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Income taxes | 12 Months Ended
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Dec. 31, 2017
Income Tax Disclosure [Abstract] |
Income taxes | Income taxes The following table summarizes the components of the provision for income taxes from continuing operations:
| 2017 |  | 2016 |  | 2015
| (Dollars in thousands)
Current: |  |  |  |  |
Federal | $ | 133,621 |  |  | $ | 2,344 |  |  | $ | (4,700 | )
State | 5,213 |  |  | 5,230 |  |  | 2,377 |
Foreign | 35,444 |  |  | 28,842 |  |  | 53,151 |
Deferred: |  |  |  |  |
Federal | (258,247 | ) |  | (25,141 | ) |  | (35,750 | )
State | 1,459 |  |  | (1,837 | ) |  | (5,012 | )
Foreign | 212,158 |  |  | (1,364 | ) |  | (2,228 | )
| $ | 129,648 |  |  | $ | 8,074 |  |  | $ | 7,838 |
The Tax Cuts and Jobs Act (the “TCJA”) was enacted on December 22, 2017. The legislation significantly changes U.S. tax law by, among other things, permanently reducing corporate income tax rates from a maximum of 35% to 21%, effective January 1, 2018; implementing a territorial tax system, by generally providing for, among other things, a dividends received deduction on the foreign source portion of dividends received from a foreign corporation if specified conditions are met; and imposing a one-time repatriation tax on undistributed post-1986 foreign subsidiary earnings and profits, which are deemed repatriated for purposes of the tax. As a result of the TCJA, the Company reassessed and revalued its ending net deferred tax liabilities at December 31, 2017 and recognized a $46.1 million provisional tax benefit in the Company’s consolidated statement of income for the year ended December 31, 2017. As a result of the deemed repatriation tax under the TCJA, the Company recognized a $154.0 million provisional tax expense in the Company’s consolidated statement of income for the year ended December 31, 2017, and the Company expects to pay this tax over an eight-year period. While the TCJA provides for a territorial tax system, beginning in 2018, it includes two new U.S. tax base erosion provisions, the global intangible low-taxed income (“GILTI”) provisions and the base-erosion and anti-abuse tax (“BEAT”) provisions. The GILTI provisions require the Company to include in its U.S. income tax return foreign subsidiary earnings in excess of an allowable return on the foreign subsidiary’s tangible assets. The Company expects that it will be subject to incremental U.S. tax on GILTI income beginning in 2018. Because of the complexity of the new GILTI tax rules, the Company is continuing to evaluate this provision of the TCJA and the application of Financial Accounting Standards Board Accounting Standards Codification Topic 740, "Income Taxes." Under U.S. GAAP, the Company may make an accounting policy election to either (1) treat future taxes with respect to the inclusion in U.S. taxable income of amounts related to GILTI as current period expense when incurred (the “period cost method”) or (2) take such amounts into a company’s measurement of its deferred taxes (the “deferred method”). The Company’s selection of an accounting policy with respect to the new GILTI tax rules will depend, in part, on an analysis of the Company’s global income to determine whether the Company expects to have future U.S. inclusions in taxable income related to GILTI and, if so, what the impact is expected to be. The determination of whether the Company expects to have future U.S. inclusions in taxable income related to GILTI depends not only on the Company’s current structure and estimated future operating results but also the Company’s ability and willingness to modify its structure and/or its business. As such, the Company is not yet able to reasonably estimate the effect of this provision of the TCJA. Therefore, the Company has not made any adjustments related to potential GILTI tax in its financial statements and has not made a policy decision regarding whether to record deferred taxes on GILTI. The BEAT provisions in the TCJA eliminate the deduction of certain base-erosion payments made to related foreign corporations, and impose a minimum tax if greater than regular tax. While the Company’s analysis of the BEAT provisions is not fully completed, the Company does not currently believe it will be subject to the BEAT provisions in 2018 and has not recorded any tax impacts of BEAT in its consolidated financial statements for the year ended December 31, 2017. On December 22, 2017, the SEC staff issued Staff Accounting Bulletin No. 118 (“SAB 118”) to address the application of U.S. GAAP in situations where a company does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the TCJA. SAB 118 states that in these circumstances, if the company can determine a reasonable estimate for the income tax effects, the SEC staff would not object if the company includes in its financial statements the reasonable estimate it has determined (and the SEC staff also expressed its belief that it would not be appropriate for a company to exclude a reasonable estimate from its financial statements to the extent a reasonable estimate has been determined). The Company has recognized the provisional tax impacts related to deemed repatriated