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Income Taxes | 12 Months Ended
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Dec. 31, 2014
Income Taxes [Abstract] |
Income Tax Disclosure [Text Block] |
7. | INCOME TAXES
Income before income taxes for U.S. and non-U.S. operations was as follows:
| 2014 |  | 2013 |  | 2012
| (in millions)
U.S. income (loss) | $ | 12.0 |  |  | $ | (23.8 | ) |  | $ | (6.0 | )
Non - U.S. income | 164.7 |  |  | 110.1 |  |  | 37.5 |
Total income before income taxes | $ | 176.7 |  |  | $ | 86.3 |  |  | $ | 31.5 |
The following is a summary of the components of our provisions for income taxes:
| 2014 |  | 2013 |  | 2012
| (in millions)
Current |  |  |  |  |
Federal | $ | 0.6 |  |  | $ | (1.3 | ) |  | $ | (3.3 | )
Other state and local | 0.1 |  |  | 0.1 |  |  | 1.1 |
Foreign | 44.2 |  |  | 12.1 |  |  | 10.2 |
Total current | $ | 44.9 |  |  | $ | 10.9 |  |  | $ | 8.0 |
Deferred |  |  |  |  |
Federal | $ | (11.6 | ) |  | $ | (9.3 | ) |  | $ | (347.1 | )
Foreign | 0.4 |  |  | (9.8 | ) |  | 3.9 |
Total deferred | (11.2 | ) |  | (19.1 | ) |  | (343.2 | )
Total income tax expense (benefit) | $ | 33.7 |  |  | $ | (8.2 | ) |  | $ | (335.2 | )
The following is a reconciliation of our provision for income taxes to the expected amounts using statutory rates:
| 2014 |  | 2013 |  | 2012
Federal statutory | 35.0 | % |  | 35.0 | % |  | 35.0 | %
Foreign income taxes | (25.1 | ) |  | (48.5 | ) |  | (85.0 | )
Change in enacted tax rate | — |  |  | (9.9 | ) |  | — |
State and local | 0.1 |  |  | 0.2 |  |  | 3.5 |
Tax Credits | (11.4 | ) |  | — |  |  | — |
Valuation allowance | 4.5 |  |  | 12.4 |  |  | (985.0 | )
U.S. tax on unremitted foreign earnings | 1.9 |  |  | (0.2 | ) |  | (29.5 | )
Uncertain tax positions | 13.0 |  |  | (0.5 | ) |  | (5.2 | )
Other | 1.1 |  |  | 2.0 |  |  | 2.0 |
Effective income tax rate | 19.1 | % |  | (9.5 | )% |  | (1,064.2 | )%
Our income tax expense and effective tax rate for 2014 and 2013 primarily reflect favorable foreign tax rates, along with our inability to realize a tax benefit for current foreign losses. In 2014, we recorded tax expense of $23.1 million for changes to prior year uncertain tax positions related to transfer pricing and expense of $3.4 million for a change in estimate for U.S. tax on unremitted foreign earnings. We also recorded a net tax benefit of $20.1 million in 2014 related to our ability to utilize tax credits in future periods resulting in the recognition of a deferred tax asset. In 2013, new Mexican tax reform was enacted that, among other things, increased the tax rate related to Maquiladora Companies from 17.5% to 30%. We recorded a tax benefit of $8.5 million as a result of revaluing our deferred tax assets at the newly enacted rate. In 2013, we recorded tax expense of $4.8 million relating to changes in estimates in the U.S. and certain foreign jurisdictions. Our income tax benefit and effective tax rate for 2013 also reflects the impact of recording a tax benefit of $1.5 million relating to the release of a prior year unrecognized tax benefit due to the expiration of the applicable statute of limitations and a tax benefit of $3.3 million relating to an election we made in 2013 regarding the treatment of foreign exchange gains and losses in a foreign jurisdiction. During 2013, we also settled various income tax audits resulting in a reduction of our liability for unrecognized income tax benefits of $8.4 million and a cash payment of $4.7 million. In 2012, our business returned to a position of cumulative profitability on a pre-tax basis, considering our operating results for the three years ended December 31, 2012. We concluded that this record of cumulative profitability in recent years, in addition to the restructuring of our U.S. operations and our long range forecast showing continued profitability, provided sufficient positive evidence that our net U.S. federal tax benefits more likely than not would be realized. Accordingly, in 2012, we released the valuation allowance against our net federal deferred assets for entities in the U.S., resulting in a $337.5 million benefit in our 2012 provision for income taxes. Our income tax benefit and effective tax rate in 2012 reflect the impact of this valuation allowance reversal. Our income tax expense and effective tax rate for 2012 also reflect a net tax expense of $1.3 million related to the amendment of state income tax returns as a result of the settlement of federal income tax audits for the tax years 2004 through 2007. As of December 31, 2014 and 2013, we have refundable income taxes of $5.6 million and $4.9 million, respectively, classified as prepaid expenses and other on our Consolidated Balance Sheet. We also have income taxes payable of $3.0 million and $2.6 million classified as other accrued expenses on our Consolidated Balance Sheet as of December 31, 2014 and 2013, respectively. As of December 31, 2014 and 2013, we have accrued value added tax payable of $36.1 million and $38.3 million, respectively, classified as other accrued expenses on our Consolidated Balance Sheet. The following is a summary of the significant components of our deferred tax assets and liabilities:
| December 31,
| 2014 |  | 2013
| (in millions)
Current deferred tax assets |  |  |
Employee benefits | $ | 26.0 |  |  | $ | 14.5 |
Inventory | 7.5 |  |  | 8.0 |
Prepaid taxes and other | 16.9 |  |  | 24.6 |
Valuation allowance | (10.2 | ) |  | (10.7 | )
Total current deferred tax assets | $ | 40.2 |  |  | $ | 36.4 |
Current deferred tax liabilities |  |  |
Unrealized foreign exchange gain and other | (0.1 | ) |  | (0.1 | )
Current deferred tax asset, net | $ | 40.1 |  |  | $ | 36.3 |
Current deferred tax assets and liabilities recognized in our Consolidated Balance Sheets are as follows:
| December 31,
| 2014 |  | 2013
| (in millions)
U.S. federal and state deferred tax asset, net | $ | 27.0 |  |  | $ | 17.1 |
Other foreign deferred tax asset, net | 13.1 |  |  | 19.2 |
Current deferred tax asset, net | $ | 40.1 |  |  | $ | 36.3 |
The following is a summary of the significant components of our noncurrent deferred tax assets and liabilities:
| December 31,
| 2014 |  | 2013
| (in millions)
Noncurrent deferred tax assets |  |  |
Employee benefits | $ | 193.9 |  |  | $ | 161.5 |
Net operating loss (NOL) carryforwards | 104.7 |  |  | 176.9 |
Tax credit carryforwards | 69.8 |  |  | 82.9 |
Capital allowance carryforwards | 14.4 |  |  | 16.0 |
Fixed assets | 6.6 |  |  | 10.3 |
Deferred revenue | 12.6 |  |  | 15.7 |
Capitalized expenditures | 111.2 |  |  | 113.6 |
Other | 2.3 |  |  | 2.9 |
Valuation allowances | (146.7 | ) |  | (153.0 | )
Noncurrent deferred tax assets | 368.8 |  |  | 426.8 |
Noncurrent deferred tax liabilities |  |  |
U.S. tax on unremitted foreign earnings | — |  |  | (85.0 | )
Fixed assets and other | (9.1 | ) |  | (9.8 | )
Noncurrent deferred tax asset, net | $ | 359.7 |  |  | $ | 332.0 |
Noncurrent deferred tax assets and liabilities recognized in our Consolidated Balance Sheets are as follows:
| December 31,
| 2014 |  | 2013
| (in millions)
U.S. federal and state deferred tax asset, net | $ | 362.2 |  |  | $ | 337.2 |
Other foreign deferred tax asset (liability), net | (2.5 | ) |  | (5.2 | )
Noncurrent deferred tax asset, net | $ | 359.7 |  |  | $ | 332.0 |
DEFERRED INCOME TAX ASSETS AND LIABILITIES AND VALUATION ALLOWANCES The deferred income tax assets and liabilities previously summarized reflect the impact of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the basis of such assets and liabilities as measured by tax laws. As of December 31, 2014 and December 31, 2013, we had deferred tax assets from domestic and foreign NOL and tax credit carryforwards of $188.9 million and $275.8 million, respectively. Approximately $85.6 million of the deferred tax assets at December 31, 2014 relate to tax credits that can be carried forward indefinitely with the remainder having carryover periods of 5 to 20 years. The deferred tax asset relating to U.S. net operating losses and tax credit carryforwards as of December 31, 2014 is lower than the actual amount reported and expected to be reported on our U.S. tax returns by $3.2 million. This difference is the result of tax deductions in excess of financial statement amounts for stock based compensation. When this amount is realized, we will record a credit to additional paid in capital and reduce our income taxes payable. Accounting guidance for income taxes requires a deferred tax liability be established for the U.S. tax impact of undistributed earnings of foreign subsidiaries unless it can be shown that these earnings will be permanently reinvested outside the U.S. Deferred income taxes have not been provided on $502.2 million of undistributed earnings of certain foreign subsidiaries as such amounts are considered permanently reinvested. The remittance of these undistributed earnings may subject us to U.S. income taxes and certain foreign withholding taxes at the time of remittance, however, the determination of the amount of unrecognized deferred tax liability relating to the remittance of undistributed earnings is not practicable. In accordance with the accounting guidance for income taxes, we estimate whether recoverability of our deferred tax assets is “more likely than not,” based on forecasts of taxable income in the related tax jurisdictions. In this estimate, we use historical results, projected future operating results based upon approved business plans, eligible