XML 36 R19.htm IDEA: XBRL DOCUMENT
v3.8.0.1

INCOME TAXES | 12 Months Ended
--- | ---
Dec. 31, 2017
Income Tax Disclosure [Abstract] |
INCOME TAXES | 11. INCOME TAXES 2017 Tax Cuts and Jobs Act On December 22, 2017, the 2017 Tax Cuts and Jobs Act (the Tax Act) was enacted into law. The new legislation contains several key tax provisions, including a one-time mandatory transition tax on accumulated foreign earnings and a reduction of the U.S. corporate income tax rate to 21% effective January 1, 2018. The Corporation will generally be eligible for a 100% dividends received exemption on its foreign earnings starting in fiscal year 2018. However, it may also be subject to the Base Erosion Anti-Abuse Tax and Global Intangible Low Taxed Income (GILTI), both of which do not impact the Corporation until fiscal year 2018. The Corporation has not yet adopted an accounting policy related to the provision of deferred taxes for inside asset basis differences that could produce additional income subject to GILTI in the future. The Corporation anticipates that future issuance of U.S. Treasury department regulations and notices will clarify significant issues dealing with the application and computation of taxes due under the GILTI provisions. In accordance with Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act, the Corporation recognized the income tax effects of the Tax Act in its consolidated financial statements for the year ended December 31, 2017, resulting in a net increase in its provision for income taxes of approximately $10 million. The Corporation expects to finalize any provisional amounts associated with the Tax Act over the next 12 months based on an ongoing assessment of its tax positions and other relevant data. The Corporation has summarized the most significant impacts from the Tax Act below: Reduction of the U.S. Corporate Income Tax Rate The Corporation measures deferred tax assets and liabilities using enacted tax rates that are applicable in the years in which the temporary differences are expected to be recovered or paid. Accordingly, the Corporation’s deferred tax assets and liabilities were remeasured to reflect the reduction of the U.S. corporate income tax rate from 35 percent to 21 percent, resulting in a provisional $13.4 million decrease in income tax expense for the year ended December 31, 2017 and a corresponding $13.4 million decrease in net deferred tax liabilities as of December 31, 2017. The Corporation is still analyzing certain aspects of the Tax Act and refining its calculations, which could potentially affect the measurement of these balances or potentially give rise to new deferred tax amounts. Transition Tax on Foreign Earnings The Corporation recorded provisional income tax expense of $18.2 million for the year ended December 31, 2017 related to the one-time transition tax on certain foreign earnings. Prior to assessing the impact of the Tax Act, the Corporation had a deferred tax liability of $5.5 million for certain foreign subsidiaries whose earnings were not considered permanently reinvested. As of December 31, 2017, the Corporation’s provisional income tax liability related to the transition tax was $23.7 million. The transition tax will be paid over eight years, as permitted by the Tax Act, with the current balance of $1.9 million recorded in current income tax payable as of December 31, 2017. The determination of the transition tax requires further analysis regarding the amount and composition of the Corporation’s historical foreign earnings and tax pools. Given that all of its foreign undistributed earnings are no longer considered permanently reinvested, the Corporation also recorded provisional income tax expense of $3.8 million for the year ended December 31, 2017 for withholding taxes that would arise upon ultimate distribution of all the Corporation’s foreign undistributed earnings. The Corporation is considered permanently reinvested to the extent of any outside basis differences in its foreign subsidiaries in excess of the amount of undistributed earnings. Earnings before income taxes for the years ended December 31 consist of:
(In thousands) |  | 2017 |  | 2016 |  | 2015
Domestic |  | $ | 179,006 |  |  | $ | 154,571 |  |  | $ | 135,112 |
Foreign |  | 120,613 |  |  | 113,390 |  |  | 140,082 |
|  | $ | 299,619 |  |  | $ | 267,961 |  |  | $ | 275,194 |
The provision for income taxes for the years ended December 31 consists of:
(In thousands) |  | 2017 |  | 2016 |  | 2015
Current: |  |  |  |  |  |
Federal |  | $ | 54,963 |  |  | $ | 45,523 |  |  | $ | (6,741 | )
State |  | 2,648 |  |  | 8,002 |  |  | 6,175 |
Foreign |  | 23,162 |  |  | 20,861 |  |  | 27,134 |
Total current |  | 80,773 |  |  | 74,386 |  |  | 26,568 |
Deferred: |  |  |  |  |  |
Federal |  | 2,595 |  |  | 4,267 |  |  | 49,060 |
State |  | 4,282 |  |  | 73 |  |  | 7,390 |
Foreign |  | (2,922 | ) |  | (147 | ) |  | (72 | )
Total deferred |  | 3,955 |  |  | 4,193 |  |  | 56,378 |
Provision for income taxes |  | $ | 84,728 |  |  | $ | 78,579 |  |  | $ | 82,946 |
The effective tax rate varies from the U.S. federal statutory tax rate for the years ended December 31, principally:
|  | 2017 |  | 2016 |  | 2015
U.S. federal statutory tax rate |  | 35.0 | % |  | 35.0 | % |  | 35.0 | %
Add (deduct): |  |  |  |  |  |
State and local taxes, net of federal benefit |  | 1.8 |  |  | 1.1 |  |  | 4.3 |
R&D tax credits |  | (1.3 | ) |  | (0.9 | ) |  | (1.3 | )
Foreign earnings (1) |  | (6.0 | ) |  | (5.8 | ) |  | (6.2 | )
