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, 2016

Schedule of Earnings Before Income Taxes by Jurisdiction

The sources of Earnings before income taxes were as follows:



(in millions)	2016		2015		2014
United States	$	308.0	$	261.0	$	242.9
Foreign	81.7		54.2		45.0
Earnings before income taxes	$	389.7	$	315.2	$	287.9

Schedule of Components of Income Tax Provision (Benefit)

The Income tax provision consisted of the following:



(in millions)	2016			2015			2014
Current tax expense:
U.S. Federal	$	25.0		$	24.7		$	18.2
State and local	4.6			2.5			2.6
Foreign	23.2			17.0			23.9
Total current	52.8			44.2			44.7

Deferred tax expense:
U.S. Federal	56.1			40.7			42.4
State and local	6.6			3.2			5.7
Foreign	(0.2		)	(0.3		)	0.2
Total deferred	62.5			43.6			48.3

Income tax provision	$	115.3		$	87.8		$	93.0

Schedule of Deferred Tax Assets and Liabilities

Temporary differences and carryforwards giving rise to deferred tax assets and liabilities at December 31, 2016 and 2015, are summarized in the table below:



(in millions)	2016			2015
Deferred tax assets:
Pension	$	86.2		$	110.6
Loss carryforwards	71.7			61.5
Tax credit carryforwards	47.3			57.0
Product warranties	41.9			39.4
Sales incentives and discounts	32.0			26.8
Deferred revenue	23.2			23.1
Equity compensation	23.2			26.4
Compensation and benefits	22.2			24.0
Deferred compensation	21.7			29.3
Postretirement and postemployment benefits	20.2			21.3
Depreciation and amortization	—			35.0
Other	82.9			78.0
Gross deferred tax assets	472.5			532.4
Valuation allowance	(78.1		)	(70.6		)
Deferred tax assets	$	394.4		$	461.8

Deferred tax liabilities:
Depreciation and amortization	$	(45.5	)	$	—
State and Local income taxes	(34.9		)	(38.6		)
Other	(8.7		)	(15.3		)
Deferred tax liabilities	$	(89.1	)	$	(53.9	)

Total net deferred tax assets	$	305.3		$	407.9

Reconciliation of Unrecognized Tax Benefits

The following is a reconciliation of the total amounts of unrecognized tax benefits excluding interest and penalties for the 2016 and 2015 annual reporting periods:



(in millions)	2016			2015			2014
Balance at January 1	$	4.7		$	4.8		$	6.0
Gross increases - tax positions prior periods	0.3			0.4			0.5
Gross decreases - tax positions prior periods	(0.4		)	(0.1		)	(0.4		)
Gross increases - current period tax positions	0.5			0.5			0.7
Decreases - settlements with taxing authorities	—			(0.6		)	(0.7		)
Reductions - lapse of statute of limitations	(1.7		)	—			(1.2		)
Other	—			(0.3		)	(0.1		)
Balance at December 31	$	3.4		$	4.7		$	4.8

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

The difference between the actual income tax provision (benefit) 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)	2016			2015			2014
Income tax provision at 35 percent	$	136.4		$	110.3		$	100.7
State and local income taxes, net of Federal income tax effect	8.3			7.3			6.4
Deferred tax asset valuation allowance	3.4			5.3			(7.6		)
Income attributable to domestic production activities	(6.3		)	(9.2		)	(8.8		)
Impairment of equity method investment	—			—			4.0
Change in estimates related to prior years and prior years amended tax return filings	(0.2		)	(4.2		)	(1.4		)
Federal and state tax credits	(10.2		)	(8.9		)	(7.6		)
Taxes related to foreign income, net of credits	(20.6		)	(6.7		)	5.2
Taxes related to unremitted earnings	(1.1		)	(11.4		)	(5.5		)
Tax reserve reassessment	(1.4		)	0.6			(0.3		)
Deferred tax reassessment	1.5			3.0			3.5
Tax law changes	5.4			—			—
Other	0.1			1.7			4.4
Actual income tax provision	$	115.3		$	87.8		$	93.0

Effective tax rate	29.6		%	27.9		%	32.3		%

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)	2016		2015		2014
Continuing operations	$	115.3	$	87.8	$	93.0
Discontinued operations	1.0		0.3		11.0
Total tax provision	$	116.3	$	88.1	$	104.0