Income Taxes

The provision for income taxes consists of the following for the years ended December 31, (in millions):



	2015			2014			2013
Current:
Federal	$	103.0		$	24.5		$	20.7
State	18.8			5.9			10.5
Foreign	19.4			19.2			30.2
Total current	141.2			49.6			61.4
Deferred	(7.2		)	39.3			88.6
Total provision	$	134.0		$	88.9		$	150.0
Total provision (benefit) — discontinued operations	$	55.8		$	(0.2	)	$	30.0
Total provision — continuing operations	$	78.2		$	89.1		$	120.0

The non-U.S. component of income before income taxes was $186.2 million, $163.3 million and $156.3 million in 2015, 2014 and 2013, respectively.

A reconciliation of the U.S. statutory rate to the effective income tax rate on a continuing basis is as follows for the years ended December 31,:



	2015		2014		2013
Statutory rate	35.0	%	35.0	%	35.0	%
Add (deduct) effect of:
State income taxes, net of federal income tax effect	3.0		2.1		1.7
Foreign tax credit	(17.5	)	(5.5	)	(3.8	)
Foreign rate differential	(10.5	)	(7.0	)	(2.7	)
Increases (decreases) in tax contingencies, net of impacts of resolutions	1.2		(0.6	)	0.9
Valuation allowance reserve increase (decrease)	0.2		(2.7	)	(3.5	)
Venezuela deconsolidation	15.7		—		—
Other, net	(3.9	)	(2.0	)	(5.2	)
Effective rate	23.2	%	19.3	%	22.4	%

The components of net deferred tax assets are as follows as of December 31, (in millions):



	2015			2014
Deferred tax assets:
Accruals not currently deductible for tax purposes	$	171.7		$	144.9
Post-retirement liabilities	28.6			39.5
Pension liabilities	113.5			135.3
Foreign net operating losses	248.3			271.9
Other	78.8			100.8
Total gross deferred tax assets	640.9			692.4
Less valuation allowance	(291.0		)	(345.3		)
Net deferred tax assets after valuation allowance	$	349.9		$	347.1
Deferred tax liabilities:
Accelerated depreciation	$	(69.7	)	$	(58.3	)
Amortizable intangibles	(463.6		)	(352.0		)
Other	(4.7		)	(3.4		)
Total gross deferred tax liabilities	$	(538.0	)	$	(413.7	)
Net deferred tax liabilities ⁽¹⁾	$	(188.1	)	$	(66.6	)

Noncurrent deferred income tax assets	$	38.5		$	39.1
Noncurrent deferred income tax liabilities	(226.6		)	(105.7		)
	$	(188.1	)	$	(66.6	)


(1)	In accordance with ASU 2013-11, $60.0 million and $31.3 million of deferred income tax assets have been offset against other noncurrent liabilities in the Consolidated Balance Sheet as of December 31, 2015 and 2014, respectively, and are not included in the net deferred tax liabilities in the table.

The Company’s foreign tax credit carryforwards of $30.5 million begin to expire in 2020. The Company has $921.7 million of U.S. and foreign net operating losses, of which $746.6 million do not expire and $175.1 million expire between 2016 and 2032.

As of December 31, 2015, the Company has a valuation allowance recorded against foreign net operating losses and other deferred tax assets the Company believes are not more likely than not to be realized due to the uncertainty resulting from a lack of previous taxable income within the applicable tax jurisdictions. A valuation allowance of $291.0 million and $345.3 million was recorded against certain deferred tax asset balances as of December 31, 2015 and 2014, respectively. For the year ended December 31, 2015, the Company recorded a net valuation allowance decrease of $54.3 million which is comprised of a valuation allowance reduction of $12.8 million for which the Company concluded the deferred tax assets were realizable; currency translation in foreign jurisdictions due to the strengthening of the U.S. dollar against the Euro and other currencies; and, the utilization of prior year net operating losses in the current year in certain jurisdictions that the Company previously determined were not more likely than not to be realized.