Stock compensation - excess tax benefits |  | (2.6 | ) |  | — |  |  | — |
Impacts related to the Tax Act |  | 3.4 |  |  | — |  |  | — |
All other, net |  | (2.0 | ) |  | (0.1 | ) |  | (1.7 | )
Effective tax rate |  | 28.3 | % |  | 29.3 | % |  | 30.1 | %
(1) Foreign earnings primarily include the net impact of differences between local statutory rates and the U.S. Federal statutory rate, the cost of repatriating foreign earnings, and the impact of changes to foreign valuation allowances. The components of the Corporation’s deferred tax assets and liabilities as of December 31 are as follows:
(In thousands) |  | 2017 |  | 2016
Deferred tax assets: |  |  |  |
Pension plans |  | $ | 18,903 |  |  | $ | 45,568 |
Environmental reserves |  | 7,109 |  |  | 9,871 |
Inventories |  | 15,116 |  |  | 21,758 |
Postretirement/postemployment benefits |  | 8,241 |  |  | 13,542 |
Incentive compensation |  | 7,721 |  |  | 9,425 |
Net operating loss |  | 10,908 |  |  | 10,345 |
Capital loss carryover |  | 7,047 |  |  | 11,352 |
Other |  | 28,775 |  |  | 39,977 |
Total deferred tax assets |  | 103,820 |  |  | 161,838 |
Deferred tax liabilities: |  |  |  |
Depreciation |  | 19,586 |  |  | 25,963 |
Goodwill amortization |  | 67,779 |  |  | 97,667 |
Other intangible amortization |  | 38,252 |  |  | 51,712 |
Other |  | 12,636 |  |  | 16,225 |
Total deferred tax liabilities |  | 138,253 |  |  | 191,567 |
Valuation allowance |  | 12,322 |  |  | 17,776 |
Net deferred tax liabilities |  | $ | 46,755 |  |  | $ | 47,505 |
Deferred tax assets and liabilities are reflected on the Corporation’s consolidated balance sheet as of December 31 as follows:
(In thousands) |  | 2017 |  | 2016
Net noncurrent deferred tax assets |  | 2,605 |  |  | 2,217 |
Net noncurrent deferred tax liabilities |  | 49,360 |  |  | 49,722 |
Net deferred tax liabilities |  | $ | 46,755 |  |  | $ | 47,505 |
The Corporation has income tax net operating loss carryforwards related to international operations of $24.0 million of which $17.9 million have an indefinite life and $6.1 million expire through 2023. The Corporation has federal and state income tax net loss carryforwards of $104.1 million, of which $73.0 million are net operating losses which expire through 2037 and $31.1 million are capital loss carryforwards which expire through 2020. The Corporation has recorded a deferred tax asset of $18 million reflecting the benefit of the loss carryforwards. Management assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to utilize the existing deferred tax assets. A significant piece of objective negative evidence evaluated was the cumulative loss incurred over the three-year period ended December 31, 2017 in certain of the Corporation’s foreign locations. Such objective evidence limits the ability to consider other subjective evidence such as projections for future growth. The Corporation provisionally decreased its valuation allowance by $5.5 million to $12.3 million, as of December 31, 2017, in order to measure only the portion of the deferred tax asset that more likely than not will be realized. Of the $5.5 million decrease in the valuation allowance, $4.3 million was due to the reduction of the U.S. corporate income tax rate from 35 percent to 21 percent. The amount of the deferred tax asset considered realizable, however, could be adjusted if estimates of future taxable income during the carryforward period are reduced or if objective negative evidence in the form of cumulative losses is no longer present and additional weight may be given to subjective evidence such as projections for growth. Income tax payments, net of refunds, of $92.1 million, $54.5 million, and $4.9 million were made in 2017, 2016, and 2015, respectively. The Corporation has recognized a liability in Other liabilities for interest of $2.6 million and penalties of $1.6 million as of December 31, 2017. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
(In thousands) |  | 2017 |  | 2016 |  | 2015
Balance as of January 1, |  | $ | 11,454 |  |  | $ | 12,414 |  |  | $ | 11,560 |
Additions for tax positions of prior periods |  | 1,069 |  |  | 32 |  |  | 359 |
Reductions for tax positions of prior periods |  | (194 | ) |  | (1,679 | ) |  | — |
Additions for tax positions related to the current year |  | 1,273 |  |  | 789 |  |  | 2,026 |
Settlements |  | (428 | ) |  | (102 | ) |  | (1,414 | )
Foreign currency translation |  | — |  |  | — |  |  | (117 | )
Balance as of December 31, |  | $ | 13,174 |  |  | $ | 11,454 |  |  | $ | 12,414 |
In many cases, the Corporation’s uncertain tax positions are related to tax years that remain subject to examination by tax authorities. The following describes the open tax years, by major tax jurisdiction, as of December 31, 2017:
United States (Federal) | 2014 | - | present
United States (Various states) | 2006 | - | present
United Kingdom | 2010 | - | present
Canada | 2011 | - | present
The Corporation does not expect any significant changes to the estimated amount of liability associated with its uncertain tax positions through the next twelve months. Included in the total unrecognized tax benefits as of December 31, 2017, 2016, and 2015 is $10.1 million, $7.7 million, and $8.3 million, respectively, which if recognized, would favorably affect the effective income tax rate.

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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 -URI http://asc.fasb.org/topic&trid=2144680 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration