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Income Taxes | 12 Months Ended
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Dec. 31, 2017
Income Taxes |
Income Taxes | (9) Income Taxes The significant components of the Company’s deferred income tax liabilities and assets are as follows:
|  | December 31, |
|  | 2017 |  | 2016 |
|  | (in millions) |
Deferred income tax liabilities: |  |  |  |  |  |  |
Excess tax over book depreciation |  | $ | 13.5 |  | $ | 15.5 |
Intangibles |  |  | 37.1 |  |  | 55.2 |
Goodwill |  |  | 16.3 |  |  | 20.4 |
Foreign earnings |  |  | 14.6 |  |  | — |
Other |  |  | 5.7 |  |  | 6.1 |
Total deferred tax liabilities |  |  | 87.2 |  |  | 97.2 |
Deferred income tax assets: |  |  |  |  |  |  |
Accrued expenses |  |  | 17.8 |  |  | 22.9 |
Capital loss carry forward |  |  | 0.3 |  |  | 1.4 |
Foreign tax credits |  |  | 22.0 |  |  | — |
Net operating loss carry forward |  |  | 6.5 |  |  | 7.3 |
Inventory reserves |  |  | 5.8 |  |  | 13.5 |
Other |  |  | 9.9 |  |  | 13.5 |
Total deferred tax assets |  |  | 62.3 |  |  | 58.6 |
Less: valuation allowance |  |  | (28.7) |  |  | (7.1) |
Net deferred tax assets |  |  | 33.6 |  |  | 51.5 |
Net deferred tax liabilities |  | $ | (53.6) |  | $ | (45.7) |
The provision for income taxes is based on the following pre‑tax income:
|  | Year Ended December 31, |
|  | 2017 |  | 2016 |  | 2015 |
|  | (in millions) |
Domestic |  | $ | 80.3 |  | $ | 64.8 |  | $ | (25.8) |
Foreign |  |  | 62.8 |  |  | 63.0 |  |  | (85.2) |
|  | $ | 143.1 |  | $ | 127.8 |  | $ | (111.0) |
The provision for income taxes consists of the following:
|  | Year Ended December 31, |
|  | 2017 |  | 2016 |  | 2015 |
|  | (in millions) |
Current tax expense: |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 42.1 |  | $ | 18.3 |  | $ | 3.4 |
Foreign |  |  | 17.3 |  |  | 17.2 |  |  | 18.1 |
State |  |  | 4.2 |  |  | 3.9 |  |  | 2.0 |
|  |  | 63.6 |  |  | 39.4 |  |  | 23.5 |
Deferred tax expense (benefit): |  |  |  |  |  |  |  |  |  |
Federal |  |  | 4.0 |  |  | 3.6 |  |  | (13.6) |
Foreign |  |  | 8.5 |  |  | 0.6 |  |  | (7.0) |
State |  |  | 5.9 |  |  | — |  |  | (1.0) |
|  |  | 18.4 |  |  | 4.2 |  |  | (21.6) |
Deferred tax remeasurement of the 2017 Tax Act |  |  | (12.0) |  |  | — |  |  | — |
|  | $ | 70.0 |  | $ | 43.6 |  | $ | 1.9 |
The 2017 Tax Cuts and Jobs Act (“2017 Tax Act”) was enacted on December 22, 2017 and has resulted in significant changes to the U.S. corporate income tax system. These changes include lowering the U.S. Corporate income tax rate from 35% to 21% and the elimination or reduction of certain domestic deductions and credits. The 2017 Tax Act also transitions international taxation from a worldwide system to a modified territorial system creating new taxes on certain foreign-sourced earnings and certain related party payments, which are referred to as the Global Intangible Low-taxed Income Tax and the Annual Anti-Base Erosion Tax, respectively. The 2017 Tax Act also imposes a one-time mandatory deemed repatriation tax (“Toll Tax”) on foreign subsidiaries’ previously untaxed accumulated foreign earnings. Due to the timing of the enactment and the complexity involved applying the provisions of the 2017 Tax Act, the Company made reasonable estimates of the effects and recorded provisional amounts in its financial statements. In December 2017, the SEC staff issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (SAB 118), which allows companies to record provisional amounts during a measurement period not to extend beyond one year of the enactment date. As additional regulatory guidance is issued by the applicable taxing authorities, as accounting treatment is clarified, as the Company performs additional analysis on the application of the law, and as the Company refines estimates in calculating the effect, the Company’s final analysis, which will be recorded in the period completed, may be different from the Company’s current provisional amounts, which could materially affect the Company’s tax obligations and effective tax rate in the period or periods in which the adjustments are made. Changes in tax rates and tax laws are accounted for in the period of enactment. Therefore, the Company recorded a provisional tax expense of $25.1 million related to the 2017 Tax Act, as of December 31, 2017. This amount also includes an immaterial benefit to the Company’s 2017 current year tax expense. The final determination of the Toll Tax, impacts to the Company’s deferred