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INCOME TAX UNCERTAINTIES | 12 Months Ended
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Dec. 31, 2016
INCOME TAX UNCERTAINTIES |
INCOME TAX UNCERTAINTIES | NOTE 5 INCOME TAXES Income before income taxes consists of:
Years Ended December 31, |  | 2016 |  | 2015 |  | 2014 |
United States |  | $ | 55,278 |  | $ | 73,492 |  | $ | 31,681 |
International |  |  | 225,219 |  |  | 221,079 |  |  | 254,620 |
Total |  | $ | 280,497 |  | $ | 294,571 |  | $ | 286,301 |
The provision (benefit) for income taxes is comprised of:
Years Ended December 31, |  | 2016 |  | 2015 |  | 2014 |
Current: |  |  |  |  |  |  |  |  |  |
U.S. Federal |  | $ | 24,045 |  | $ | 19,749 |  | $ | 14,023 |
State/Local |  |  | 449 |  |  | 82 |  |  | 42 |
International |  |  | 61,511 |  |  | 82,586 |  |  | 99,585 |
|  | $ | 86,005 |  | $ | 102,417 |  | $ | 113,650 |
Deferred: |  |  |  |  |  |  |  |  |  |
U.S. Federal/State |  | $ | (4,002) |  | $ | 1,605 |  | $ | (10,130) |
International |  |  | (7,110) |  |  | (8,746) |  |  | (8,843) |
|  | $ | (11,112) |  | $ | (7,141) |  | $ | (18,973) |
Total |  | $ | 74,893 |  | $ | 95,276 |  | $ | 94,677 |
The difference between the actual income tax provision and the tax provision computed by applying the statutory federal income tax rate of 35.0% in 2016, 2015 and 2014 to income before income taxes is as follows:
Years Ended December 31, |  | 2016 |  | 2015 |  | 2014 |
Income tax at statutory rate |  | $ | 98,174 |  | $ | 103,100 |  | $ | 100,205 |
State income (benefits) taxes, net of federal (tax) benefit |  |  | (980) |  |  | (1,254) |  |  | 770 |
Investment incentives |  |  | (6,413) |  |  | (3,082) |  |  | — |
Tax resolutions |  |  | (7,205) |  |  | 2,375 |  |  | — |
Provision for distribution of current foreign earnings |  |  | 3,494 |  |  | 2,031 |  |  | 695 |
Rate differential on earnings of foreign operations |  |  | (12,037) |  |  | (5,688) |  |  | (5,478) |
Other items, net |  |  | (140) |  |  | (2,206) |  |  | (1,515) |
Actual income tax provision |  | $ | 74,893 |  | $ | 95,276 |  | $ | 94,677 |
Effective income tax rate |  |  | 26.7 | % |  | 32.3 | % |  | 33.1 | %
The state income tax provision for 2016 reflects a benefit of $1.6 million related to the reduction of valuation allowances mostly associated with U.S. state tax credits. The tax provision for 2016 also reflects benefits of $6.4 million associated with the exceptional depreciation allowances enacted in France and Italy. The $7.2 million related to tax resolutions includes an amount of $5.0 million related to dividends previously taxed in France. The remaining $2.2 million is a net amount related to uncertain tax positions in France, Italy and Germany. The $3.5 million charge pertaining to the distribution of earnings reflects $2.1 million of tax incurred in 2016 for income recognized under the U.S. deemed dividend provisions and $1.4 million for cash movements in Europe during 2016. The rate differential on earnings of foreign operations reflects a $4.7 million benefit due to the reduction in the corporate income tax rate in France from 38.00% to 34.43%. In addition, the rate differential on earnings of foreign operations reflects benefits of$2.0 million, $2.2 million, and $2.2 million due to reductions in the corporate income tax rates in Germany, Switzerland, and China, respectively. The tax provision for 2015 reflects a benefit of $1.1 million related to the reduction of valuation allowances mostly associated with U.S. state tax credits. Additional benefits of $3.1 million associated with the exceptional depreciation allowances enacted in France during 2015 were partially offset by a $2.4 million charge for expected income tax assessments in France for a transfer pricing issue. While the Company expects to seek compensating offsets for this amount, no receivable has been recorded at this time. The $2.0 million charge pertaining to the distribution of earnings reflects $1.6 million of tax incurred in 2015 for income recognized under the U.S. deemed dividend provisions and $0.4 million for planned cash movements in Europe during 2016. In 2014, we did not repatriate foreign earnings to the U.S., resulting in a reduced tax rate. Significant deferred tax assets and liabilities as of December 31, 2016 and 2015 are comprised of the following temporary differences:
|  | 2016 |  | 2015 |
Deferred Tax Assets: |  |  |  |  |  |  |
Pension liabilities |  | $ | 27,087 |  | $ | 27,155 |
Stock compensation |  |  | 18,943 |  |  | 20,170 |
Foreign tax credit carryforward |  |  | 10,813 |  |  | 7,471 |
Net operating loss carryforwards |  |  | 5,150 |  |  | 5,053 |
U.S. state tax credits |  |  | 8,103 |  |  | 8,554 |
Vacation |  |  | 4,783 |  |  | 4,167 |
Workers compensation |  |  | 3,575 |  |  | 4,693 |
Other |  |  | 12,651 |  |  | 6,503 |
Total gross deferred tax assets |  |  | 91,105 |  |  | 83,766 |
Less valuation allowance |  |  | (4,070) |  |  | (6,125) |
Net deferred tax assets |  |  | 87,035 |  |  | 77,641 |
Deferred Tax Liabilities: |  |  |  |  |  |  |
