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Income Taxes | 12 Months Ended
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Dec. 31, 2016
Income Taxes |
Income Taxes | Note 4—Income Taxes The components of income before income taxes and the provision for income taxes are as follows:
|  | Year Ended December 31, |
|  | 2016 |  | 2015 |  | 2014 |
Income before income taxes: |  |  |  |  |  |  |  |  |  |
United States |  | $ | 87.7 |  | $ | 134.4 |  | $ | 161.4 |
Foreign |  |  | 1,053.4 |  |  | 918.4 |  |  | 811.1 |
|  | $ | 1,141.1 |  | $ | 1,052.8 |  | $ | 972.5 |
Current tax provision: |  |  |  |  |  |  |  |  |  |
United States |  | $ | 74.6 |  | $ | 39.5 |  | $ | 63.7 |
Foreign |  |  | 263.8 |  |  | 228.1 |  |  | 183.1 |
|  |  | 338.4 |  |  | 267.6 |  |  | 246.8 |
Deferred tax provision (benefit): |  |  |  |  |  |  |  |  |  |
United States |  |  | (32.3) |  |  | 13.3 |  |  | (0.7) |
Foreign |  |  | 2.4 |  |  | (0.4) |  |  | 11.2 |
|  |  | (29.9) |  |  | 12.9 |  |  | 10.5 |
Total provision for income taxes |  | $ | 308.5 |  | $ | 280.5 |  | $ | 257.3 |
At December 31, 2016, the Company had $126.4 of foreign tax loss and credit carryforwards, $17.4 of U.S. federal loss and credit carryforwards, and $7.9 of U.S. state tax loss and credit carryforwards net of federal benefit, of which $69.4, $17.4 and $4.0, respectively, will either expire or be refunded at various dates through 2036 and the balance can be carried forward indefinitely. A valuation allowance of $37.2 and $18.5 at December 31, 2016 and 2015, respectively, has been recorded which relates to the U.S. federal and state and foreign net operating loss carryforwards and U.S. state tax credits. The net change in the valuation allowance for deferred tax assets was an increase of $18.7 in 2016, which was related to foreign net operating loss, U.S. federal net operating loss and state credit carryforwards. The net change in the valuation allowance for deferred tax assets was an increase of $3.0 in 2015, which related to foreign net operating loss and U.S. state credit carryforwards. Differences between the U.S. statutory federal tax rate and the Company’s effective income tax rate are analyzed below:
|  | Year Ended December 31, |  |
|  | 2016 |  |  | 2015 |  |  | 2014 |  |
U.S. statutory federal tax rate |  | 35.0 | % |  | 35.0 | % |  | 35.0 | % |
State and local taxes |  | 0.1 |  |  | 0.1 |  |  | 0.4 |  |
Foreign earnings and dividends taxed at different rates |  | (9.7) |  |  | (8.8) |  |  | (8.3) |  |
Valuation allowance |  | 0.7 |  |  | 0.3 |  |  | (0.4) |  |
Other |  | 0.9 |  |  | — |  |  | (0.2) |  |
Effective tax rate |  | 27.0 | % |  | 26.6 | % |  | 26.5 | % |
The tax rates for each year presented above reflect the effect of acquisition-related expenses incurred during such years. The effect of acquisition-related expenses had the impact of increasing the Company’s effective tax rate for 2016 and 2015 by 50 basis points and 10 basis points, respectively. Acquisition-related expenses incurred during 2014 did not have an impact on the effective tax rate for that year. The components of the Company’s deferred tax assets and liabilities are comprised of the following:
|  | December 31,
|  | 2016 |  | 2015
Deferred tax assets relating to: |  |  |  |  |  |
Accrued liabilities and reserves |  | $ | 36.8 |  | $ | 21.4
Operating loss and tax credit carryforwards |  |  | 58.8 |  |  | 29.4
Pensions, net |  |  | 64.7 |  |  | 63.6
Inventories |  |  | 45.3 |  |  | 29.0
Employee benefits |  |  | 43.4 |  |  | 41.8
Total deferred tax assets |  |  | 249.0 |  |  | 185.2
Valuation allowance |  |  | (37.2) |  |  | (18.5)
Total deferred tax assets, net of valuation allowances |  |  | 211.8 |  |  | 166.7
Deferred tax liabilities relating to: |  |  |  |  |  |
Goodwill |  |  | 185.9 |  |  | 163.5
Depreciation and amortization |  |  | 67.6 |  |  | 37.4
Contingent consideration |  |  | 6.6 |  |  | 6.6
Total deferred tax liabilities |  |  | 260.1 |  |  | 207.5
Net deferred tax liability |  | $ | 48.3 |  | $ | 40.8
Classification of deferred tax assets and liabilities, as reflected on the balance sheet:
Intangibles, net and other long-term assets |  | $ | 29.4 |  | $ | 26.0
Other long-term liabilities |  |  | 77.7 |  |  | 66.8
Net deferred tax liability, long-term |  | $ | 48.3 |  | $ | 40.8
A tabular reconciliation of the gross amounts of unrecognized tax benefits excluding interest and penalties at the beginning and end of the year for 2016, 2015 and 2014 is shown below. The gross increases for tax positions in prior periods recorded in 2016 include $78.7 which are related to acquisitions.
|  | 2016 |  | 2015 |  | 2014 |
Unrecognized tax benefits as of January 1 |  | $ | 29.8 |  | $ | 27.7 |  | $ | 24.8 |
Gross increases for tax positions in prior periods |  |  | 81.9 |  |  | 0.3 |  |  | 2.2 |
Gross increases for tax positions in current period |  |  | 7.0 |  |  | 2.1 |  |  | 2.6 |
Settlements |  |  | (10.8) |  |  | — |  |  | (0.5) |
Lapse of statute of limitations |  |  | (1.7) |  |  | (0.3) |  |  | (1.4) |
Unrecognized tax benefits as of December 31 |  | $ | 106.2 |  | $ | 29.8 |  | $ | 27.7 |
The Company includes estimated interest and penalties related to unrecognized tax benefits in the provision for income taxes. During the years ended December 31, 2016, 2015 and 2014, the provision for income taxes included a net expense of $6.5, $1.5 and $0.9, respectively, in estimated interest and penalties. As of December 31, 2016, 2015 and 2014, the liability for unrecognized tax benefits included $35.3, $6.0 and $4.5, respectively, for tax-related interest and penalties. The Company operates in the U.S. and numerous foreign taxable jurisdictions, and at any point in time has numerous audits underway at various stages of completion. With few exceptions, the Company is subject to income tax examinations by tax authorities for the years 2011 and after. The Company is generally not able to precisely estimate the ultimate settlement amounts or timing until the close of an audit. The Company evaluates its tax positions and establishes liabilities for uncertain tax positions that may be challenged by tax authorities and may not be fully sustained, despite the Company’s belief that the underlying tax positions are fully supportable. As of December 31, 2016 and 2015, the amount of the liability for unrecognized tax benefits, including penalties and interest, which if recognized would impact the effective tax rate, was approximately $138.7 and $20.6, respectively. Unrecognized tax benefits are reviewed on an ongoing basis and are adjusted for changing facts and circumstances, including progress of tax audits and the closing of statutes of limitation. Based on information currently available, management anticipates that over the next twelve-month period, audit activity could be completed and statutes of limitation may close relating to existing unrecognized tax benefits of approximately $8.6.

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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=65882285&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=65882285&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=65882285&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=65882285&loc=d3e32537-109319 + Details
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