earnings and the revaluation of deferred tax assets and liabilities and included these amounts in its consolidated financial statements for the year ended December 31, 2017. The ultimate impact may differ from these provisional amounts, possibly materially, due to, among other things, additional analysis, changes in interpretations and assumptions the Company has made, additional regulatory guidance that may be issued, and actions the Company may take as a result of the TCJA. At December 31, 2017, the cumulative unremitted earnings of subsidiaries outside the United States that are considered non-permanently reinvested and for which taxes have been provided approximated $2.0 billion. The following table summarizes the United States and non-United States components of income from continuing operations before taxes:
| 2017 |  | 2016 |  | 2015
| (Dollars in thousands)
United States | $ | 37,528 |  |  | $ | (29,988 | ) |  | $ | (19,550 | )
Other | 247,383 |  |  | 275,713 |  |  | 264,196 |
| $ | 284,911 |  |  | $ | 245,725 |  |  | $ | 244,646 |
Reconciliations between the statutory federal income tax rate and the effective income tax rate are as follows:
| 2017 |  | 2016 |  | 2015
Federal statutory rate | 35.0 | % |  | 35.0 | % |  | 35.0 | %
Tax effect of international items | (25.7 | ) |  | (27.5 | ) |  | (28.4 | )
Impacts of U.S. tax reform | 37.9 |  |  | — |  |  | — |
Excess tax benefits related to share-based compensation | (2.3 | ) |  | — |  |  | — |
State taxes, net of federal benefit | 0.1 |  |  | 0.9 |  |  | (0.7 | )
Uncertain tax contingencies | (1.8 | ) |  | (3.6 | ) |  | (1.9 | )
Contingent consideration reversals | 0.4 |  |  | (1.2 | ) |  | (0.7 | )
Other, net | 1.9 |  |  | (0.3 | ) |  | (0.1 | )
| 45.5 | % |  | 3.3 | % |  | 3.2 | %
The effective income tax rate for 2017 was 45.5% compared to 3.3% for 2016. The effective income tax rate for 2017 was impacted by a net tax expense of $107.9 million resulting from the enactment of the TCJA. The $107.9 million net tax expense reflects a tax expense of $154.0 million for the deemed repatriation of undistributed foreign earnings partially offset by a $46.1 million tax benefit resulting from the reassessment and revaluation of the net deferred tax liabilities. Additionally, the effective tax rate for 2017 was impacted by a net excess tax benefit related to share-based compensation and a benefit resulting from the expiration of various statutes of limitation. The effective income tax rate for 2016 was impacted by a tax benefit associated with U.S. federal tax return filings, a benefit resulting from the reduction of our German reserves as a result of the conclusion of an audit, a benefit resulting from the expiration of various statutes of limitation, and a benefit associated with the IP R&D asset impairment referenced in Note 4. The Company and its subsidiaries are routinely subject to examinations by various taxing authorities. In conjunction with these examinations and as a regular practice, the Company establishes and adjusts reserves with respect to its uncertain tax positions to address developments related to those positions. The Company realized a net benefit of approximately $5.2 million in 2017 as a result of reducing its reserves with respect to uncertain tax positions, principally due to the expiration of a number of applicable statutes of limitations. The Company realized a net benefit of approximately $8.8 million in 2016, as a result of reducing its reserves with respect to uncertain tax positions, principally due to the conclusion of a tax audit in Germany and the expiration of various statutes of limitations. The Company realized a net benefit of approximately $4.6 million in 2015, which resulted from a reduction in the Company's U.S. reserves due to the conclusion of a tax audit, offset by an increase in the Company's foreign reserves with respect to developments in the tax audit in Germany discussed above. The following table summarizes significant components of the Company’s deferred tax assets and liabilities at December 31, 2017 and 2016:
| 2017 |  | 2016
| (Dollars in thousands)
Deferred tax assets: |  |  |
Tax loss and credit carryforwards | $ | 210,055 |  |  | $ | 136,046 |
Pension | 28,147 |  |  | 46,563 |
Reserves and accruals | 62,378 |  |  | 52,343 |
Other | 3,619 |  |  | 17,704 |
Less: valuation allowances | (104,799 | ) |  | (104,520 | )
Total deferred tax assets | 199,400 |  |  | 148,136 |
Deferred tax liabilities: |  |  |
Property, plant and equipment | 22,299 |  |  | 32,209 |
Intangibles — stock acquisitions | 553,245 |  |  | 321,707 |
Unremitted foreign earnings | 223,494 |  |  | 63,419 |
Other | 228 |  |  | 466 |
Total deferred tax liabilities | 799,266 |  |  | 417,801 |
Net deferred tax liability | $ | (599,866 | ) |  | $ | (269,665 | )
