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Income Taxes | 12 Months Ended
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Dec. 31, 2015
Income Tax Disclosure [Abstract] |
Income Taxes | 12. Income Taxes The components of (loss) earnings before income taxes were:
| Years Ended December 31,
| 2015 |  | 2014 |  | 2013
Domestic | $ | (73.4 | ) |  | $ | (13.2 | ) |  | $ | (2.9 | )
Foreign | (175.5 | ) |  | (41.9 | ) |  | 104.4 |
Total (loss) earnings before income taxes | $ | (248.9 | ) |  | $ | (55.1 | ) |  | $ | 101.5 |
Income tax expense (benefit) for the years ended December 31, 2015, 2014 and 2013 is comprised of the following:
| Years Ended December 31,
| 2015 |  | 2014 |  | 2013
Current: |  |  |  |  |
U.S. Federal | $ | 1.9 |  |  | $ | 0.3 |  |  | $ | — |
State and local | — |  |  | 0.2 |  |  | 0.1 |
Foreign | 8.7 |  |  | 30.2 |  |  | 25.6 |
Total current tax expense | 10.6 |  |  | 30.7 |  |  | 25.7 |
Deferred: |  |  |  |  |
U.S. Federal | $ | (3.3 | ) |  | $ | (10.3 | ) |  | $ | 0.5 |
State and local | (0.1 | ) |  | (0.1 | ) |  | — |
Foreign | (22.3 | ) |  | 11.6 |  |  | (30.5 | )
Total deferred tax expense (benefit) | (25.7 | ) |  | 1.2 |  |  | (30.0 | )
Total income tax expense (benefit) | $ | (15.1 | ) |  | $ | 31.9 |  |  | $ | (4.3 | )
The reconciliation of the U.S. federal income tax rate to the Company’s effective income tax rate was as follows:
| Years Ended December 31,
| 2015 |  | 2014 |  | 2013
U.S. Federal income tax rate | (35.0 | )% |  | (35.0 | )% |  | 35.0 | %
State and local taxes, net of Federal income tax benefit | (0.6 | )% |  | (1.8 | )% |  | 0.1 | %
Foreign operations tax effect | 3.1 | % |  | (2.7 | )% |  | (41.4 | )%
Research & experimentation tax credits | (1.0 | )% |  | (3.9 | )% |  | (0.8 | )%
Valuation allowance | 25.2 | % |  | 104.6 | % |  | 0.7 | %
Tax contingencies | (0.2 | )% |  | 1.4 | % |  | 0.6 | %
Other, principally non-tax deductible items | 1.8 | % |  | (12.2 | )% |  | 1.6 | %
Prior period items | 0.6 | % |  | 7.5 | % |  | — | %
Effective income tax rate | (6.1 | )% |  | 57.9 | % |  | (4.2 | )%
The Company’s effective tax rate is favorably impacted by two tax holidays granted to us by Malaysia effective through December 31, 2021. These tax holidays are subject to the Company’s satisfaction of certain conditions, including investment or sales thresholds, which the Company expects to maintain. If the Company fails to satisfy such conditions, the Company’s effective tax rate may be significantly adversely impacted. The benefit of these incentives for the years ending December 31, 2015, 2014 and 2013 is estimated to be $11.6 million, $16.8 million and $32.0 million, respectively. The benefit of the tax holidays on a per share basis for the years ending December 31, 2015, 2014 and 2013 was $0.13, $0.20 and $0.38, respectively. The components of the Company’s deferred tax assets and liabilities included the following:
| December 31, 2015 |  | December 31, 2014
Deferred tax assets: |  |  |
Accrued compensation, principally post-retirement and other employee benefits | $ | 14.5 |  |  | $ | 11.3 |
Accrued expenses, principally for state income taxes, interest and warranty | 17.1 |  |  | 4.8 |
Net operating loss and other carryforwards | 151.6 |  |  | 101.3 |
Inventories, principally due to reserves for financial reporting purposes and capitalization for tax purposes | 7.5 |  |  | 6.9 |
Accounts receivable, principally due to allowance for doubtful accounts | 0.2 |  |  | 0.1 |
Prepaid defined benefit plan assets | 1.5 |  |  | 1.7 |
Plant and equipment, principally due to differences in depreciation | 20.1 |  |  | 6.3 |
Total gross deferred tax assets | 212.5 |  |  | 132.4 |
Valuation allowance | (182.8 | ) |  | (80.7 | )
Total deferred tax assets | $ | 29.7 |  |  | $ | 51.7 |
Deferred tax liabilities: |  |  |
Intangible assets, principally due to different tax and financial reporting bases and amortization lives | $ | (30.2 | ) |  | $ | (79.4 | )
Other liabilities | (1.6 | ) |  | (1.9 | )
Total gross deferred tax liabilities | (31.8 | ) |  | (81.3 | )
Net deferred tax liability | $ | (2.1 | ) |  | $ | (29.6 | )
Classified as follows in the consolidated balance sheets: |  |  |
Deferred tax assets (current deferred tax assets) (1) | $ | — |  |  | $ | 9.8 |
Federal and other taxes on income (current deferred tax liabilities) (1) | — |  |  | (0.2 | )
Other assets and deferred charges (non-current deferred tax assets) (1) | 16.3 |  |  | 10.0 |
Deferred income taxes (non-current deferred tax liabilities) (1) | (18.4 | ) |  | (49.2 | )
Net deferred tax liability | $ | (2.1 | ) |  | $ | (29.6 | )
