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Income Taxes | 12 Months Ended
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Dec. 31, 2018
Income Taxes |
Income Taxes | (10) Income Taxes The significant components of the Company’s deferred income tax liabilities and assets are as follows:
|  | December 31,
|  | 2018 |  | 2017
|  | (in millions)
Deferred income tax liabilities: |  |  |  |  |  |
Excess tax over book depreciation |  | $ | 16.2 |  | $ | 13.5
Intangibles |  |  | 33.8 |  |  | 37.1
Goodwill |  |  | 17.4 |  |  | 16.3
Foreign earnings |  |  | 5.1 |  |  | 14.6
Other |  |  | 3.2 |  |  | 5.7
Total deferred tax liabilities |  |  | 75.7 |  |  | 87.2
Deferred income tax assets: |  |  |  |  |  |
Accrued expenses |  |  | 16.0 |  |  | 17.8
Capital loss carry forward |  |  | — |  |  | 0.3
Foreign tax credits |  |  | 33.5 |  |  | 22.0
Net operating loss carry forward |  |  | 6.1 |  |  | 6.5
Inventory reserves |  |  | 6.0 |  |  | 5.8
Other |  |  | 7.1 |  |  | 9.9
Total deferred tax assets |  |  | 68.7 |  |  | 62.3
Less: valuation allowance |  |  | (29.9) |  |  | (28.7)
Net deferred tax assets |  |  | 38.8 |  |  | 33.6
Net deferred tax liabilities |  | $ | (36.9) |  | $ | (53.6)
The provision for income taxes is based on the following pre‑tax income:
|  | Year Ended December 31,
|  | 2018 |  | 2017 |  | 2016
|  | (in millions)
Domestic |  | $ | 103.2 |  | $ | 80.3 |  | $ | 64.8
Foreign |  |  | 71.4 |  |  | 62.8 |  |  | 63.0
|  | $ | 174.6 |  | $ | 143.1 |  | $ | 127.8
The provision for income taxes consists of the following:
|  | Year Ended December 31,
|  | 2018 |  | 2017 |  | 2016
|  | (in millions)
Current tax expense: |  |  |  |  |  |  |  |  |
Federal |  | $ | 24.7 |  | $ | 42.1 |  | $ | 18.3
Foreign |  |  | 29.0 |  |  | 17.3 |  |  | 17.2
State |  |  | 7.7 |  |  | 4.2 |  |  | 3.9
|  |  | 61.4 |  |  | 63.6 |  |  | 39.4
Deferred tax expense (benefit): |  |  |  |  |  |  |  |  |
Federal |  |  | (3.2) |  |  | 4.0 |  |  | 3.6
Foreign |  |  | (7.7) |  |  | 8.5 |  |  | 0.6
State |  |  | (1.9) |  |  | 5.9 |  |  | —
|  |  | (12.8) |  |  | 18.4 |  |  | 4.2
Deferred tax remeasurement of the 2017 Tax Act |  |  | (2.0) |  |  | (12.0) |  |  | —
|  | $ | 46.6 |  | $ | 70.0 |  | $ | 43.6
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 included 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 transitioned 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 imposed 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 December 31, 2017 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. Adjustments made to the provisional amounts allowed under SAB 118 were identified and recorded as discrete adjustments as described in the following paragraphs. 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 included an immaterial benefit to the Company’s 2017 current year tax expense. During the year ended December 31, 2018, the Company finalized the impact of the 2017 Tax Act and recorded a benefit of $3.7 million, reducing the net impact to $21.4 million. Included in the 2018 adjustment was a $10.6 million benefit related to the determination of our foreign tax credits and partial release of a related valuation allowance, partially offset by additional Toll Tax of $10.2 million. Toll Tax The 2017 Tax Act imposed 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. For the year ended December 31, 2017, the Company recorded a provisional amount of $23.3 million related to the Toll Tax. As of December 31, 2018, the Company recorded tax expense based on final guidance on the 2017 Tax Act of $10.2 million, resulting in a total Toll Tax charge of $33.5 million which is being 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, for the year ended December 31, 2017 the Company recorded a provisional amount of tax benefit of $12 million, and as of December 31, 2018 the Company recorded a final tax benefit of $2 million, for a net $14 million benefit, 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 recorded a provisional amount of deferred tax expense of $14.6 million, and as of December 31, 2018 the Company recorded a final tax benefit of $2 million, for a net deferred tax expense of $12.6 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,
|  | 2018 |  | 2017 |  | 2016
|  | (in millions)
Computed expected federal income expense |  | $ | 36.6 |  | $ | 50.1 |  | $ | 44.7
State income taxes, net of federal tax benefit |  |  | 5.3 |  |  | 2.7 |  |  | 2.2
Foreign tax rate differential |  |  | 2.7 |  |  | (6.7) |  |  | (6.7)
Impact of the 2017 Tax Act |  |  | (3.7) |  |  | 25.1 |  |  | —
Unrecognized tax benefits |  |  | 3.2 |  |  | — |  |  | —
Other, net |  |  | 2.5 |  |  | (1.2) |  |  | 3.4
|  | $ | 46.6 |  | $ | 70.0 |  | $ | 43.6
At December 31, 2018, the Company had foreign net operating loss carry forwards of $24.6 million for income tax purposes before considering valuation allowances; $24.6 million of the losses can be carried forward indefinitely. The net operating losses consist of $24.6 million related to Austrian operations. At December 31, 2018, all U.S. capital loss carry forwards were utilized or expired. At December 31, 2018 and December 31, 2017, the Company had foreign tax credit carry forwards of $33.5 million and $22.0 million, respectively, for income tax purposes before considering valuation allowances. The foreign tax credit carryforwards expire in 2027 and 2028. At December 31, 2018 and December 31, 2017, the Company had valuation allowances of $29.9 million and $28.7 million, respectively. At December 31, 2018, $23.8 million related to foreign tax credits and $6.1 million related to Austrian net operating losses. At December 31, 2017, $0.3 million related to U.S. capital losses, $22.0 million related to foreign tax credits and $6.4 million related to Austrian net operating losses. Management believes that the ability of the Company to use such foreign tax credits and 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. After December 31, 2017 the Company considered all of its foreign earnings to be permanently reinvested outside of the U.S. and has no plans to repatriate these foreign earnings to the U.S.

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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 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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