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, 2017

Schedule of Earnings Before Income Taxes by Jurisdiction

The sources of Earnings before income taxes were as follows:



(in millions)	2017		2016		2015
United States	$	265.5	$	304.9	$	246.9
Foreign	77.8		84.1		67.9
Earnings before income taxes	$	343.3	$	389.0	$	314.8

Schedule of Components of Income Tax Provision (Benefit)

The Income tax provision consisted of the following:



(in millions)	2017			2016			2015
Current tax expense:
U.S. Federal	$	11.0		$	25.6		$	21.3
State and local	6.0			4.7			2.2
Foreign	20.6			23.4			17.1
Total current	37.6			53.7			40.6

Deferred tax expense:
U.S. Federal	118.5			56.2			40.4
State and local	1.8			6.7			3.2
Foreign	(1.9		)	(0.2		)	(0.3		)
Total deferred	118.4			62.7			43.3

Income tax provision	$	156.0		$	116.4		$	83.9

Schedule of Deferred Tax Assets and Liabilities

Temporary differences and carryforwards giving rise to deferred tax assets and liabilities at December 31, 2017 and 2016 are summarized in the table below:



(in millions)	2017			2016
Deferred tax assets:
Pension	$	25.0		$	86.2
Loss carryforwards	75.9			71.7
Tax credit carryforwards	43.8			47.3
Product warranties	31.3			41.9
Sales incentives and discounts	25.0			32.0
Deferred revenue	19.2			23.2
Equity compensation	15.1			23.2
Compensation and benefits	4.0			22.2
Deferred compensation	15.4			21.7
Postretirement and postemployment benefits	12.6			20.2
Sale of business	14.4			10.2
Other	48.1			72.7
Gross deferred tax assets	329.8			472.5
Valuation allowance	(81.4		)	(78.1		)
Deferred tax assets	$	248.4		$	394.4

Deferred tax liabilities:
Depreciation and amortization	$	(57.8	)	$	(45.5	)
State and local income taxes	(21.1		)	(34.9		)
Other	(8.7		)	(8.7		)
Deferred tax liabilities	$	(87.6	)	$	(89.1	)

Total net deferred tax assets	$	160.8		$	305.3

Reconciliation of Unrecognized Tax Benefits

The following is a reconciliation of the total amounts of unrecognized tax benefits excluding interest and penalties for the 2017, 2016 and 2015 annual reporting periods:



(in millions)	2017			2016			2015
Balance at January 1	$	3.4		$	4.7		$	4.8
Gross increases - tax positions prior periods	0.1			0.3			0.4
Gross decreases - tax positions prior periods	(0.2		)	(0.4		)	(0.1		)
Gross increases - current period tax positions	0.4			0.5			0.5
Decreases - settlements with taxing authorities	(0.5		)	—			(0.6		)
Reductions - lapse of statute of limitations	(1.1		)	(1.7		)	—
Other	—			0.0			(0.3		)
Balance at December 31	$	2.1		$	3.4		$	4.7

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)	2017			2016			2015
Income tax provision at 35 percent	$	120.2		$	136.2		$	110.2
State and local income taxes, net of Federal income tax effect	7.4			8.3			7.1
Deferred tax asset valuation allowance	4.7			2.9			0.7
Income attributable to domestic production activities	(8.2		)	(6.1		)	(8.8		)
Equity compensation	(7.7		)	—			—
Change in estimates related to prior years and prior years amended tax return filings	1.4			(0.2		)	(4.2		)
Federal and state tax credits	(10.3		)	(9.1		)	(8.0		)
Taxes related to foreign income, net of credits	(25.4		)	(20.1		)	(6.8		)
Taxes related to unremitted earnings	—			(1.1		)	(11.4		)
Tax reserve reassessment	(1.1		)	(1.4		)	0.5
Deferred tax reassessment	2.1			1.6			3.0
Tax law changes	71.8			5.4			—
Other	1.1			—			1.6
Actual income tax provision	$	156.0		$	116.4		$	83.9

Effective tax rate	45.4		%	29.9		%	26.7		%

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)	2017			2016			2015
Continuing operations	$	156.0		$	116.4		$	83.9
Discontinued operations	(21.2		)	(0.0		)	4.2
Total tax provision	$	134.8		$	116.4		$	88.1