Annual report pursuant to Section 13 and 15(d)

Income Taxes (Tables)

v3.20.4
Income Taxes (Tables)
12 Months Ended
Dec. 31, 2020
Income Tax Disclosure [Abstract]  
Components of Income before Income Taxes
The components of income before income taxes were as follows:
 
    
Year Ended December 31,
 
    
2020
    
2019
    
2018
 
    
(in millions)
 
Domestic
   $ 152.5      $ 48.6      $ (2.0
Foreign
     363.9        402.8        466.2  
    
 
 
    
 
 
    
 
 
 
Total
   $ 516.4      $ 451.4      $ 464.2  
    
 
 
    
 
 
    
 
 
 
Components of Income Tax Expense
Income taxes were as follows:
 
    
Year Ended December 31,
 
    
2020
    
2019
    
2018
 
    
(in millions)
 
Current
                          
Foreign
   $ 122.0      $ 100.6      $ 150.7  
Federal
     13.7        22.1        24.9  
State
     6.1        2.3        0.1  
    
 
 
    
 
 
    
 
 
 
       141.8        125.0        175.7  
    
 
 
    
 
 
    
 
 
 
Deferred:
                          
Foreign
     (2.7      12.8        (13.7
Federal
     3.9        1.3        8.0  
State
     0.8        1.3        (2.4
    
 
 
    
 
 
    
 
 
 
       2.0        15.4        (8.1
    
 
 
    
 
 
    
 
 
 
     $ 143.8      $ 140.4      $ 167.6  
    
 
 
    
 
 
    
 
 
 
Deferred Tax Assets and Liabilities
The significant categories of temporary differences that gave rise to deferred tax assets and liabilities were as follows:
 
    
December 31,
 
    
2020
    
2019
 
    
(in millions)
 
Deferred income tax assets:
                 
Accruals not currently deductible
   $ 92.6      $ 80.2  
Tax loss and credit carryforwards of certain foreign subsidiaries
     128.3        103.6  
Tax loss and domestic tax credit carryforwards
     208.7        215.2  
Deferred compensation plan
     39.6        40.9  
Deferred interest expense
     67.4        35.5  
Accrued vacation
     5.9        5.5  
Inventory reserve
     5.5        4.7  
Operating lease liabilities
     36.6        21.5  
Other
     6.6        6.0  
    
 
 
    
 
 
 
Gross deferred income tax assets
     591.2        513.1  
Less: valuation allowance
     (390.8      (330.3
    
 
 
    
 
 
 
Total deferred income tax assets
   $ 200.4      $ 182.8  
    
 
 
    
 
 
 
Deferred income tax liabilities:
                 
Intangible assets
   $ 71.2      $ 71.1  
Depreciation/amortization
     2.7        3.7  
Unremitted foreign earnings
     14.9        22.7  
Operating lease assets
     32.9        18.0  
Other
     22.0        9.4  
    
 
 
    
 
 
 
Total deferred income tax liabilities
     143.7        124.9  
    
 
 
    
 
 
 
Total net deferred tax assets
   $ 56.7      $ 57.9  
    
 
 
    
 
 
 
Reconciliation between Provision for Income Taxes at Statutory Rate and Provision for Income Taxes at Effective Tax Rate
The applicable statutory income tax rate in the Cayman Islands was zero for Herbalife Nutrition Ltd. for the years being reported. For purposes of the reconciliation between the provision for income taxes at the statutory rate and the provision for income taxes at the effective tax rate, a notional 21% tax rate is applied for the years ended December 31, 2020, 2019, and 2018 as follows:
 
    
Year Ended December 31,
 
    
2020
    
2019
    
2018
 
    
(in millions)
 
Tax expense at United States statutory rate
   $ 108.4      $ 94.8      $ 97.4  
Increase (decrease) in tax resulting from:
                          
Differences between U.S. and foreign tax rates on foreign income, including withholding taxes
     (11.2      40.9        62.0  
U.S. tax (benefit) on foreign income, net of foreign tax credits
     (20.5      (10.1      (0.8
Increase in valuation allowances
     60.6        11.4        52.7  
State taxes, net of federal benefit
     5.2        3.1        (1.5
Unrecognized tax benefits
     3.9        (6.9      6.9  
Unremitted earnings
     (8.3      10.0        (9.2
Excess tax benefits on equity awards
     (3.1      (5.8      (53.1
Other
     8.8        3.0        13.2  
    
 
 
    
 
 
    
 
 
 
Total
   $ 143.8      $ 140.4      $ 167.6  
    
 
 
    
 
 
    
 
 
 
Changes Occurred in Amount of Unrecognized Tax Benefits The following changes occurred in the amount of unrecognized tax benefits during the years ended December 31, 2020, 2019, and 2018:
    
Year Ended December 31,
 
    
2020
    
2019
    
2018
 
    
(in millions)
 
Beginning balance of unrecognized tax benefits
   $ 48.9      $ 53.5      $ 50.6  
Additions for current year tax positions
     9.7        8.4        12.8  
Additions for prior year tax positions
     1.3        6.1        0.7  
Reductions for prior year tax positions
     (0.6      (15.4      (2.1
Reductions for audit settlements
     (4.7      (0.1      (0.5
Reductions for the expiration of statutes of limitations
     (2.1      (3.6      (4.8
Changes due to foreign currency translation adjustments
    
0.2
       —          (3.2
    
 
 
    
 
 
    
 
 
 
Ending balance of unrecognized tax benefits (excluding interest and penalties)
     52.7        48.9        53.5  
Interest and penalties associated with unrecognized tax benefits
     13.2        11.0        11.7  
    
 
 
    
 
 
    
 
 
 
Ending balance of unrecognized tax benefits (including interest and penalties)
   $ 65.9      $ 59.9      $ 65.2