The Company routinely reviews valuation allowances recorded against deferred tax assets on a more likely than not basis as to whether the Company has the ability to realize the deferred tax assets. In making such a determination, the Company takes into consideration all available and appropriate positive and negative evidence, including projected future taxable income, future reversals of existing taxable temporary differences, the ability to carryback net operating losses and available tax planning strategies. Although realization is not assured, based on this existing evidence, the Company believes it is more likely than not that the Company will realize the benefit of existing deferred tax assets, net of the valuation allowances mentioned above. As of December 31, 2015, the Company determined that there is sufficient positive evidence to conclude that it is more likely than not that additional deferred tax assets in certain operations in Europe and the U.S. are realizable. The decrease in valuation allowance was partially offset by the increase in valuation allowance related to certain operations in Asia Pacific resulting in realization of $12.8 million of additional net deferred tax assets.

As of December 31, 2015, the estimated amount of total unremitted non-U.S. subsidiary earnings is $657.8 million. Such earnings and profits are considered to be indefinitely reinvested and, accordingly, no U.S. federal or state deferred income taxes have been provided thereon on this amount or any additional excess of the amount for financial reporting over the tax basis of investments in foreign subsidiaries. Earnings is the most significant component of the basis difference which is indefinitely reinvested. Upon distribution of those earnings in the form of dividends or otherwise, the Company would be subject to U.S. income taxes and withholding taxes payable in various non-U.S. jurisdictions, which could potentially be offset by foreign tax credits. Determination of the amount of unrecognized deferred U.S. income tax liability is not practicable because of the complexities associated with its hypothetical calculation.

As of December 31, 2015 and 2014, the Company had unrecognized tax benefits of $162.9 million and $101.4 million, respectively. The Company recorded unrecognized tax benefits as a result of acquisitions of $61.9 million in 2015. If recognized, $155.4 million and $94.5 million as of December 31, 2015 and 2014, respectively, would affect the effective tax rate. The Company recognizes interest and penalties, if any, related to unrecognized tax benefits as a component of income tax expense. As of December 31, 2015 and 2014, the Company had recorded accrued interest and penalties related to the unrecognized tax benefits of $6.3 million and $5.4 million, respectively. During 2015, the Company recognized an income tax benefit on interest and penalties of $0.1 million due to the resolution of certain tax contingencies partially offset by the accrual of current year interest on existing positions. During 2014, the Company recognized an income tax benefit on interest and penalties of $4.8 million due to the resolution of certain tax contingencies.

The following table summarizes the changes in gross unrecognized tax benefits for the years ended December 31, (in millions):



	2015			2014
Unrecognized tax benefits balance at January 1,	$	101.4		$	103.8
Increases in tax positions for prior years	63.1			3.5
Decreases in tax positions for prior years	(19.4		)	(11.1		)
Increases in tax positions for current year	21.5			10.1
Settlements with taxing authorities	(2.6		)	(1.8		)
Lapse of statute of limitations	(1.1		)	(3.1		)
Unrecognized tax benefits balance at December 31,	$	162.9		$	101.4

It is reasonably possible that there would be a change in the amount of the Company’s unrecognized tax benefits within the next 12 months due to activities of various worldwide taxing authorities, including proposed assessments of additional tax, possible settlement of audit issues, or the expiration of applicable statutes of limitations. In the normal course of business, the Company is subject to audits by worldwide taxing authorities regarding various tax liabilities. The Company’s U.S. federal income tax returns for 2011, 2012 and 2013, as well as certain state and non-U.S. income tax returns for various years, are under routine examination.

The Company files numerous consolidated and separate income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. The statute of limitations for the Company’s U.S. federal income tax returns has expired for years prior to 2011. The Company’s Canadian tax returns are subject to examination for years after 2009. With few exceptions, the Company is no longer subject to other income tax examinations for years before 2011.