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Income Taxes | 12 Months Ended
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Oct. 31, 2017
Income Tax Disclosure [Abstract] |
Income Taxes | INCOME TAXES The Company files income tax returns in the U.S. federal jurisdiction, various U.S. state and local jurisdictions, and various non-U.S. jurisdictions. The provision for income taxes consists of the following:
| Year Ended October 31,
(in millions) | 2017 |  | 2016 |  | 2015
Current |  |  |  |  |
Federal | $ | 33.0 |  |  | $ | 20.3 |  |  | $ | 18.3 |
State and local | 6.0 |  |  | 4.4 |  |  | 4.0 |
Non-U.S. | 25.9 |  |  | 40.3 |  |  | 29.6 |
| 64.9 |  |  | 65.0 |  |  | 51.9 |
Deferred |  |  |  |  |
Federal | 4.5 |  |  | 0.5 |  |  | 2.4 |
State and local | (2.0 | ) |  | 0.5 |  |  | 0.2 |
Non-U.S. | (0.2 | ) |  | 0.5 |  |  | (6.1 | )
| 2.3 |  |  | 1.5 |  |  | (3.5 | )
| $ | 67.2 |  |  | $ | 66.5 |  |  | $ | 48.4 |
The non-U.S. income before income tax expense was $85.2 million, $49.9 million and $44.8 million in 2017, 2016, and 2015, respectively. The U.S. income before income tax was $115.1 million, $91.3 million and $70.0 million in 2017, 2016, and 2015, respectively. The following is a reconciliation of the provision for income taxes based on the federal statutory rate to the Company’s effective income tax rate:
| Year Ended October 31,
| 2017 |  | 2016 |  | 2015
Federal statutory rate | 35.00 | % |  | 35.00 | % |  | 35.00 | %
Impact of foreign tax rate differential | (9.86 | )% |  | (11.15 | )% |  | (10.10 | )%
State and local taxes, net of federal tax benefit | 1.35 | % |  | 2.19 | % |  | 2.80 | %
Net impact of changes in valuation allowances | 20.74 | % |  | 1.91 | % |  | 3.00 | %
Venezuela balance sheet remeasurement | — | % |  | — | % |  | 5.90 | %
Non-deductible write-off and impairment of goodwill and other intangible assets | (0.02 | )% |  | 7.37 | % |  | 2.50 | %
Unrecognized tax benefits | (2.00 | )% |  | 4.84 | % |  | 2.50 | %
Permanent book-tax differences | (15.71 | )% |  | (4.78 | )% |  | (0.50 | )%
Withholding taxes | 1.88 | % |  | 4.64 | % |  | 2.70 | %
Other items, net | 2.20 | % |  | 7.08 | % |  | (1.60 | )%
| 33.58 | % |  | 47.10 | % |  | 42.20 | %
The Company included in the table above a $38.6 million and 19.26% change in valuation allowance, with offsetting amounts in permanent book-tax differences, for certain intercompany financing transactions. The primary items which decreased the Company’s effective income tax rate from the federal statutory rate in 2017 were permanent book-tax differences, unrecognized tax benefits, the impact of foreign tax rates that differ from the federal statutory tax rate, and other immaterial items; offset primarily by increases in valuation allowances. The primary items which increased the Company’s effective income tax rate from the federal statutory rate in 2016 were non-deductible expenses, such as the write-off of goodwill allocated to divestitures and impairments, withholding taxes, unrecognized tax benefits, state and local taxes, net of federal tax benefit, the net impact of changes in valuation allowances due to changes in circumstances in several legal entities and other tax items. Cumulatively, these items impacted the 2016 effective income tax rate by approximately 28.0 percent. This increase was offset by the impact of foreign tax rates and permanent book-tax differences, which decreased the effective income tax rate by approximately 15.9 percent in 2016. In both 2016 and 2015, the items that materially increased the effective income tax rate from the federal statutory rate were related to non-U.S. operations. As discussed in Note 1 herein, with respect to its operations in Venezuela, the Company changed from the official exchange rate to the SIMADI rate requiring remeasurement of the Venezuelan balance sheet during 2015. This balance sheet remeasurement contributed 5.90 percent to the Company's effective tax rate. The net $19.4 million charge to the income statement had no tax benefit. The components of the Company’s deferred tax assets and liabilities as of October 31 for the years indicated were as follows:
(in millions) | 2017 |  | 2016
Deferred Tax Assets |  |  |
Net operating loss and other carryforwards | $ | 116.4 |  |  | $ | 83.0 |
Pension liabilities | 38.8 |  |  | 57.0 |
Insurance operations | 2.3 |  |  | 2.7 |
Incentive liabilities | 14.7 |  |  | 8.0 |
Environmental reserves | 1.4 |  |  | 1.3 |
Inventories | 7.6 |  |  | 7.8 |
State income taxes | 7.1 |  |  | 7.0 |
Postretirement benefit obligations | 3.0 |  |  | 3.1 |
Other | 16.6 |  |  | 9.1 |
Interest accrued | 3.1 |  |  | 1.2 |
Allowance for doubtful accounts | 1.6 |  |  | 1.9 |
Restructuring reserves | 0.6 |  |  | 1.1 |
Deferred compensation | 4.2 |  |  | 3.8 |
Foreign tax credits | 5.1 |  |  | 2.4 |
Vacation accruals | 1.4 |  |  | 1.5 |
Workers compensation accruals | 4.5 |  |  | 6.7 |
Total Deferred Tax Assets | 228.4 |  |  | 197.6 |
Valuation allowance | (132.4 | ) |  | (92.1 | )
Net Deferred Tax Assets | $ | 96.0 |  |  | $ | 105.5 |
Deferred Tax Liabilities |  |  |
Properties, plants and equipment | $ | 99.1 |  |  | $ | 86.5 |
Goodwill and other intangible assets | 74.0 |  |  | 80.4 |
Foreign income inclusion | 1.1 |  |  | 1.1 |
Foreign exchange gains | 0.2 |  |  | 5.7 |
Other | 15.4 |  |  | — |
Timberland transactions | 113.5 |  |  | 115.8 |
Total Deferred Tax Liabilities | 303.3 |  |  | 289.5 |
Net Deferred Tax Liability | $ | (207.3 | ) |  | $ | (184.0 | )
The Company included in the above table a $38.6 million deferred tax asset associated with foreign net operating loss carryforwards and a corresponding $38.6 million valuation allowance in a jurisdiction for which the Company determined utilization is remote. As of October 31, 2017, the Company had income tax benefits of $116.4 million from net operating loss carryforwards, almost all of which were related to non-US operations. The Company has recorded valuation allowances of $127.3 million and $89.9 million against non-US deferred tax assets as of October 31, 2017 and 2016 respectively. The Company has also recorded valuation allowances of $5.1 million and $2.3 million, as of October 31, 2017 and 2016, respectively, against U.S. deferred tax assets. The Company had net changes in valuation allowances in 2017 of $40.3 million, resulting in a net increase of 20.74% in the effective tax rate related to these changes. Prior to the first quarter of 2017, the Company asserted under ASC 740-30, formerly Accounting Principles Board opinion 23 ("APB 23"), that unremitted earnings of its subsidiaries directly or indirectly owned by Greif International Holding BV (“GIH”) were permanently reinvested. As a result of the Company’s debt re-financing concluded in November 2016, the Company reassessed its unremitted earnings position in the first quarter of 2017. The Company concluded that the unremitted earnings of subsidiaries owned directly, or indirectly, by GIH may be used to fully fund the repayment of up to €187.0 million ($203.9 million as of April 30, 2017) of third-party debt of GIH’s non-U.S. parent company, Greif Luxembourg Holding Sarl, a company organized under the laws of Luxembourg. During the 2017 fiscal year, €187.0 million ($203.9 million as of April 30, 2017) of the debt was repaid, utilizing, in part, $104.0 million of pre-2017 earnings distributed during the year. As a result, deferred tax liabilities of $2.0 million related to withholding taxes have been recorded through the fourth quarter of 2017 (initially measured at $3.6 million) with respect to the $104.0 million of pre-2017 unremitted earnings, which represents the total tax liability less current year dividends and releases for all of the pre-2017 unremitted earnings expected to be remitted. Beginning in fiscal year 2017, deferred tax liabilities have been recorded on current year earnings not required to be immediately reinvested by the respective subsidiaries of the foreign holding companies (“Foreign Holdcos”) (including holding companies such as GIH, Greif Luxembourg Holding Sarl, and Greif UK International Holding Ltd). Other than the change in assertion with respect to current year earnings, the Company has not recognized U.S. deferred income taxes on a cumulative total of $646.4 million of undistributed earnings from certain of the Company's non-U.S. subsidiaries as of October 31, 2017. The Company's intention is to reinvest these earnings indefinitely outside the U.S. or to repatriate the earnings only when it is tax-efficient to do so. Therefore, no U.S. tax provision has been accrued related to the repatriation of these earnings. Furthermore, given the uncertainty as to whether the Company will decide in the future to repatriate earnings and the wide variation in results depending on the various alternatives it could deploy should the Company decide to do so, it is difficult to make a reliable estimate as to the amount of any additional taxes which may be payable on such undistributed earnings. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
(in millions) | 2017 |  | 2016 |  | 2015
Balance at November 1 | $ | 29.7 |  |  | $ | 29.6 |  |  | $ | 34.3 |
Increases in tax positions for prior years | 2.1 |  |  | 5.7 |  |  | 8.5 |
Decreases in tax positions for prior years | (1.8 | ) |  | (10.5 | ) |  | (2.2 | )
Increases in tax positions for current years | 6.7 |  |  | 6.9 |  |  | 6.2 |
Settlements with taxing authorities | (7.4 | ) |  | — |  |  | (5.7 | )
Lapse in statute of limitations | (4.6 | ) |  | (2.6 | ) |  | (6.2 | )
Currency translation | 2.1 |  |  | 0.6 |  |  | (5.3 | )
Balance at October 31 | $ | 26.8 |  |  | $ | 29.7 |  |  | $ | 29.6 |
The 2017 net decrease is primarily related to decreases related to the settlement of prior years’ tax audits and lapse in statute of limitations, offset by increases in unrecognized tax benefits related to prior years and the current year. The Company files income tax returns in the U.S. federal jurisdiction, various U.S. state jurisdictions and various non-U.S. jurisdictions and is subject to audit by various taxing authorities for 2012 through the current fiscal year. The Company has completed its U.S. federal tax audit for the tax years through 2013. The October 31, 2017, 2016, 2015 balances include $26.8 million, $28.5 million and $28.5 million, respectively, of unrecognized tax benefits that, if recognized, would have an impact on the effective tax rate. The Company also recognizes accrued interest and penalties related to unrecognized tax benefits in income tax expense net of tax, as applicable. As of October 31, 2017 and October 31, 2016, the Company had $3.7 million and $5.6 million, respectively, accrued for the payment of interest and penalties. The Company has estimated the reasonably possible expected net change in unrecognized tax benefits through October 31, 2017 under ASC 740. The Company’s estimate is based on lapses of the applicable statutes of limitations, settlements and payments of uncertain tax positions. The estimated net decrease in unrecognized tax benefits for the next 12 months ranges from zero to $5.0 million. Actual results may differ materially from this estimate.

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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 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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