INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2017

Schedule of Components of Income Tax Expense

The following table sets forth the components of the provision (benefit) for income taxes:



	Year Ended December 31,
	2017			2016			2015
				(In thousands)
Current income taxes:
Federal ⁽¹⁾	$	122,170		$	65,614		$	45,812
State	2,259			6,489			4,565
Foreign	15,274			3,502			2,309
Total current income taxes	139,703			75,605			52,686
Deferred income taxes:
Federal	(48,060		)	(42,835		)	29,593
State	4,508			(2,938		)	3,767
Foreign	(6,844		)	599			9,491
Total deferred income taxes	(50,396		)	(45,174		)	42,851
Provision for income taxes	$	89,307		$	30,431		$	95,537


⁽¹⁾	Income tax (expense) benefit related to stock-based awards and other equity instruments recorded directly to additional paid in capital totaled $(0.1) million and $1.6 million in 2016 and 2015, respectively. Due to the adoption of ASU 2016-09, as described in Note 2, there was no income tax (expense) benefit recorded to additional paid in capital for stock-based awards in 2017.

Schedule of Income before Income Tax, Domestic and Foreign

The following table sets forth the components of income before income taxes by jurisdiction:



	Year Ended December 31,
	2017		2016		2015
			(In thousands)
United States	$	180,957	$	80,881	$	288,881
Foreign	71,483		50,670		15,029
Income before income taxes	$	252,440	$	131,551	$	303,910

Schedule of Effective Income Tax Rate Reconciliation

The following table sets forth the reconciliation between the federal statutory income tax rate and the effective tax rate:



	Year Ended December 31,
	2017		2016		2015
Federal statutory rate	35.0	%	35.0	%	35.0	%
State income taxes, net of federal income tax benefit	1.4		1.0		2.2
Deemed repatriation of undistributed foreign earnings	32.8		—		—
Deferred income tax remeasurement	(22.4	)	—		—
Tax effect of intercompany financing	(10.5	)	(19.9	)	(8.8	)
Foreign tax rate differences	(1.3	)	(0.4	)	(1.1	)
Valuation allowance against deferred tax assets	0.4		1.1		—
Nondeductible expenses	(0.1	)	1.6		1.2
Adjustment related to uncertain tax positions	—		3.7		2.7
Other	0.1		1.0		0.2
Effective tax rate	35.4	%	23.1	%	31.4	%

Schedule of Deferred Tax Assets and Liabilities

The following table sets forth deferred tax assets and liabilities:



	As of December 31,
	2017					2016
				(In thousands)
	Assets			Liabilities		Assets			Liabilities
Accounts receivable	$	3,496		$	—	$	3,484		$	—
Inventories	—			3,181		—			4,001
Depreciation of property, buildings and equipment	—			13,283		—			11,487
Amortization of intangible assets ⁽¹⁾	—			159,107		—			237,015
Employee benefits	14,835			—		18,577			—
Stock-based compensation ⁽²⁾	16,341			—		23,844			—
Advance payments	8,456			—		22,056			—
Foreign tax credits	—			—		15,698			—
Tax loss carryforwards	19,128			—		18,440			—
Other	11,850			8,672		7,175			7,783
Deferred income taxes before valuation allowance	74,106			184,243		109,274			260,286
Valuation allowance	(2,518		)	—		(1,430		)	—
Total deferred income taxes ⁽¹⁾	$	71,588		$	184,243	$	107,844		$	260,286


⁽¹⁾	As described in Note 2, the Consolidated Balance Sheet at December 31, 2016 was revised to correct certain financial statement line items, including deferred income taxes.


⁽²⁾	The Company does not expect the realizability of the deferred tax asset related to stock-based compensation to be materially impacted by the TCJA's expansion on the limitation of deductions for excessive employee compensation.

Summary of Income Tax Examinations



United States — Federal		2004 and forward
United States — Material States		2013 and forward
Canada		2004 and forward

The statutes of limitation with respect to the Company’s 2004 to 2007 U.S. federal income tax returns are open by waiver only in connection with the implementation of the Mutual Agreement Procedure (“MAP”) concluded in the fourth quarter of 2015 between the Competent Authorities of the Internal Revenue Service (the "IRS") and the Canada Revenue Agency (the “CRA”) and the request for MAP assistance filed with the IRS and CRA in 2017 with respect to certain other 2004 to 2007 transfer pricing matters. The statutes of limitation with respect to the Company’s 2008 to 2011 U.S. federal income tax returns are open by waiver only in connection with the implementation of the Advance Pricing Agreement (“APA”) concluded in the fourth quarter of 2015 between the IRS and CRA and certain other transfer pricing matters pending with the CRA. The statutes of limitation with respect to the Company’s 2012 and 2013 U.S. federal income tax returns are open by waiver only in connection with the IRS examination of the 2012 and 2013 years and the APA.

The Company is under examination by tax authorities in the U.S. and Canada and remains subject to examination until the applicable statutes of limitation expire. The statutes of limitation for the material jurisdictions in which the Company files income tax returns remain open as follows:



United States — Federal		2004 and forward
United States — Material States		2013 and forward
Canada		2004 and forward

Summary of Income Tax Contingencies

The following table sets forth the reconciliation of gross unrecognized tax benefits:



	As of December 31,
	2017			2016			2015
	(In thousands)
Beginning balance January 1	$	6,181		$	5,436		$	20,033
Additions based on tax positions related to the current year	—			—			46
Additions for tax positions of prior years	—			3,298			402
Reductions for tax positions of prior years	(155		)	(21		)	(378		)
Settlements	(1,025		)	(1,921		)	(9,638		)
Lapse in statute of limitations	(755		)	(728		)	(1,497		)
Foreign currency exchange rate changes	102			117			(3,532		)
Ending balance December 31	$	4,348		$	6,181		$	5,436