Annual report pursuant to Section 13 and 15(d)

Income Taxes (Tables)

v3.22.0.1
Income Taxes (Tables)
12 Months Ended
Dec. 31, 2021
Income Tax Disclosure [Abstract]  
Components of Income before Income Taxes

The components of income before income taxes were as follows:

 

 

 

Year Ended December 31,

 

 

 

2021

 

 

2020

 

 

2019

 

 

 

(in millions)

 

Domestic

 

$

53.4

 

 

$

152.5

 

 

$

48.6

 

Foreign

 

 

507.4

 

 

 

363.9

 

 

 

402.8

 

Total

 

$

560.8

 

 

$

516.4

 

 

$

451.4

 

 

Components of Income Tax Expense

Income taxes were as follows:

 

 

 

Year Ended December 31,

 

 

 

2021

 

 

2020

 

 

2019

 

 

 

(in millions)

 

Current:

 

 

 

 

 

 

 

 

 

Foreign

 

$

121.8

 

 

$

122.0

 

 

$

100.6

 

Federal

 

 

20.1

 

 

 

13.7

 

 

 

22.1

 

State

 

 

5.0

 

 

 

6.1

 

 

 

2.3

 

 

 

 

146.9

 

 

 

141.8

 

 

 

125.0

 

Deferred:

 

 

 

 

 

 

 

 

 

Foreign

 

 

(17.0

)

 

 

(2.7

)

 

 

12.8

 

Federal

 

 

(16.0

)

 

 

3.9

 

 

 

1.3

 

State

 

 

(0.3

)

 

 

0.8

 

 

 

1.3

 

 

 

 

(33.3

)

 

 

2.0

 

 

 

15.4

 

 

 

$

113.6

 

 

$

143.8

 

 

$

140.4

 

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,

 

 

 

2021

 

 

2020

 

 

 

(in millions)

 

Deferred income tax assets:

 

 

 

 

 

 

Accruals not currently deductible

 

$

94.9

 

 

$

98.5

 

Tax loss and credit carryforwards of certain foreign subsidiaries

 

 

122.7

 

 

 

128.3

 

Domestic tax credit carryforwards

 

 

204.5

 

 

 

208.7

 

Deferred compensation plan

 

 

40.0

 

 

 

39.6

 

Deferred interest expense

 

 

115.5

 

 

 

67.4

 

Inventory reserve

 

 

9.3

 

 

 

5.5

 

Operating lease liabilities

 

 

39.1

 

 

 

36.6

 

Other

 

 

6.5

 

 

 

6.6

 

Gross deferred income tax assets

 

 

632.5

 

 

 

591.2

 

Less: valuation allowance

 

 

(411.9

)

 

 

(390.8

)

Total deferred income tax assets

 

$

220.6

 

 

$

200.4

 

Deferred income tax liabilities:

 

 

 

 

 

 

Intangible assets

 

$

72.4

 

 

$

71.2

 

Unremitted foreign earnings

 

 

20.9

 

 

 

14.9

 

Operating lease assets

 

 

34.3

 

 

 

32.9

 

Other

 

 

5.6

 

 

 

24.7

 

Total deferred income tax liabilities

 

 

133.2

 

 

 

143.7

 

Total net deferred tax assets

 

$

87.4

 

 

$

56.7

 

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, 2021, 2020, and 2019 as follows:

 

 

 

Year Ended December 31,

 

 

 

2021

 

 

2020

 

 

2019

 

 

 

(in millions)

 

Tax expense at United States statutory rate

 

$

117.8

 

 

$

108.4

 

 

$

94.8

 

Increase (decrease) in tax resulting from:

 

 

 

 

 

 

 

 

 

Differences between U.S. and foreign tax rates on foreign income, including withholding taxes

 

 

(15.1

)

 

 

(19.5

)

 

 

50.9

 

U.S. tax (benefit) on foreign income, net of foreign tax credits

 

 

(21.9

)

 

 

(20.5

)

 

 

(10.1

)

Increase in valuation allowances

 

 

21.1

 

 

 

60.6

 

 

 

11.4

 

State taxes, net of federal benefit

 

 

3.0

 

 

 

5.2

 

 

 

3.1

 

Unrecognized tax benefits

 

 

9.3

 

 

 

3.9

 

 

 

(6.9

)

Excess tax benefits on equity awards

 

 

(3.5

)

 

 

(3.1

)

 

 

(5.8

)

Other

 

 

2.9

 

 

 

8.8

 

 

 

3.0

 

Total

 

$

113.6

 

 

$

143.8

 

 

$

140.4

 

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, 2021, 2020, and 2019:

 

 

 

Year Ended December 31,

 

 

 

2021

 

 

2020

 

 

2019

 

 

 

(in millions)

 

Beginning balance of unrecognized tax benefits

 

$

52.7

 

 

$

48.9

 

 

$

53.5

 

Additions for current year tax positions

 

 

9.2

 

 

 

9.7

 

 

 

8.4

 

Additions for prior year tax positions

 

 

5.1

 

 

 

1.3

 

 

 

6.1

 

Reductions for prior year tax positions

 

 

(2.3

)

 

 

(0.6

)

 

 

(15.4

)

Reductions for audit settlements

 

 

(5.2

)

 

 

(4.7

)

 

 

(0.1

)

Reductions for the expiration of statutes of limitations

 

 

(4.1

)

 

 

(2.1

)

 

 

(3.6

)

Changes due to foreign currency translation adjustments

 

 

(1.3

)

 

 

0.2

 

 

 

 

Ending balance of unrecognized tax benefits (excluding interest and penalties)

 

 

54.1

 

 

 

52.7

 

 

 

48.9

 

Interest and penalties associated with unrecognized tax benefits

 

 

18.4

 

 

 

13.2

 

 

 

11.0

 

Ending balance of unrecognized tax benefits (including interest and penalties)

 

$

72.5

 

 

$

65.9

 

 

$

59.9