carry forward periods, tax planning opportunities and other relevant considerations. As described above, in 2012, we released the valuation allowance against our net federal deferred tax assets for entities in the United States, resulting in a $337.5 million benefit in our 2012 provision for income taxes. As of December 31, 2014 and December 31, 2013, we have a valuation allowance of $156.9 million and $163.7 million, respectively, related to net deferred tax assets in several foreign jurisdictions and U.S. state and local jurisdictions. UNRECOGNIZED INCOME TAX BENEFITS To the extent our uncertain tax positions do not meet the “more likely than not” threshold, we have derecognized such positions. To the extent our uncertain tax positions meet the “more likely than not” threshold, we have measured and recorded the highest probable benefit, and have established appropriate reserves for benefits that exceed the amount likely to be sustained upon examination. A reconciliation of the beginning and ending amounts of unrecognized income tax benefits is as follows:
| Unrecognized Income Tax |  | Interest and
| Benefits |  | Penalties
| (in millions)
Balance at January 1, 2012 | $ | 25.8 |  |  | $ | 7.4 |
Increase in prior year tax positions | — |  |  | 2.8 |
Decrease in prior year tax positions | (1.1 | ) |  | — |
Increase in current year tax positions | 0.4 |  |  | — |
Settlement | (4.4 | ) |  | — |
Balance at December 31, 2012 | $ | 20.7 |  |  | $ | 10.2 |
Increase in prior year tax positions | 6.1 |  |  | 0.1 |
Decrease in prior year tax positions | (4.4 | ) |  | (6.2 | )
Increase in current year tax positions | 4.0 |  |  | — |
Settlement | (4.7 | ) |  | — |
Balance at December 31, 2013 | $ | 21.7 |  |  | $ | 4.1 |
Increase in prior year tax positions | 10.5 |  |  | 8.1 |
Decrease in prior year tax positions | (0.5 | ) |  | — |
Increase in current year tax positions | 15.6 |  |  | — |
Balance at December 31, 2014 | $ | 47.3 |  |  | $ | 12.2 |
At December 31, 2014 and December 31, 2013, we had $47.3 million and $21.7 million of net unrecognized income tax benefits, respectively. Changes to prior and current year tax positions for the year ended December 31, 2014 relate primarily to transfer pricing, income tax credits and the effect of changes in exchange rates. In 2014, 2013, and 2012, we recognized expense of $8.1 million, benefit of $6.1 million and expense of $2.8 million, respectively, related to interest and penalties in income tax expense on our Consolidated Statement of Income. We have a liability of $12.2 million and $4.1 million related to the estimated future payment of interest and penalties at December 31, 2014 and 2013, respectively. We file income tax returns in the U.S. federal jurisdiction, as well as various states and foreign jurisdictions. The Internal Revenue Service (IRS) commenced an examination of our U.S. income tax returns for 2010 and 2011 in 2013. The Mexican tax authorities commenced a transfer pricing examination of our income tax return for 2008 in 2013 and continue with its transfer pricing examination of our 2007 income tax return. In 2014, the India Tax Authorities commenced a transfer pricing examination for the 2010/2011 tax year. We are no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years before 2007. At this time, we are not aware of any examinations underway in any other foreign jurisdictions. The U.S. federal income tax examination for the years 2008 and 2009 and the Mexico transfer pricing examination for the year 2006 were settled in 2013. These settlements resulted in a reduction of a portion of our liability for unrecognized income tax benefits and a cash payment of $4.7 million in 2013. Based on the status of the IRS audits and audits outside the U.S., and the protocol of finalizing audits by the relevant tax authorities, it is not possible to estimate the impact of changes, if any, to previously recorded uncertain tax positions. Although it is not possible to predict the timing of the conclusion of all ongoing audits with certainty, we anticipate that the current U.S. IRS audit will be completed during 2015. It is also possible that the current 2007 and 2008 audits with the Mexican tax authorities will be completed before the end of 2016. Although it is difficult to estimate with certainty the amount of an audit settlement for the years currently under audit, we do not expect any settlements will be materially different from what we have recorded in unrecognized tax benefits. We will continue to monitor the progress and conclusions of all ongoing audits and will adjust our estimated liability as necessary.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319 + Details
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