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Income Taxes | 12 Months Ended
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Dec. 31, 2014
Income Tax Disclosure [Abstract] |
Income Taxes | INCOME TAXES The following table summarizes the income tax expense (benefit) from continuing operations:
(in millions) | 2014 |  | 2013 |  | 2012
Current: |  |  |  |  |
Federal | $ | 3.0 |  |  | $ | — |  |  | $ | (1.8 | )
Foreign | 0.6 |  |  | 2.4 |  |  | 3.2 |
State and local | 1.3 |  |  | 1.0 |  |  | 0.1 |
Total current tax expense | 4.9 |  |  | 3.4 |  |  | 1.5 |
Deferred: |  |  |  |  |
Federal | 17.8 |  |  | (112.1 | ) |  | 2.1 |
Foreign | (2.7 | ) |  | 0.2 |  |  | 0.3 |
State and local | 4.3 |  |  | 1.3 |  |  | — |
Total deferred tax expense (benefit) | 19.4 |  |  | (110.6 | ) |  | 2.4 |
Total income tax expense (benefit) | $ | 24.3 |  |  | $ | (107.2 | ) |  | $ | 3.9 |
The following table summarizes the differences between the statutory federal income tax rate and the effective income tax rate from continuing operations:
| 2014 |  | 2013 |  | 2012
Statutory federal income tax rate | 35.0 | % |  | 35.0 | % |  | 35.0 | %
State income taxes, net of federal tax benefit | 3.6 |  |  | 2.7 |  |  | 1.0 |
Valuation allowance | (4.3 | ) |  | (231.7 | ) |  | 41.3 |
Domestic production deduction | (2.0 | ) |  | (1.2 | ) |  | — |
Bad debt deduction | — |  |  | — |  |  | (24.9 | )
Asset dispositions and write-offs | — |  |  | (3.0 | ) |  | (29.5 | )
Repatriation effects | — |  |  | 1.5 |  |  | — |
Tax reserves | (1.2 | ) |  | — |  |  | (1.0 | )
R&D tax credits | (0.6 | ) |  | (1.5 | ) |  | — |
Foreign tax rate effects | (2.5 | ) |  | (4.4 | ) |  | (7.2 | )
Other, net | (0.2 | ) |  | 0.3 |  |  | 0.4 |
Effective income tax rate | 27.8 | % |  | (202.3 | )% |  | 15.1 | %
The following table summarizes income from continuing operations before taxes:
(in millions) | 2014 |  | 2013 |  | 2012
U.S. | $ | 78.5 |  |  | $ | 38.9 |  |  | $ | 10.0 |
Non-U.S. | 8.8 |  |  | 14.1 |  |  | 15.9 |
Income from continuing operations before taxes | $ | 87.3 |  |  | $ | 53.0 |  |  | $ | 25.9 |
ASC Topic 740, Income Taxes, requires that the future realization of deferred tax assets depends on the existence of sufficient taxable income in future periods. Possible sources of taxable income include taxable income in carryback periods, the future reversal of existing taxable temporary differences recorded as a deferred tax liability, tax-planning strategies that generate future income or gains in excess of anticipated losses in the carryforward period and projected future taxable income. If, based upon all available evidence, both positive and negative, it is more likely than not such deferred tax assets will not be realized, a valuation allowance is recorded. Significant weight is given to positive and negative evidence that is objectively verifiable. A company’s three-year cumulative loss position is significant negative evidence in considering whether deferred tax assets are realizable and the accounting guidance restricts the amount of reliance the Company can place on projected taxable income to support the recovery of the deferred tax assets. Throughout 2012, the Company was in a three-year cumulative domestic loss position and continued to maintain a valuation allowance, initially recorded in 2010, against domestic deferred tax assets due to the uncertainty of the realization of certain deferred tax assets. In 2012, the Company continued to adjust its valuation allowance as the deferred tax assets increased or decreased, resulting in effectively no tax expense or benefit being recorded for domestic operations. However, in 2012, the Company did record tax expense for the increase in the deferred tax liabilities of its domestic indefinite lived intangibles. Furthermore, an income tax provision was recorded in each of the three years in the period ended December 31, 2014 for foreign operations that were not in a cumulative loss position. We continually evaluate the need to maintain a valuation allowance for deferred tax assets based on our assessment of whether it is more likely than not that deferred tax benefits will be realized through the generation of future taxable income. Appropriate consideration is given to all available evidence, both positive and negative, in assessing the need for a valuation allowance. In the second quarter of 2013, this evaluation resulted in the determination that $102.4 million of our valuation allowance on U.S. deferred tax assets could be released. At that time, a qualitative and quantitative analysis of current and expected domestic earnings, industry and market trends, tax planning strategies and general business risks resulted in a conclusion that it was more likely than not that a significant portion of our U.S. deferred tax assets would be realized. Factors considered in reaching this determination included the return to profitability on a cumulative basis and improved market demand, with