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Income Taxes | 12 Months Ended
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Dec. 31, 2015
Income Tax Disclosure [Abstract] |
Income Tax Disclosure [Text Block] |
7. | INCOME TAXES
Income before income taxes for U.S. and non-U.S. operations was as follows:
| 2015 |  | 2014 |  | 2013
| (in millions)
U.S. income (loss) | $ | 88.3 |  |  | $ | 12.0 |  |  | $ | (23.8 | )
Non - U.S. income | 184.4 |  |  | 164.7 |  |  | 110.1 |
Total income before income taxes | $ | 272.7 |  |  | $ | 176.7 |  |  | $ | 86.3 |
The following is a summary of the components of our provisions for income taxes:
| 2015 |  | 2014 |  | 2013
| (in millions)
Current |  |  |  |  |
Federal | $ | 0.5 |  |  | $ | 0.6 |  |  | $ | (1.3 | )
Other state and local | 0.2 |  |  | 0.1 |  |  | 0.1 |
Foreign | 10.8 |  |  | 44.2 |  |  | 12.1 |
Total current | $ | 11.5 |  |  | $ | 44.9 |  |  | $ | 10.9 |
Deferred |  |  |  |  |
Federal | $ | 26.4 |  |  | $ | (11.6 | ) |  | $ | (9.3 | )
Foreign | (0.8 | ) |  | 0.4 |  |  | (9.8 | )
Total deferred | 25.6 |  |  | (11.2 | ) |  | (19.1 | )
Total income tax expense (benefit) | $ | 37.1 |  |  | $ | 33.7 |  |  | $ | (8.2 | )
The following is a reconciliation of our provision for income taxes to the expected amounts using statutory rates:
| 2015 |  | 2014 |  | 2013
Federal statutory | 35.0 | % |  | 35.0 | % |  | 35.0 | %
Foreign income taxes | (17.6 | ) |  | (25.1 | ) |  | (48.5 | )
Change in enacted tax rate | — |  |  | — |  |  | (9.9 | )
State and local | 0.1 |  |  | 0.1 |  |  | 0.2 |
Tax Credits | (1.3 | ) |  | (11.4 | ) |  | — |
Valuation allowance | 2.6 |  |  | 4.5 |  |  | 12.4 |
U.S. tax on unremitted foreign earnings | 0.2 |  |  | 1.9 |  |  | (0.2 | )
Uncertain tax positions | (5.7 | ) |  | 13.0 |  |  | (0.5 | )
Other | 0.3 |  |  | 1.1 |  |  | 2.0 |
Effective income tax rate | 13.6 | % |  | 19.1 | % |  | (9.5 | )%
Our income tax expense and effective tax rate for 2015, 2014 and 2013 primarily reflect favorable foreign tax rates, along with our inability to realize a tax benefit for current foreign losses. In the fourth quarter of 2015, we recorded an $11.5 million reduction in tax expense related to uncertain tax positions attributable to transfer pricing as a result of new information from our discussions with foreign tax authorities. 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, 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. 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. As of December 31, 2015 and 2014, we have refundable income taxes of $2.5 million and $5.6 million, respectively, classified as prepaid expenses and other on our Consolidated Balance Sheet. We also have income taxes payable of $6.8 million and $3.0 million classified as other accrued expenses on our Consolidated Balance Sheet as of December 31, 2015 and 2014, respectively. The increase in our income taxes payable relates primarily to a reclassification from our long-term unrecognized income tax benefit related to the estimated payment to be made in the first quarter of 2016 as a result of the resolution of transfer pricing audits with the Mexican tax authorities. As of December 31, 2015 and 2014, we have accrued value added tax payable of $35.8 million and $36.1 million, respectively, classified as other accrued expenses on our Consolidated Balance Sheet. In November 2015, the FASB issued ASU 2015-17 - Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes, which simplifies the presentation of deferred income taxes. This ASU requires that deferred tax assets and liabilities be classified as noncurrent in our Consolidated Balance Sheet. We early adopted this ASU effective December 31, 2015 on a prospective basis. Adoption of this ASU resulted in a reclassification of our net current deferred tax asset and liabilities, by jurisdiction, to the net noncurrent assets and liabilities on our Consolidated Balance Sheet as of December 31, 2015. No prior periods were retrospectively adjusted. The following is a summary of the significant components of our deferred tax assets and liabilities:
| December 31,
| 2015 |  | 2014
| (in millions)
Current deferred tax assets |  |  |
Employee benefits | $ | — |  |  | $ | 26.0 |
Inventory | — |  |  | 7.5 |
Prepaid taxes and other | — |  |  | 16.9 |
Valuation allowance | — |  |  | (10.2 | )
Total current deferred tax assets | $ | — |  |  | $ | 40.2 |
Current deferred tax liabilities |  |  |
Unrealized foreign exchange gain and other | — |  |  | (0.1 | )
Current deferred tax asset, net | $ | — |  |  | $ | 40.1 |
Current deferred tax assets and liabilities recognized in our Consolidated Balance Sheets are as follows:
| December 31,
| 2015 |  | 2014
| (in millions)
U.S. federal and state deferred tax asset, net | $ | — |  |  | $ | 27.0 |
Other foreign deferred tax asset, net | — |  |  | 13.1 |
Current deferred tax asset, net | $ | — |  |  | $ | 40.1 |
The following is a summary of the significant components of our noncurrent deferred tax assets and liabilities:
| December 31,
| 2015 |  | 2014
| (in millions)
Noncurrent deferred tax assets |  |  |
Employee benefits | $ | 211.1 |  |  | $ | 193.9 |
Inventory | 9.4 |  |  | — |
Net operating loss (NOL) carryforwards | 117.0 |  |  | 104.7 |
Tax credit carryforwards | 25.8 |  |  | 69.8 |
Capital allowance carryforwards | 13.6 |  |  | 14.4 |
Fixed assets | 13.5 |  |  | 6.6 |
Deferred revenue | 15.0 |  |  | 12.6 |
Capitalized expenditures | 120.5 |  |  | 111.2 |
Other | 22.4 |  |  | 2.3 |
Valuation allowances | (167.3 | ) |  | (146.7 | )
Noncurrent deferred tax assets | $ | 381.0 |  |  | $ | 368.8 |
Noncurrent deferred tax liabilities |  |  |
Fixed assets and other | (14.2 | ) |  | (9.1 | )
Noncurrent deferred tax asset, net | $ | 366.8 |  |  | $ | 359.7 |
Noncurrent deferred tax assets and liabilities recognized in our Consolidated Balance Sheets are as follows:
| December 31,
| 2015 |  | 2014
| (in millions)
U.S. federal and state deferred tax asset, net | $ | 354.7 |  |  | $ | 362.2 |
Other foreign deferred tax asset (liability), net | 12.1 |  |  | (2.5 | )
Noncurrent deferred tax asset, net | $ | 366.8 |  |  | $ | 359.7 |
DEFERRED INCOME TAX ASSETS AND LIABILITIES AND VALUATION ALLOWANCES The deferred income tax assets and liabilities summarized above 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, 2015 and December 31, 2014, we had deferred tax assets from domestic and foreign NOL and tax credit carryforwards of $156.4 million and $188.9 million, respectively. Approximately $87.9 million of the deferred tax assets at December 31, 2015 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. tax credit carryforwards as of December 31, 2015 is lower than the actual amount reported and expected to be reported on our U.S. tax returns by $5.1 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 increase our 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 $724.1 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. This includes the consideration of tax law changes, prior profitability performance and the uncertainty of future projected profitability. As of December 31, 2015 and December 31, 2014, we have a valuation allowance of $167.3 million and $156.9 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, 2013 | $ | 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 |
Increase in prior year tax positions | — |  |  | 1.4 |
Decrease in prior year tax positions | (9.4 | ) |  | (4.9 | )
Increase in current year tax positions | 8.8 |  |  | — |
Foreign currency remeasurement adjustment | (5.1 | ) |  | (1.8 | )
Balance at December 31, 2015 | $ | 41.6 |  |  | $ | 6.9 |
At December 31, 2015 and December 31, 2014, we had $41.6 million and $47.3 million of net unrecognized income tax benefits, respectively. The decrease in prior year tax positions at December 31, 2015 reflects a reduction in our income tax expense of $11.5 million attributable to transfer pricing as a result of new information from our discussions with Mexican tax authorities. In 2015, 2014, and 2013, we recognized a benefit of $3.5 million, expense of $8.1 million and a benefit of $6.1 million, respectively, related to interest and penalties in income tax expense on our Consolidated Statement of Income. We have a liability of $6.9 million and $12.2 million related to the estimated future payment of interest and penalties at December 31, 2015 and 2014, respectively. The amount of the uncertain tax position as of December 31, 2015 that, if recognized, would affect the effective tax rate is $48.5 million. 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 2012 and 2013 in 2015. In January 2016, we completed negotiations with the Mexican tax authorities to settle 2007 through 2009 transfer pricing audits. We made a payment of $22.9 million on January 29, 2016 that fully satisfies our obligations for transfer pricing issues for tax years 2007 through 2013. Including this settlement, we expect our total transfer pricing related payments in 2016 to the Mexican tax authorities to be in the range of $30 to $40 million. In 2015, we closed our transfer pricing examination for the 2010/2011 tax year with the India Tax Authorities with no resulting adjustments. 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 examinations for the years 2010 and 2011 were settled in 2015. This settlement resulted in no cash payment or reduction in our liability for unrecognized income tax benefits. 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 difficult to estimate with certainty the amount of an audit settlement, we do not expect the settlement will be materially different from what we have recorded. 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 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 2: 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 Reference 3: 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 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 + Details
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