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Income Taxes | 12 Months Ended
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Dec. 31, 2018
Income Tax Disclosure [Abstract] |
Income Taxes | INCOME TAXES The following table summarizes the income tax expense from continuing operations:
(in millions) | 2018 |  | 2017 |  | 2016
Current tax expense (benefit): |  |  |  |  |
Federal | $ | 17.8 |  |  | $ | 12.0 |  |  | $ | 7.0 |
Foreign | (0.1 | ) |  | 0.8 |  |  | 0.6 |
State and local | 5.7 |  |  | 2.9 |  |  | 2.0 |
Total current tax expense | 23.4 |  |  | 15.7 |  |  | 9.6 |
Deferred tax expense (benefit): |  |  |  |  |
Federal | 0.6 |  |  | (15.7 | ) |  | 8.4 |
Foreign | (6.5 | ) |  | 0.8 |  |  | (0.7 | )
State and local | 0.4 |  |  | (0.3 | ) |  | 0.1 |
Total deferred tax (benefit) expense | (5.5 | ) |  | (15.2 | ) |  | 7.8 |
Total income tax expense | $ | 17.9 |  |  | $ | 0.5 |  |  | $ | 17.4 |
The following table summarizes the differences between the statutory federal income tax rate and the effective income tax rate from continuing operations:
| 2018 |  | 2017 |  | 2016
Statutory federal income tax rate | 21.0 | % |  | 35.0 | % |  | 35.0 | %
State income taxes, net of federal tax benefit | 4.5 |  |  | 4.3 |  |  | 3.6 |
Remeasurement of deferred taxes, associated with 2017 Tax Act | — |  |  | (37.6 | ) |  | — |
Valuation allowance | — |  |  | 3.6 |  |  | (3.7 | )
Domestic production deduction | — |  |  | (2.3 | ) |  | (2.4 | )
Tax planning benefits, excluding valuation allowance effects | (8.1 | ) |  | — |  |  | — |
Tax reserves | (0.3 | ) |  | 0.1 |  |  | (1.0 | )
Tax credits | (0.3 | ) |  | (0.9 | ) |  | (0.8 | )
Foreign tax rate effects | 0.3 |  |  | (0.5 | ) |  | 0.8 |
Other, net | (1.1 | ) |  | (0.9 | ) |  | (0.9 | )
Effective income tax rate | 16.0 | % |  | 0.8 | % |  | 30.6 | %
The following table summarizes income (loss) before income taxes from continuing operations:
(in millions) | 2018 |  | 2017 |  | 2016
U.S. | $ | 100.6 |  |  | $ | 55.7 |  |  | $ | 57.7 |
Non-U.S. | 11.0 |  |  | 5.3 |  |  | (0.9 | )
Income before income taxes | $ | 111.6 |  |  | $ | 61.0 |  |  | $ | 56.8 |
Summary The Company recognized income tax expense of $17.9 million for the year ended December 31, 2018, compared to $0.5 million for the year ended December 31, 2017. The increase in income tax expense was primarily due to higher earnings, and the impact of certain special tax items in the prior year, which did not repeat in 2018. In addition, during the year ended December 31, 2018, the Company recognized a tax benefit of $8.6 million associated with the completion of a tax planning strategy in Spain. Tax expense for the year ended December 31, 2017 was lower than in 2018, largely due to the recognition of a $23.0 million net tax benefit associated with the revaluation of the Company’s net deferred tax liabilities in the U.S. following the reduction of the federal corporate tax rate included in the 2017 Tax Act. This benefit was partially offset by a $2.2 million net increase in valuation allowance, inclusive of a $3.0 million valuation allowance recorded against the Company’s foreign tax credits as a result of the enactment of the 2017 Tax Act, the recognition of $0.6 million of additional tax expense associated with a change in the state tax rate in Illinois, and additional taxes resulting from higher pre-tax earnings. The Company’s effective tax rate for the year ended December 31, 2018 was 16.0%, compared to 0.8% in 2017. The 2018 effective tax rate included the effects of the benefit from the tax planning strategy, whereas the 2017 effective tax rate included the aforementioned impacts resulting from the 2017 Tax Act. The Company recognized income tax expense of $0.5 million for the year ended December 31, 2017, compared to $17.4 million for the year ended December 31, 2016. The decrease in expense was primarily due to the recognition of a $23.0 million net tax benefit associated with the revaluation of the Company’s net deferred tax liabilities in the U.S. following the reduction of the federal corporate tax rate included in the 2017 Tax Act. This decrease was partially offset by a $2.2 million net increase in valuation allowance, inclusive of a $3.0 million valuation allowance recorded against the Company’s foreign tax credits as a result of the enactment of the 2017 Tax Act, the recognition of $0.6 million of additional tax expense associated with a change in the state tax rate in Illinois, and additional taxes resulting from higher pre-tax earnings. The Company’s effective tax rate for the year ended December 31, 2017 was 0.8%, compared to 30.6% in 2016. The 2017 effective tax rate included the aforementioned impacts resulting from the 2017 Tax Act. The effective tax rate for 2016 included a $2.2 million net benefit from valuation allowance changes, consisting of a $3.5 million benefit associated with the release of valuation allowance in Canada, offset by $1.3 million of expense recognized in connection with establishing a valuation allowance against net deferred tax assets in the U.K. The Company paid income taxes of $21.6 million in 2018, $13.9 million in 2017 and $13.3 million in 2016. Impact of the 2017 Tax Act In December 2017, the 2017 Tax Act was enacted. Among its provisions, the 2017 Tax Act reduces the U.S. federal corporate tax rate from 35% to 21% (effective in 2018), required companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred and created new taxes on certain foreign sourced earnings, including a new minimum tax on Global Intangible Low-Taxed Income (“GILTI”). The Company accounts for income taxes in accordance with ASC 740, Income Taxes, which requires that the effect of a change in tax rates on deferred tax assets and liabilities be recognized in the period the tax rate change was enacted. As a result of the 2017 Tax Act, the Company remeasured its U.S. deferred tax assets and liabilities at the lower rate, recording a net tax benefit of $23.0 million as a component of Income tax expense on the Consolidated Statement of Operations for the year ended December 31, 2017. In addition, the 2017 Tax Act moved the U.S. from a worldwide system of taxation to a territorial system and changed the rules that enabled taxpayers to generate foreign source income related to export sales. As a result of these changes, the Company concluded that it was not “more likely than not” that it could utilize its existing foreign tax credits within the applicable carryforward period and recognized a $3.0 million valuation allowance was recorded against the Company’s foreign tax credits as of December 31, 2017. The 2017 Tax Act also provides a one-time “transition tax” on untaxed post-1986 accumulated earnings and profits (“E&P”) of a company’s controlled foreign corporations (“CFC”) determined as of November 2, 2017 or December 31, 2017 (whichever date on which there is more deferred E&P). Cash and cash equivalents are taxed at an effective rate of 15.5% and earnings in excess of the cash position are taxed at an effective rate of 8%. The 2017 Tax Act permits the netting of positive earnings of one CFC against deficits of others. At both November 2, 2017 and December 31, 2017, the accumulated undistributed earnings of the Company’s foreign subsidiaries aggregate to an overall E&P deficit. Therefore, the Company did not have a transition tax liability under the provisions of the 2017 Tax Act. As of December 31, 2018, the Company continues to assert that its undistributed earnings of certain foreign subsidiaries are indefinitely reinvested. Due to the complexities of implementing the provisions of the 2017 Tax Act, the SEC staff issued Staff Accounting Bulletin No. 118 (“SAB 118”), which provides guidance on the accounting for the tax effects of the 2017 Tax Act and permits a measurement period not to exceed one year from the enactment date for companies to complete the required analyses and accounting. The consolidated financial statements for the year ended December 31, 2017 included the Company’s provisional estimates of the impact of the 2017 Tax Act, in accordance with SAB 118. The SAB 118 measurement period ended during the fourth quarter of 2018 and the Company had no significant measurement period adjustments. Additionally, the Company completed its assessment of GILTI and has established a policy to account for this tax as a period expense in the year it is incurred. Deferred Taxes The following table summarizes deferred income tax assets and liabilities of the Company’s continuing operations:
(in millions) | 2018 |  | 2017
Deferred tax assets: |  |  |
Property, plant and equipment | $ | 1.9 |  |  | $ | 1.7 |
Accrued expenses | 27.3 |  |  | 24.0 |
Stock based compensation | 3.5 |  |  | 2.6 |
Net operating loss, research and development and foreign tax credit carryforwards | 25.8 |  |  | 22.6 |
Goodwill and intangibles | 0.9 |  |  | 0.4 |
Pension benefits | 20.2 |  |  | 22.7 |
Other | — |  |  | 0.8 |
Gross deferred tax assets | 79.6 |  |  | 74.8 |
Valuation allowance | (9.4 | ) |  | (10.6 | )
Total deferred tax assets | 70.2 |  |  | 64.2 |
Deferred tax liabilities: |  |  |
Property, plant and equipment | (17.9 | ) |  | (11.3 | )
Pension benefits | (10.3 | ) |  | (13.5 | )
Goodwill and intangibles | (74.6 | ) |  | (77.1 | )
Other | (1.1 | ) |  | (1.2 | )
Gross deferred tax liabilities | (103.9 | ) |  | (103.1 | )
Net deferred tax liabilities | $ | (33.7 | ) |  | $ | (38.9 | )
The deferred tax asset for tax loss carryforwards at December 31, 2018 includes federal net operating loss carryforwards of $0.5 million, which will begin to expire in 2027, state net operating loss carryforwards of $7.3 million, which will begin to expire in 2019, and foreign net operating loss carryforwards of $13.8 million, which will begin to expire in 2025. The deferred tax asset for tax credit carryforwards at December 31, 2018 includes U.S. research tax credit carryforwards of $1.1 million, which will begin to expire in 2019 and U.S. foreign tax credits of $3.1 million, which will begin to expire in 2023. The deferred tax asset for tax loss and tax credit carryforwards at December 31, 2017, included federal net operating loss carryforwards of $1.1 million, state net operating loss carryforwards of $8.3 million, foreign net operating loss carryforwards of $9.1 million, U.S. foreign tax credits of $3.0 million, and U.S. research tax credit carryforwards of $1.1 million. The $70.2 million of deferred tax assets at December 31, 2018, 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, 2018. 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. Valuation Allowances ASC 740, Income Taxes, also 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 year ended December 31, 2017, the Company determined that $0.8 million of valuation allowance, previously recorded against state deferred tax assets, could be released primarily as a result of future taxable income expected to be generated in certain states following the TBEI acquisition. At December 31, 2018, the total valuation allowance recorded against the Company’s deferred tax assets was $9.4 million, comprised of a $5.3 million valuation allowance recorded against state net operating loss carryforwards, a $1.0 million valuation allowance recorded against foreign net deferred tax assets, inclusive of a $0.8 million valuation allowance against net deferred tax assets in the U.K., and a $3.1 million valuation allowance recorded against the Company’s foreign tax credits, primarily as a result of the 2017 Tax Act. Unrecognized Tax Benefits The following table summarizes the activity related to the Company’s unrecognized tax benefits:
(in millions) | 2018 |  | 2017 |  | 2016
Balance at January 1 | $ | 1.9 |  |  | $ | 1.8 |  |  | $ | 2.2 |
Increases related to current year tax | 0.2 |  |  | 0.2 |  |  | 0.1 |
Decreases due to lapse of statute of limitations | (0.5 | ) |  | (0.1 | ) |  | (0.5 | )
Balance at December 31 | $ | 1.6 |  |  | $ | 1.9 |  |  | $ | 1.8 |
The Company’s accounting policy is to recognize interest and penalties related to income tax matters in income tax expense. At December 31, 2018 and 2017, accruals for interest and penalties amounting to $0.6 million and $0.6 million, respectively, are included in the Consolidated Balance Sheets but are not included in the table above. At December 31, 2018 and 2017, reserves for unrecognized tax benefits, including interest and penalties, of $2.1 million and $2.2 million, respectively, were included within Other long-term liabilities on the Consolidated Balance Sheets. At December 31, 2018 and 2017, unrecognized tax benefits of $0.1 million and $0.3 million, respectively, were included as a component of Deferred tax liabilities on the Consolidated Balance Sheets. All of the unrecognized tax benefits of $1.6 million and $1.9 million at December 31, 2018 and 2017, respectively, 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 or settlements with tax authorities within the next twelve months. Status of Tax Returns We file U.S., state and foreign income tax returns in jurisdictions with varying statutes of limitations. The 2015 through 2017 tax years generally remain subject to examination by federal tax authorities, whereas the 2014 through 2017 tax years generally remain subject to examination by most state tax authorities. In significant foreign jurisdictions, the tax years from 2014 through 2017 generally remain subject to examination by their respective tax authorities.

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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