expectations that such improvement would continue into the foreseeable future. In addition, in 2012, we exited a business segment that had produced losses. Upon releasing the significant portion of our valuation allowance on U.S. deferred tax assets in the second quarter of 2013, a valuation allowance of $10.4 million was maintained in accordance with the guidance provided in ASC 740-270-25-4 and was released through the effective tax rate as domestic income is recognized throughout the course of the year ended December 31, 2013. An additional $3.4 million reduction in deferred tax valuation allowances was recorded in the year ended December 31, 2013. In the fourth quarter of 2013, the Company also executed a tax planning strategy that resulted in the release of $6.7 million of valuation allowance that was previously recorded against the Company’s foreign tax credits, which would have begun to expire in 2015. During the year ended December 31, 2013, changes in the United Kingdom (“U.K.”) and Finland tax rates were enacted. As a result, the Company recognized income tax expense of $0.8 million and an income tax benefit of $0.8 million related to the decrease in deferred tax assets and liabilities in the U.K. and Finland, respectively. As the Company no longer maintains a valuation allowance against most domestic tax assets, tax expense has been recognized on domestic earnings, as well as non-U.S. earnings, in the year ended December 31, 2014. The Company recognized income tax expense of $24.3 million for the year ended December 31, 2014, compared to an income tax benefit of $107.2 million in the prior year. The Company’s effective tax rate for the year ended December 31, 2014 was 27.8%, compared to (202.3)% in 2013. In the fourth quarter of 2014, based on a qualitative and quantitative analysis, the Company determined that $3.5 million of valuation allowance previously recorded against deferred tax assets in Spain could be released. In reaching the conclusion that it was more likely that deferred tax assets would be realized, the Company evaluated current and expected earnings, the cumulative earnings position, industry and market trends, recent changes in Spanish tax legislation and general business risks. The Company’s effective tax rate for the year ended December 31, 2014 was also favorably impacted by a $1.0 million net reduction in unrecognized tax benefits and an income tax benefit of $0.4 million related to the decrease in foreign deferred tax liabilities resulting from a change in the enacted Spanish tax rate. The following table summarizes deferred income tax assets and liabilities:
(in millions) | 2014 |  | 2013
Deferred tax assets: |  |  |
Depreciation and amortization | $ | 11.1 |  |  | $ | 10.8 |
Accrued expenses | 28.6 |  |  | 28.8 |
Net operating loss, alternative minimum tax, research and development and foreign tax credit carryforwards | 44.6 |  |  | 62.8 |
Definite lived intangibles | 1.6 |  |  | 1.7 |
Pension benefits | 35.4 |  |  | 23.3 |
Other | 1.0 |  |  | 1.1 |
Deferred revenue | 0.1 |  |  | 0.1 |
Gross deferred tax assets | 122.4 |  |  | 128.6 |
Valuation allowance | (3.8 | ) |  | (9.8 | )
Total deferred tax assets | 118.6 |  |  | 118.8 |
Deferred tax liabilities: |  |  |
Depreciation and amortization | (5.8 | ) |  | (3.7 | )
Expenses capitalized for book | (1.4 | ) |  | (1.0 | )
Pension benefits | (13.4 | ) |  | (11.5 | )
Indefinite lived intangibles | (57.1 | ) |  | (56.8 | )
Other | (0.5 | ) |  | (0.3 | )
Gross deferred tax liabilities | (78.2 | ) |  | (73.3 | )
Net deferred tax assets | $ | 40.4 |  |  | $ | 45.5 |
The deferred tax asset for tax loss carryforwards at December 31, 2014, includes federal net operating loss carryforwards of $5.1 million, which begin to expire in 2027, state net operating loss carryforwards of $5.7 million, which will begin to expire in 2015, and foreign net operating loss carryforwards of $3.0 million, which have an indefinite life. The deferred tax asset for tax credit carryforwards includes U.S. research tax credit carryforwards of $5.0 million, which will begin to expire in 2019, U.S. foreign tax credits of $22.3 million, which will begin to expire in 2017, alternative motor vehicle credits of $0.2 million, which will begin to expire in 2029, and U.S. alternative minimum tax credit carryforwards of $3.3 million with no expiration. The deferred tax asset for tax loss carryforwards at December 31, 2013, included federal net operating loss carryforwards of $7.5 million, state net operating loss carryforwards of $7.7 million, foreign net operating loss carryforwards of $5.2 million, U.S. research tax credit carryforwards of $7.9 million, U.S. foreign tax credits of $31.0 million, alternative motor vehicle credits of $0.2 million, and U.S. alternative minimum tax credit carryforwards of $3.3 million. We continue to maintain a valuation allowance on certain state deferred tax assets that we believe, on a more likely than not basis, will not be realized. At December 31, 2014, the valuation allowance recorded against state net operating loss carryforwards totaled $3.8 million. The $118.6 million of deferred tax assets at December 31, 2014, for which no valuation allowance is recorded, is anticipated to be realized through future taxable income or the future reversal of existing taxable temporary differences recorded as deferred tax liabilities at December 31, 2014. Should the Company determine that it would not be able to realize its remaining deferred tax assets in the future, an adjustment to the valuation allowance would be recorded in the period such determination is made. The net deferred tax asset is classified in the Consolidated Balance Sheets as follows:
(in millions) | 2014 |  | 2013
Current net deferred tax assets | $ | 19.9 |  |  | $ | 12.5 |
Current valuation allowance | (1.1 | ) |  | (0.1 | )
Total current net deferred tax assets | $ | 18.8 |  |  | $ | 12.4 |
Long-term net deferred tax assets | $ | 28.0 |  |  | $ | 42.8 |
Long-term valuation allowance | (2.7 | ) |  | (9.7 | )
Long-term net deferred tax assets | $ | 25.3 |  |  | $ | 33.1 |
At December 31, 2014, $4.0 million of net deferred tax liabilities are included within Other long-term liabilities on the Consolidated Balance Sheet. In the fourth quarter of 2013, in connection with the aforementioned tax planning strategy, the Company repatriated $24.3 million of previously undistributed earnings at one of the Company’s foreign subsidiaries. As a result of this change, in 2013 the Company increased its deferred tax assets related to the $24.3 million repatriation by $9.9 million. The remainder of the foreign subsidiaries undistributed earnings are considered to be indefinitely reinvested. Federal and state income taxes have not been provided on accumulated undistributed earnings of certain foreign subsidiaries aggregating approximately $40.9 million and $59.2 million at December 31, 2014 and 2013, respectively, as such earnings have been reinvested in the business. The determination of the amount of the unrecognized deferred tax liability related to the undistributed earnings is not practicable. The following table summarizes the activity related to the Company’s unrecognized tax benefits:
(in millions) | 2014 |  | 2013 |  | 2012
Balance at January 1 | $ | 4.8 |  |  | $ | 4.0 |  |  | $ | 4.3 |
Increases related to current year tax | 0.4 |  |  | 1.4 |  |  | 0.2 |
Increases from prior period positions | 0.3 |  |  | 0.4 |  |  | 0.1 |
Decreases from prior period positions | (0.1 | ) |  | (0.2 | ) |  | (0.2 | )
Decreases due to lapse of statute of limitations | (2.4 | ) |  | (0.8 | ) |  | (0.4 | )
Foreign currency translation | (0.2 | ) |  | — |  |  | — |
Balance at December 31 | $ | 2.8 |  |  | $ | 4.8 |  |  | $ | 4.0 |
The Company’s continuing practice is to recognize interest and penalties related to income tax matters in income tax expense. At December 31, 2014 and 2013, accruals for interest and penalties amounting to $0.8 million and $0.1 million, respectively, are included in the Consolidated Balance Sheets but are not included in the table above. At December 31, 2014 and 2013, reserves for unrecognized tax benefits, including interest and penalties, of $3.3 million and $4.8 million, respectively, were included within other long-term liabilities on the Consolidated Balance Sheets. At December 31, 2014, unrecognized tax benefits of $0.3 million were included as a reduction of current deferred tax assets on the Consolidated Balance Sheet. All of the unrecognized tax benefits of $2.8 million at December 31, 2014 would impact our annual effective tax rate, if recognized. We do not expect any significant change to our unrecognized tax benefits as a result of potential expiration of statute of limitations and settlements with tax authorities. We file U.S., state and foreign income tax returns in jurisdictions with varying statutes of limitations. The 2012 through 2014 tax years generally remain subject to examination by federal tax authorities, whereas the 2011 through 2014 tax years generally remain subject to examination by most state tax authorities. In significant foreign jurisdictions, the tax years from 2010 through 2014 generally remain subject to examination by their respective tax authorities. The Company paid income taxes of $8.2 million in 2014, $4.0 million in 2013 and $2.9 million in 2012.

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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 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 2: 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 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 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=6907707&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=6907707&loc=d3e32537-109319 Reference 6: 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=6907707&loc=d3e32559-109319 + Details
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