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Income Taxes | 12 Months Ended
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Dec. 31, 2016
Income Tax Disclosure [Abstract] |
Income Taxes | INCOME TAXES The following table summarizes the income tax expense (benefit) from continuing operations:
(in millions) | 2016 |  | 2015 |  | 2014
Current: |  |  |  |  |
Federal | $ | 7.0 |  |  | $ | 6.6 |  |  | $ | 3.0 |
Foreign | 0.6 |  |  | — |  |  | 0.3 |
State and local | 2.0 |  |  | 1.8 |  |  | 1.3 |
Total current tax expense | 9.6 |  |  | 8.4 |  |  | 4.6 |
Deferred: |  |  |  |  |
Federal | 8.4 |  |  | 25.4 |  |  | 17.8 |
Foreign | (0.7 | ) |  | (2.0 | ) |  | (3.0 | )
State and local | 0.1 |  |  | 2.3 |  |  | 4.3 |
Total deferred tax expense | 7.8 |  |  | 25.7 |  |  | 19.1 |
Total income tax expense | $ | 17.4 |  |  | $ | 34.1 |  |  | $ | 23.7 |
The following table summarizes the differences between the statutory federal income tax rate and the effective income tax rate from continuing operations:
| 2016 |  | 2015 |  | 2014
Statutory federal income tax rate | 35.0 | % |  | 35.0 | % |  | 35.0 | %
State income taxes, net of federal tax benefit | 3.6 |  |  | 3.3 |  |  | 3.7 |
Valuation allowance | (3.7 | ) |  | 1.7 |  |  | (4.5 | )
Domestic production deduction | (2.4 | ) |  | (2.2 | ) |  | (2.1 | )
Tax planning benefits, excluding valuation allowance effects | — |  |  | (6.0 | ) |  | — |
Tax reserves | (1.0 | ) |  | 0.2 |  |  | (1.2 | )
Tax credits | (0.8 | ) |  | 1.9 |  |  | (0.6 | )
Foreign tax rate effects | 0.8 |  |  | 0.5 |  |  | (2.0 | )
Other, net | (0.9 | ) |  | (0.3 | ) |  | 0.1 |
Effective income tax rate | 30.6 | % |  | 34.1 | % |  | 28.4 | %
The following table summarizes income from continuing operations before taxes:
(in millions) | 2016 |  | 2015 |  | 2014
U.S. | $ | 57.7 |  |  | $ | 96.4 |  |  | $ | 78.2 |
Non-U.S. | (0.9 | ) |  | 3.5 |  |  | 5.2 |
Income from continuing operations before taxes | $ | 56.8 |  |  | $ | 99.9 |  |  | $ | 83.4 |
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. 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. During the fourth quarter of 2016, the Company determined that $3.5 million of valuation allowance, previously recorded against deferred tax assets in Canada, could be released. These assets primarily relate to Canadian net operating loss carryforwards that were largely generated by the Company’s former North American refuse truck body business, which was discontinued in 2005. As of December 31, 2015, these deferred tax assets, and the corresponding full valuation allowance, were included within Long-term assets of discontinued operations on the Consolidated Balance Sheet. The Company has not had any material operations in Canada for a number of years. The current-year acquisitions of JJE and, to a lesser extent, Westech, expand the Company’s footprint in Canada, and the Company now has operations in that jurisdiction. The Company was in a three-year cumulative loss position in Canada as of December 31, 2016, primarily because of the aggregate year-to-date operating losses of the current-year acquisitions. The current-year operating losses largely result from the recognition of higher cost of sales associated with sales of acquired equipment, which were increased to fair value in connection with purchase accounting for the acquisition of JJE. While these purchase accounting expense effects are expected to continue for several quarters, the impact on future quarterly operating results is expected to be less significant than during 2016. Absent these expenses, which are not considered indicative of the Company’s ongoing operations in Canada, the Company would have been in a cumulative three-year income position. Furthermore, management believes that future projections support the realization of the deferred tax assets before the net operating loss carryforwards begin to expire in 2025. Based on its evaluation, management concluded that there was sufficient positive evidence to support the future realization of the Canadian deferred tax assets, such that the valuation allowance could be released in the fourth quarter of 2016. In addition, during the fourth quarter of 2016, the Company determined that a valuation allowance of $1.3 million should be recorded against its net deferred tax assets in the United Kingdom (“U.K.”), which include deferred tax assets on the actuarial losses of its U.K. defined benefit plan. The Company’s U.K. operations have been adversely impacted in recent years by ongoing softness in global coal markets. The Company reached its conclusion after considering current market conditions, as well as the cumulative three-year loss position as of December 31, 2016. The Company recognized income tax expense of $17.4 million for the year ended December 31, 2016, compared to $34.1 million for the year ended December 31, 2015. The decrease in tax expense in the current year was primarily due to lower pre-tax income levels and an aggregate net benefit of $2.2 million resulting from the aforementioned valuation allowance changes. The Company’s effective tax rate for the year ended December 31, 2016 was 30.6%, compared to 34.1% in 2015. The effective tax rate for 2016 included the $2.2 million net benefit from the valuation allowance changes, whereas the prior-year rate included certain tax benefits, described further below, that did not recur in 2016. The Company recognized income tax expense of $34.1 million for the year ended December 31, 2015, compared to $23.7 million for the year ended December 31, 2014. The Company’s effective tax rate for the year ended December 31, 2015 was 34.1%, compared to 28.4% in 2014. The increase in tax expense in 2015 compared to 2014 was primarily due to higher pre-tax income levels and the absence of certain tax benefits in 2014 that did not recur in 2015, described further below. The Company’s effective tax rate for the year ended December 31, 2015 was favorably impacted by a $4.2 million net tax benefit associated with tax planning strategies, partially offset by a $2.4 million adjustment of deferred tax assets and $0.4 million of expense associated with a change in the enacted tax rate in the U.K. The Company’s effective tax rate for the year ended December 31, 2014 was favorably impacted by a $3.5 million release of valuation allowance previously recorded against deferred tax assets in Spain, a $1.0 million net reduction in unrecognized tax benefits and a 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 of the Company’s continuing operations:
(in millions) | 2016 |  | 2015
Deferred tax assets: |  |  |
Depreciation and amortization | $ | 11.2 |  |  | $ | 10.9 |
Accrued expenses | 25.9 |  |  | 27.6 |
Net operating loss, alternative minimum tax, research and development and foreign tax credit carryforwards | 22.6 |  |  | 29.1 |
Definite lived intangibles | 1.2 |  |  | 1.4 |
Pension benefits | 32.9 |  |  | 33.5 |
Other | 0.1 |  |  | — |
Gross deferred tax assets | 93.9 |  |  | 102.5 |
Valuation allowance | (7.7 | ) |  | (5.9 | )
Total deferred tax assets | 86.2 |  |  | 96.6 |
Deferred tax liabilities: |  |  |
Depreciation and amortization | (10.5 | ) |  | (6.6 | )
Expenses capitalized for book | (1.4 | ) |  | (2.0 | )
Pension benefits | (14.5 | ) |  | (14.7 | )
Indefinite lived intangibles | (51.1 | ) |  | (52.6 | )
Other | (0.2 | ) |  | (0.1 | )
Gross deferred tax liabilities | (77.7 | ) |  | (76.0 | )
Net deferred tax assets | $ | 8.5 |  |  | $ | 20.6 |
The deferred tax asset for tax loss and tax credit carryforwards at December 31, 2016 includes federal net operating loss carryforwards of $3.0 million, which begin to expire in 2027, state net operating loss carryforwards of $6.8 million, which will begin to expire in 2017, and foreign net operating loss carryforwards of $9.2 million, which will begin to expire in 2025. The deferred tax asset for tax credit carryforwards includes U.S. research tax credit carryforwards of $1.1 million, which will begin to expire in 2019, U.S. foreign tax credits of $1.5 million, which will begin to expire in 2023, and U.S. alternative minimum tax credit carryforwards of $1.0 million with no expiration. The deferred tax asset for tax loss and tax credit carryforwards at December 31, 2015, included federal net operating loss carryforwards of $4.0 million, state net operating loss carryforwards of $6.8 million, foreign net operating loss carryforwards of $5.2 million, U.S. research tax credit carryforwards of $1.5 million, U.S. foreign tax credits of $8.3 million, and U.S. alternative minimum tax credit carryforwards of $3.3 million. In addition to a $1.9 million valuation allowance recorded against foreign net deferred tax assets, inclusive of the $1.3 million valuation allowance recorded in the U.K. during the year ended December 31, 2016, 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, 2016, the valuation allowance recorded against state net operating loss carryforwards totaled $5.8 million. The $86.2 million of deferred tax assets at December 31, 2016, 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, 2016. 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. Federal and state income taxes have not been provided on accumulated undistributed earnings of certain foreign subsidiaries aggregating approximately $28.9 million and $28.0 million at December 31, 2016 and 2015, respectively, as such undistributed earnings are considered to be indefinitely 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) | 2016 |  | 2015 |  | 2014
Balance at January 1 | $ | 2.2 |  |  | $ | 2.0 |  |  | $ | 3.9 |
Increases related to current year tax | 0.1 |  |  | 0.3 |  |  | 0.4 |
Increases from prior period positions | — |  |  | — |  |  | 0.3 |
Decreases from prior period positions | — |  |  | — |  |  | (0.1 | )
Decreases due to lapse of statute of limitations | (0.5 | ) |  | (0.1 | ) |  | (2.4 | )
Foreign currency translation | — |  |  | — |  |  | (0.1 | )
Balance at December 31 | $ | 1.8 |  |  | $ | 2.2 |  |  | $ | 2.0 |
The Company’s continuing practice is to recognize interest and penalties related to income tax matters in income tax expense. At December 31, 2016 and 2015, accruals for interest and penalties amounting to $0.6 million and $0.8 million, respectively, are included in the Consolidated Balance Sheets but are not included in the table above. At December 31, 2016 and 2015, reserves for unrecognized tax benefits, including interest and penalties, of $2.1 million and $2.5 million, respectively, were included within Other long-term liabilities on the Consolidated Balance Sheets. At December 31, 2016 and 2015, unrecognized tax benefits of $0.3 million and $0.5 million, respectively, were included as a reduction of Deferred tax assets on the Consolidated Balance Sheets. All of the unrecognized tax benefits of $1.8 million at December 31, 2016 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 2014 through 2015 tax years generally remain subject to examination by federal tax authorities, whereas the 2012 through 2015 tax years generally remain subject to examination by most state tax authorities. In significant foreign jurisdictions, the tax years from 2012 through 2015 generally remain subject to examination by their respective tax authorities. The Company paid income taxes of $13.3 million in 2016, $9.6 million in 2015 and $7.2 million in 2014.

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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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