Depreciation, amortization and leases |  |  | 39,189 |  |  | 47,154 |
Acquisition related intangibles |  |  | 30,417 |  |  | 15,720 |
Total gross deferred tax liabilities |  |  | 69,606 |  |  | 62,874 |
Net deferred tax assets |  | $ | 17,429 |  | $ | 14,767 |
The foreign tax credit carryforward will expire in the years 2023, 2024 and 2026. There is no expiration date on $4.7 million of the tax‑effected net operating loss carry forwards and $0.4 million (tax effected) will expire in the years 2019 to 2034. The U.S. state tax credit carryforwards of $8.1 million (tax effected) will expire in the years 2018 to 2031. No state tax credit carryforwards are expected to expire unused in 2017. The Company evaluates the deferred tax assets and records a valuation allowance when it is believed it is more likely than not that the benefit will not be realized. The Company has established a valuation allowance of $2.2 million of the $5.2 million of tax effected net operating loss carry forwards. These losses are generally in start‑up jurisdictions or locations that have not produced an operating profit to date. A valuation allowance of $1.4 million has been established against the $8.1 million of U.S. state tax credit carry forwards. A valuation allowance of $0.5 million has been established related to other future tax deductions in non‑U.S. jurisdictions, the benefit of which management believes will not be realized. As of December 31, 2016, the Company had $1.5 billion of unremitted earnings from non‑U.S. subsidiaries. We are planning to repatriate a total of $0.3 billion of unremitted earnings in 2017. The remaining $1.2 billion of unremitted earnings have been designated as permanently reinvested. The Company has not made a provision for U.S. or additional foreign taxes on the amount of unremitted earnings. However, we estimate the amount of additional tax that might be payable on these earnings to be in the range of $50 million to $60 million. These earnings will continue to be reinvested indefinitely and could become subject to the additional tax if they were remitted as dividends or lent to a U.S. affiliate, or if the Company should sell its stock in the subsidiaries. No provision for U.S. or additional foreign taxes has been made with respect to the planned remittance of the $0.3 billion to the U.S. in 2017, as no additional tax amounts are expected to be incurred on this repatriation under existing U.S. tax law. The Company has not provided for taxes on certain tax‑deferred income of a foreign operation. The income arose predominately from government grants. Taxes of approximately $1.6 million would become payable in the event the terms of the grant are not fulfilled. INCOME TAX UNCERTAINTIES The Company provides a liability for the amount of tax benefits realized from uncertain tax positions. A reconciliation of the beginning and ending amount of income tax uncertainties is as follows:
|  | 2016 |  | 2015 |  | 2014 |
Balance at January 1 |  | $ | 7,934 |  | $ | 6,408 |  | $ | 7,988 |
Increases based on tax positions for the current year |  |  | 270 |  |  | 255 |  |  | 113 |
Increases based on tax positions of prior years |  |  | 1,283 |  |  | 2,684 |  |  | 228 |
Decreases based on tax positions of prior years |  |  | (1,472) |  |  | (518) |  |  | (1,073) |
Settlements |  |  | (1,444) |  |  | (207) |  |  | (407) |
Lapse of statute of limitations |  |  | (215) |  |  | (688) |  |  | (441) |
Balance at December 31 |  | $ | 6,356 |  | $ | 7,934 |  | $ | 6,408 |
The amount of income tax uncertainties that, if recognized, would impact the effective tax rate is close to $6.4 million. The Company estimates that it is reasonably possible that the liability for uncertain tax positions will decrease no more than $4.6 million in the next twelve months from the resolution of various uncertain positions as a result of the completion of tax audits, litigation and the expiration of the statute of limitations in various jurisdictions. The Company recognizes interest and penalties accrued related to unrecognized tax benefits as a component of income taxes. As of December 31, 2016, 2015 and 2014, the Company had approximately $1.5 million, $1.1 million and $0.7 million, respectively, accrued for the payment of interest and penalties, of which approximately $0.4 million, $0.4 million and ($0.2) million was recognized in income tax expense in the years ended December 31, 2016, 2015 and 2014, respectively. The Company or its subsidiaries file income tax returns in the U.S. Federal jurisdiction and various state and foreign jurisdictions. The major tax jurisdictions the Company files in, with the years still subject to income tax examinations, are listed below:
|  | Tax Years |
Major Tax |  | Subject to |
Jurisdiction |  | Examination |
United States — Federal |  | 2013-2016 |
United States — State |  | 2009-2016 |
France |  | 2013-2016 |
Germany |  | 2013-2016 |
Italy |  | 2012-2016 |
China |  | 2007-2016 |

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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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