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Income Taxes | 12 Months Ended
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Dec. 31, 2016
Income Taxes | 15. Income Taxes The components of income from continuing operations before income taxes and noncontrolling interests were as follows:
(In millions) |  | 2016 |  |  | 2015 |  |  | 2014 |
Domestic operations |  | $ | 513.8 |  |  | $ | 387.7 |  |  | $ | 301.4 |
Foreign operations |  |  | 68.3 |  |  |  | 72.2 |  |  |  | 90.5 |
Income before income taxes and noncontrolling interests |  | $ | 582.1 |  |  | $ | 459.9 |  |  | $ | 391.9 |
A reconciliation of income taxes at the 35% federal statutory income tax rate to the income tax provision reported was as follows:
(In millions) |  | 2016 |  |  | 2015 |  |  | 2014 |
Income tax expense computed at federal statutory income tax rate |  | $ | 203.7 |  |  | $ | 161.0 |  |  | $ | 137.2 |
Other income taxes, net of federal tax benefit |  |  | 12.6 |  |  |  | 9.4 |  |  |  | 7.2 |
Foreign taxes at a different rate than U.S. federal statutory income tax rate |  |  | (7.6 | ) |  |  | (8.7 | ) |  |  | (13.4 | )
Tax benefit on income attributable to domestic production activities |  |  | (13.0 | ) |  |  | (12.5 | ) |  |  | (7.6 | )
Net adjustments for uncertain tax positions |  |  | 13.2 |  |  |  | 4.7 |  |  |  | 4.7 |
Adoption of ASU 2016-09 |  |  | (27.8 | ) |  |  | — |  |  |  | — |
Net effect of rate changes on deferred taxes |  |  | (1.1 | ) |  |  | 0.2 |  |  |  | (0.7 | )
Valuation allowance increase (decrease) |  |  | (2.1 | ) |  |  | 0.8 |  |  |  | (4.1 | )
Miscellaneous other, net |  |  | (8.2 | ) |  |  | (1.5 | ) |  |  | (5.0 | )
Income tax expense as reported |  | $ | 169.7 |  |  | $ | 153.4 |  |  | $ | 118.3 |
Effective income tax rate |  |  | 29.2 | % |  |  | 33.4 | % |  |  | 30.2 | %
The effective income tax rates for 2016, 2015 and 2014 were favorably impacted by the tax benefit attributable to the Domestic Production Activity (Internal Revenue Code Section 199) Deduction, favorable tax rates in foreign jurisdictions, and a benefit associated with the various extensions of the U.S. research and development credit, offset by state and local taxes and increases to uncertain tax positions. The 2016 effective income tax rate was favorably impacted by a tax benefit related to the adoption of ASU 2016-09, the new accounting guidance relating to share-based compensation. The benefit associated with the favorable tax rates in foreign jurisdictions is affected by overall allocation of income, rate changes and impact of foreign exchange rates. In 2015, the effective income tax rate benefit from foreign tax rates was reduced, as compared to prior years, due to the overall allocation of income within foreign jurisdictions and an expiration of a favorable tax incentive that in total increased the effective foreign tax rate by 6%. The 2015 effective income tax rate was unfavorably impacted by $2.4 million related to nondeductible acquisition costs. The effective tax rate in 2014 was favorably impacted by the release of valuation allowances related to state net operating loss carryforwards of $4.1 million. A reconciliation of the beginning and ending amount of unrecognized tax benefits (“UTBs”) was as follows:
(In millions) |  | 2016 |  |  | 2015 |  |  | 2014 |
Unrecognized tax benefits — beginning of year |  | $ | 38.2 |  |  | $ | 31.0 |  |  | $ | 23.7 |
Gross additions — current year tax positions |  |  | 10.7 |  |  |  | 4.6 |  |  |  | 8.7 |
Gross additions — prior year tax positions |  |  | 10.4 |  |  |  | 8.3 |  |  |  | 2.2 |
Gross additions (reductions) — purchase accounting adjustments |  |  | 9.7 |  |  |  | 0.1 |  |  |  | (1.1 | )
Gross reductions — prior year tax positions |  |  | (9.8 | ) |  |  | (2.1 | ) |  |  | (2.5 | )
Gross reductions — settlements with taxing authorities |  |  | (1.0 | ) |  |  | (3.6 | ) |  |  | — |
Impact of change in foreign exchange rates |  |  | (0.0 | ) |  |  | (0.1 | ) |  |  | — |
Unrecognized tax benefits — end of year |  | $ | 58.2 |  |  | $ | 38.2 |  |  | $ | 31.0 |
The amount of UTBs that, if recognized as of December 31, 2016, would affect the Company’s effective tax rate was $45.4 million. It is reasonably possible that, within the next twelve months, total UTBs may decrease in the range of $4.0 million to $5.0 million primarily as a result of the conclusion of U.S. federal, state and foreign income tax proceedings. We classify interest and penalty accruals related to UTBs as income tax expense. In 2016, we recognized an interest and penalty expense of approximately $1.1 million. In 2015, we recognized an interest and penalty expense of approximately $1.0 million. In 2014, we recognized an interest and penalty expense of approximately $0.5 million. At December 31, 2016 and 2015, we had accruals for the payment of interest and penalties of $11.0 million and $10.2 million, respectively. We file income tax returns in the U.S., various state and foreign jurisdictions. The Company is currently under examination by the U.S. Internal Revenue Service (“IRS”) for the periods related to 2013 through 2015. We have tax years that remain open and subject to examination by tax authorities in the following major taxing jurisdictions: Canada for years after 2011, Mexico for years after 2006 and China for years after 2012. Income taxes in 2016, 2015 and 2014 were as follows:
(In millions) |  | 2016 |  |  | 2015 |  |  | 2014 |
Current |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 150.4 |  |  | $ | 130.6 |  |  | $ | 86.9 |
Foreign |  |  | 22.3 |  |  |  | 19.7 |  |  |  | 12.3 |
State and other |  |  | 22.9 |  |  |  | 16.1 |  |  |  | 12.0 |
Deferred |  |  |  |  |  |  |  |  |  |  |  |
Federal, state and other |  |  | (23.9 | ) |  |  | (11.3 | ) |  |  | 2.7 |
Foreign |  |  | (2.0 | ) |  |  | (1.7 | ) |  |  | 4.4 |
Total income tax expense |  | $ | 169.7 |  |  | $ | 153.4 |  |  | $ | 118.3 |
The components of net deferred tax assets (liabilities) as of December 31, 2016 and 2015 were as follows:
(In millions) |  | 2016 |  |  | 2015 |
Deferred tax assets: |  |  |  |  |  |  |  |
Compensation and benefits |  | $ | 56.1 |  |  | $ | 32.8 |
Defined benefit plans |  |  | 82.5 |  |  |  | 84.4 |
Capitalized inventories |  |  | 13.6 |  |  |  | 12.1 |
Accounts receivable |  |  | 10.3 |  |  |  | 7.7 |
Other accrued expenses |  |  | 41.4 |  |  |  | 23.7 |
Net operating loss and other tax carryforwards |  |  | 39.7 |  |  |  | 39.9 |
Valuation allowance |  |  | (16.4 | ) |  |  | (19.7 | )
Miscellaneous |  |  | 2.5 |  |  |  | 6.1 |
Total deferred tax assets |  |  | 229.7 |  |  |  | 187.0 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
LIFO inventories |  |  | (6.7 | ) |  |  | (8.2 | )
Fixed assets |  |  | (57.1 | ) |  |  | (48.5 | )
Identifiable intangible assets |  |  | (210.4 | ) |  |  | (194.6 | )
Investment in partnership |  |  | (109.3 | ) |  |  | (129.8 | )
Miscellaneous |  |  | (0.2 | ) |  |  | (0.2 | )
Total deferred tax liabilities |  |  | (383.7 | ) |  |  | (381.3 | )
Net deferred tax liability |  | $ | (154.0 | ) |  | $ | (194.3 | )
In accordance with ASC requirements for Income Taxes, deferred taxes were classified in the consolidated balance sheets as of December 31, 2016 and 2015 as follows:
(In millions) |  | 2016 |  |  | 2015 |
Other current assets |  | $ | — |  |  | $ | — |
Other current liabilities |  |  | — |  |  |  | — |
Other assets |  |  | 9.5 |  |  |  | 7.4 |
Deferred income taxes |  |  | (163.5 | ) |  |  | (201.7 | )
Net deferred tax liability |  | $ | (154.0 | ) |  | $ | (194.3 | )
As of December 31, 2016 and 2015, the Company had deferred tax assets relating to net operating losses, capital losses, and other tax carryforwards of $39.7 million and $39.9 million, respectively, of which approximately $8.3 million will expire between 2017 and 2021, and the remainder of which will expire in 2022 and thereafter. The Company has provided a valuation allowance to reduce the carrying value of certain of these deferred tax assets, as management has concluded that, based on the available evidence, it is more likely than not that the deferred tax assets will not be fully realized. The undistributed earnings of foreign subsidiaries that are considered indefinitely reinvested were $313.6 million at December 31, 2016. A quantification of the associated deferred tax liability on these undistributed earnings has not been made, as the determination of such liability is not practicable.

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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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