain U.S. capital losses and state net operating losses which were offset by the establishment of valuation allowances on acquired net operating losses recorded through purchase accounting.

Unrecognized income tax benefits were $29.9 and $37.5 at December 31, 2023, and 2022, respectively. It is anticipated that the amount of the unrecognized income tax benefits will decrease by $0.2 within the next 12 months due to statute of limitation lapses; 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 $0.1 and $2.3 as of December 31, 2023, and 2022, respectively. During the years ended December 31, 2023, 2022 and 2021, the Company recognized $0.0, $0.8 and $0.0, respectively, in interest and penalties expense, which was offset by a benefit from reversing previous accruals for interest and penalties of $1.8, $0.0 and $1.1, respectively.

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, 2023, 2022 and 2021:

	2023		2022		2021
Balance as of January 1	$	37.5	$	39.6	$	18.6
Increase in reserve for tax positions taken in the current year	1.8		1.8		—
Increase in reserve for tax positions taken in a prior period	10.4		10.6		31.1
Decrease in reserve for tax positions taken in a prior period	(4.0)		—		(8.1)
Decrease in reserve as a result of settlements	(7.2)		(10.4)		—
Decrease in reserve as a result of lapses in the statute of limitations	(8.6)		(4.1)		(2.0)
Balance as of December 31	$	29.9	$	37.5	$	39.6

Also included in the balance of unrecognized tax benefits as of December 31, 2023, 2022 and 2021, are $0.0, $0.0 and $0.9, respectively, of tax benefits that, if recognized, would result in adjustments to other tax accounts, primarily deferred taxes. As of December 31, 2023, 2022 and 2021 there are $29.9, $37.5 and $38.7, respectively, of tax benefits that, if recognized, would favorably impact the effective income tax rate.

The Company has substantially concluded all U.S. federal income tax matters for years through 2018 and is currently under IRS examination for tax years 2019 and 2020. Substantially all material state and local and foreign income tax matters have been concluded through 2017 and 2018, respectively. 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 Tax Cuts and Jobs Act (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 $607.6 and $927.4 that are permanently reinvested in its foreign subsidiaries as of December 31, 2023, and 2022, 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.