As a result of the TCJA, the Company reassessed and revalued its deferred tax positions at December 31, 2017. As a result, the Company recognized a $46.1 million decrease in the net deferred tax liability in 2017. Under the tax laws of various jurisdictions in which the Company operates, deductions or credits that cannot be fully utilized for tax purposes during the current year may be carried forward, subject to statutory limitations, to reduce taxable income or taxes payable in a future tax year. At December 31, 2017, the tax effect of such carryforwards approximated $210.1 million. Of this amount, $11.5 million has no expiration date, $2.0 million expires after 2017 but before the end of 2022 and $196.6 million expires after 2022. A portion of these carryforwards consists of tax losses and credits obtained by the Company as a result of acquisitions; the utilization of these carryforwards are subject to an annual limitation imposed by Section 382 of the Internal Revenue Code, which limits a company’s ability to deduct prior net operating losses following a more than 50 percent change in ownership. It is not expected that the Section 382 limitation will prevent the Company ultimately from utilizing the applicable loss carryforwards. The determination of state net operating loss carryforwards is dependent upon the United States subsidiaries’ taxable income or loss, the state’s proportion of each subsidiary's taxable net income and the application of state laws, which can change from year to year and impact the amount of such carryforward. The valuation allowance for deferred tax assets of $104.8 million and $104.5 million at December 31, 2017 and 2016, respectively, relates principally to the uncertainty of the Company’s ability to utilize certain deferred tax assets, primarily tax loss and credit carryforwards in various jurisdictions. The valuation allowance was calculated in accordance with applicable accounting standards, which require that a valuation allowance be established and maintained when it is “more likely than not” that all or a portion of deferred tax assets will not be realized. Uncertain Tax Positions: The following table is a reconciliation of the beginning and ending balances for liabilities associated with unrecognized tax benefits for the twelve month periods ended December 31, 2017, 2016 and 2015:
| 2017 |  | 2016 |  | 2015
| (Dollars in thousands)
Balance at January 1 | $ | 15,054 |  |  | $ | 34,381 |  |  | $ | 51,084 |
Increase in unrecognized tax benefits related to prior years | — |  |  | — |  |  | 2,077 |
Decrease in unrecognized tax benefits related to prior years | — |  |  | (13,083 | ) |  | (15,372 | )
Unrecognized tax benefits related to the current year | 895 |  |  | 705 |  |  | 647 |
Reductions in unrecognized tax benefits due to settlements | — |  |  | (2,121 | ) |  | — |
Reductions in unrecognized tax benefits due to lapse of applicable statute of limitations | (6,813 | ) |  | (4,840 | ) |  | (2,337 | )
Increase (decrease) in unrecognized tax benefits due to foreign currency translation | 200 |  |  | 12 |  |  | (1,718 | )
Balance at December 31 | $ | 9,336 |  |  | $ | 15,054 |  |  | $ | 34,381 |
The total liabilities associated with the unrecognized tax benefits that, if recognized, would impact the effective tax rate for continuing operations, were $5.0 million at December 31, 2017. The Company accrues interest and penalties associated with unrecognized tax benefits in income tax expense in the consolidated statements of income, and the corresponding liability is included in the consolidated balance sheets. The net interest expense (benefit) and penalties reflected in income from continuing operations for the year ended December 31, 2017 was $0.2 million and $(0.2) million, respectively; for the year ended December 31, 2016 was $0.2 million and $(0.5) million, respectively; and for the year ended December 31, 2015 was $1.6 million and $(0.4) million, respectively. The corresponding liabilities in the consolidated balance sheets for interest and penalties at December 31, 2017 were $0.6 million and $2.6 million, respectively, and at December 31, 2016 were $0.7 million and $2.7 million, respectively. The taxable years for which the applicable statute of limitations remains open by major tax jurisdictions are as follows:
| Beginning |  | Ending
United States | 2014 |  | 2017
Canada | 2005 |  | 2017
China | 2012 |  | 2017
Czech Republic | 2014 |  | 2017
France | 2015 |  | 2017
Germany | 2011 |  | 2017
India | 2002 |  | 2017
Ireland | 2013 |  | 2017
Italy | 2012 |  | 2017
Malaysia | 2013 |  | 2017
Singapore | 2013 |  | 2017
The Company and its subsidiaries are routinely subject to income tax examinations by various taxing authorities. As of December 31, 2017, the most significant tax examinations in process are in Canada, Germany, Italy, and the United States. The date at which these examinations may be concluded and the ultimate outcome of the examinations is uncertain. As a result of the uncertain outcome of these ongoing examinations, future examinations or the expiration of statutes of limitation, it is reasonably possible that the related unrecognized tax benefits for tax positions taken could materially change from those recorded as liabilities at December 31, 2017. Due to the potential for resolution of certain examinations, and the expiration of various statutes of limitation, it is reasonably possible that the Company’s unrecognized tax benefits may change within the next year by a range of zero to $1.6 million.

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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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