(1) The Company adopted ASU 2015-17 on a prospective basis effective December 31, 2015. See Note 1. Summary of Significant Accounting Policies for additional information regarding ASU 2015-17. The Company’s income tax balances were adjusted to reflect the Company’s post-Separation stand-alone income tax positions, including those related to tax loss and credit carryforwards, other deferred tax assets and valuation allowances. These Separation-related adjustments resulted in a $10.1 million increase to the net deferred tax liability, primarily due to a decrease in tax loss and credit carryforwards, partially offset by a decrease in the Company's valuation allowances. The increase in the net deferred tax liability was offset by a corresponding decrease in Net Former Parent Company Investment. During fiscal 2015, the Company established a valuation allowance for a significant portion of its deferred tax assets, primarily in the U.S. and Austria. The Company regularly assesses the need for a valuation allowance against its deferred tax assets by considering both positive and negative evidence related to the likelihood of the realization of its deferred taxes to determine whether it is more likely than not that some or all of its deferred tax assets will be realized. The Company recorded a valuation allowance as it considered its cumulative loss in recent years as a significant piece of negative evidence. The Company recorded a $32.6 million valuation allowance related to the deferred tax assets acquired during the year. Management believes that it is more likely than not that the Company will realize the benefits of the remaining deferred tax assets. The amount of the deferred tax asset considered realizable, however, could be adjusted if estimates of future taxable income during the carryforward period are reduced or increased, if objective negative evidence in the form of cumulative losses is no longer present or if additional weight is given to subjective evidence such as our projections for growth. At December 31, 2015, the Company had $74.3 million of domestic Federal net operating losses that are available, of which $12.1 million will expire in the next 5 to 10 years and $62.2 million will expire in the next 10 to 20 years. There are $111.3 million of domestic State net operating losses that are available between 2015 and 2032. There are $396.7 million of non-U.S. net operating loss carryforwards, of which $113.1 million will expire in the next 5 years and $283.6 million can be carried forward indefinitely. The Company has $9.8 million of U.S. federal research and development credits that begin to expire in 2022 and $3.8 million of foreign tax credits that begin to expire in 2024. In addition, the Company has $10.3 million of state credits, which will expire between 2015 and 2028 if unused. The Company has not provided for U.S. federal income taxes on the undistributed earnings of its international subsidiaries totaling approximately $1.8 billion at December 31, 2015, because such earnings are reinvested in foreign jurisdictions, and it is currently intended that they will continue to be reinvested indefinitely. It is not practicable to estimate the amount of additional tax that might be payable on this foreign income if distributed. Unrecognized Tax Benefits The Company records interest and penalties associated with unrecognized tax benefits as a component of income tax expense. During the years ended December 31, 2015, 2014 and 2013, the Company recorded potential interest expense of nil, $0.6 million and $0.3 million, respectively. Total accrued interest at December 31, 2015, 2014 and 2013 was $1.3 million, $1.3 million and $0.9 million, respectively, and was included in other liabilities. The Company's tax returns are routinely audited by the tax authorities in the relevant jurisdictions. For tax years before 2012, the Company is no longer subject to U.S. federal income tax examinations. For tax years before 2010, the Company’s Malaysian subsidiaries are no longer subject to examination. It is reasonably possible that the gross amount of unrecognized tax benefits will decrease by $0.6 million during the next twelve months. Included in the balance of total unrecognized tax benefits at December 31, 2015, are potential benefits of $4.4 million which if recognized, would affect the effective rate on income from continuing operations. Given the Company's current valuation allowance position, no benefit is expected to result from the reversal of any uncertain tax position associated with the acquired attributes.
Unrecognized tax benefits at January 1, 2013 | $ | 6.6 |
Additions based on tax positions related to the current year | 0.2 |
Reductions for tax positions of prior years | (1.3 | )
Unrecognized tax benefits at December 31, 2013 | $ | 5.5 |
Additions based on tax positions related to the current year | 0.1 |
Additions for tax positions of prior years | 0.7 |
Reductions for tax positions of prior years | (1.3 | )
Unrecognized tax benefits at December 31, 2014 | $ | 5.0 |
Additions for tax positions of prior years | — |
Reductions for tax positions due to lapsed statutes of limitations | (0.6 | )
Additions for acquisitions | 8.4 |
Unrecognized tax benefits at December 31, 2015 | $ | 12.8 |

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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=6907707&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=6907707&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=6907707&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=6907707&loc=d3e32537-109319 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 + Details
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