assets and liabilities, and valuation allowances will be completed as additional information becomes available, but no later than one year from the enactment of the 2017 Tax Act. Toll Tax The 2017 Tax Act imposes a one-time toll tax requiring the Company to pay U.S. income taxes on accumulated foreign subsidiary earnings not previously subject to U.S. income tax at a rate of 15.5% to the extent of foreign cash and cash equivalents and 8% on the remaining earnings. The Company recorded a provisional amount based on estimates of the effects of the 2017 Tax Act of $23.3 million which will be paid over eight years starting in 2018 and will not accrue interest. Deferred Tax Remeasurement As the Company’s deferred tax liabilities exceeded the balance of the Company’s deferred tax assets, the Company recorded a provisional amount of tax benefit of $12 million, reflecting the decrease in the U.S. Corporate income tax rate. Tax on Foreign Earnings As a result of the 2017 Tax Act, the Company can repatriate its cumulative undistributed foreign earning back to the U.S. with minimal U.S. income tax consequences other than the one-time Toll Tax. The Company has recorded a provisional amount of deferred tax expense of $14.6 million for the future repatriation of foreign earnings. Actual income taxes reported are different than what would have been computed by applying the federal statutory tax rate to income before income taxes. The reasons for these differences are as follows:
|  | Year Ended December 31, |
|  | 2017 |  | 2016 |  | 2015 |
|  | (in millions) |
Computed expected federal income expense |  | $ | 50.1 |  | $ | 44.7 |  | $ | (38.8) |
State income taxes, net of federal tax benefit |  |  | 2.7 |  |  | 2.2 |  |  | 0.8 |
Foreign tax rate differential |  |  | (6.7) |  |  | (6.7) |  |  | 7.5 |
Goodwill impairment |  |  | — |  |  | — |  |  | 29.0 |
Impact of the 2017 Tax Act |  |  | 25.1 |  |  | — |  |  | — |
Change in valuation allowance |  |  | — |  |  | — |  |  | (1.8) |
Other, net |  |  | (1.2) |  |  | 3.4 |  |  | 5.2 |
|  | $ | 70.0 |  | $ | 43.6 |  | $ | 1.9 |
At December 31, 2017, the Company had foreign net operating loss carry forwards of $26.1 million for income tax purposes before considering valuation allowances; $26.1 million of the losses can be carried forward indefinitely. The net operating losses consist of $26.1 million related to Austrian operations. At December 31, 2017, the Company had U.S. capital loss carry forwards of $0.3 million for income tax purposes before considering valuation allowances. The U.S. capital loss carry forwards expire in 2018. At December 31, 2017, the Company had foreign tax credit carry forwards of $22.0 million for income tax purposes before considering valuation allowances. The foreign tax credit carry forwards expire in 2027. At December 31, 2017 and December 31, 2016, the Company had valuation allowances of $28.7 million and $7.1 million, respectively. At December 31, 2017, $0.3 million relates to U.S. capital losses, $22.0 million relates to foreign tax credits and $6.4 million relates to Austrian net operating losses. As a result of the 2017 Tax Act, the Company recorded a provisional amount of foreign tax credits that was previously not recorded, and recognized a valuation allowance related to the credits. The provisional amount requires further analysis by the Company during the measurement period. At December 31, 2016, $1.5 million relates to U.S. capital losses and $5.7 million relates to Austrian net operating losses. Management believes that the ability of the Company to use such losses within the applicable carry forward period does not rise to the level of the more likely than not threshold. The Company does not have a valuation allowance on other deferred tax assets, as management believes that it is more likely than not that the Company will recover the net deferred tax assets. Management believes it is more likely than not that the future reversals of the deferred tax liabilities, together with forecasted income, will be sufficient to fully recover the deferred tax assets. At December 31, 2017, the Company considered none of the Company’s earnings to be permanently reinvested outside the U.S. and therefore recorded a provisional amount of deferred tax liabilities associated with the repatriation of those earnings.

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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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