Brunswick Corporation Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Income Taxes (Tables)

Income Taxes (Tables)

12 Months Ended

Dec. 31, 2019

Schedule of Earnings Before Income Taxes by Jurisdiction

The sources of Earnings before income taxes were as follows:



(in millions)	2019		2018		2017
United States	$	10.1	$	237.3	$	161.3
Foreign	100.6		73.4		51.6
Earnings before income taxes	$	110.7	$	310.7	$	212.9

Schedule of Components of Income Tax Provision (Benefit)

The Income tax provision consisted of the following:



(in millions)	2019			2018			2017
Current tax expense (benefit):
U.S. Federal	$	94.5		$	(2.3	)	$	(2.6	)
State and local	6.3			5.7			4.7
Foreign	29.3			22.9			17.3
Total current	130.1			26.3			19.4

Deferred tax expense (benefit):
U.S. Federal	(19.7		)	30.5			95.4
State and local	(29.5		)	0.9			(2.0		)
Foreign	(0.6		)	(0.4		)	(1.2		)
Total deferred	(49.8		)	31.0			92.2

Income tax provision	$	80.3		$	57.3		$	111.6

Schedule of Deferred Tax Assets and Liabilities

Temporary differences and carryforwards giving rise to deferred tax assets and liabilities at December 31, 2019 and 2018 are summarized in the table below:



(in millions)	2019			2018
Deferred tax assets:
Loss carryforwards	$	81.9		$	68.5
Tax credit carryforwards	71.8			53.2
Product warranties	28.4			33.6
Sales incentives and discounts	25.9			29.2
Operating lease liabilities	17.1			—
Deferred revenue	16.1			22.2
Equity compensation	12.0			14.7
Postretirement and postemployment benefits	11.5			12.0
Deferred compensation	10.9			13.6
Compensation and benefits	10.5			17.1
Long term contracts	3.6			11.7
Other	47.8			41.6
Gross deferred tax assets	337.5			317.4
Valuation allowance	(93.3		)	(74.7		)
Deferred tax assets	244.2			242.7

Deferred tax liabilities:
Depreciation and amortization	(85.5		)	(123.1		)
State and local income taxes	(24.3		)	(18.2		)
Operating lease assets	(15.7		)	—
Other	(5.3		)	(6.9		)
Deferred tax liabilities	(130.8		)	(148.2		)

Total net deferred tax assets	$	113.4		$	94.5

Reconciliation of Unrecognized Tax Benefits

The following is a reconciliation of the total amounts of unrecognized tax benefits excluding interest and penalties for the 2019, 2018 and 2017 annual reporting periods:



(in millions)	2019			2018			2017
Balance at January 1	$	2.3		$	2.1		$	3.4
Gross increases - tax positions prior periods	2.0			0.6			0.1
Gross decreases - tax positions prior periods	(0.8		)	(0.7		)	(0.2		)
Gross increases - current period tax positions	0.4			0.4			0.4
Decreases - settlements with taxing authorities	—			(0.1		)	(0.5		)
Reductions - lapse of statute of limitations	(0.2		)	—			(1.1		)
Balance at December 31	$	3.7		$	2.3		$	2.1

Reconciliation of Income Taxes at the Statutory Federal Income Tax Rate to Income Tax Provision (Benefit)

The difference between the actual income tax provision and the tax provision computed by applying the statutory Federal income tax rate to Earnings before income taxes is attributable to the following:



(in millions)	2019			2018			2017
Income tax provision at 21 percent, 21 percent and 35 percent	$	23.2		$	65.2		$	74.5
State and local income taxes, net of Federal income tax effect	(3.6		)	8.8			3.9
Deferred tax asset valuation allowance	(3.5		)	4.0			5.9
Equity compensation	(2.9		)	(3.1		)	(7.3		)
Change in estimates related to prior years and prior years amended tax return filings	(2.9		)	1.6			1.4
Federal and state tax credits	(11.6		)	(11.6		)	(9.5		)
Taxes related to foreign income, net of credits	(5.2		)	(6.5		)	(21.5		)
Deferred tax reassessment	1.9			3.3			2.1
Tax law changes	—			(5.2		)	66.7
FDII deduction	(5.5		)	(2.6		)	—
Disproportionate tax effect released from Other comprehensive income	91.4			—			—
Other	(1.0		)	3.4			(4.6		)
Actual income tax provision	$	80.3		$	57.3		$	111.6

Effective tax rate	72.6		%	18.5		%	52.4		%

Income Tax Provision (Benefit) Allocated to Continuing and Discontinued Operations

Income tax provision allocated to continuing operations and discontinued operations for the years ended December 31 was as follows:



(in millions)	2019			2018		2017
Continuing operations	$	80.3		$	57.3	$	111.6
Discontinued operations	(40.1		)	2.6		23.2
Total income tax provision	$	40.2		$	59.9	$	134.8