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Income Taxes | 12 Months Ended
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Dec. 31, 2017
Income Tax Disclosure [Abstract] |
Income Taxes |
16. | Income Taxes
Tax Reform Legislation popularly known as The Tax Cuts and Jobs Act (Tax Act) was enacted on December 22, 2017, resulting in significant changes to the U.S. corporate income tax system. These changes include a federal statutory rate reduction from 35% to 21%, the elimination or reduction of certain domestic deductions and credits and limitations on the deductibility of interest expense and executive compensation. The Tax Act also transitions international taxation from a worldwide system to a modified territorial system and includes base erosion prevention measures on non-U.S. earnings, which has the effect of subjecting certain earnings of our foreign subsidiaries to U.S. taxation as global intangible low-taxed income. These changes are effective beginning in 2018. The 2017 Tax Act also includes a one-time transition tax on certain unrepatriated earnings from foreign subsidiaries. ASC 740 requires a company to record the effects of a tax law change in the period of enactment, however, shortly after the enactment of the Tax Act, the SEC staff issued SAB 118, which allows a company to record a provisional amount when it does not have the necessary information available, prepared or analyzed in reasonable detail to complete its accounting for the change in the tax law. The measurement period ends when the company has obtained, prepared and analyzed the information necessary to finalize its accounting, but cannot extend beyond one year. We have made a reasonable estimate of the impact of the Tax Act and recorded discrete items in our 2017 provisional income tax expense of $2,355 which reflects an estimated reduction in our deferred income tax liabilities of $1,993 as a result of the maximum federal rate decrease to 21% from 35% and an estimated tax charge of $362 for the effects of one-time transition tax on cash and cash equivalent balances related to accumulated earnings associated with our international operations. We are continuing to gather additional information related to these estimates in order to more precisely compute the remeasurement of deferred taxes and the impact of the transition tax. Income from continuing operations for the three years ended December 31 was as follows:
| 2017 |  | 2016 |  | 2015
U.S. operations | $ | 7,465 |  |  | $ | 54,018 |  |  | $ | 51,189 |
Foreign operations | (8,757 | ) |  | 12,473 |  |  | (765 | )
Total | $ | (1,292 | ) |  | $ | 66,491 |  |  | $ | 50,424 |
Income tax expense (benefit) for the three years ended December 31 was as follows:
| 2017 |  | 2016 |  | 2015
Current: |  |  |  |  |
Federal | $ | 2,590 |  |  | $ | 15,962 |  |  | $ | 15,117 |
Foreign | 8,701 |  |  | 3,035 |  |  | 3,992 |
State | 812 |  |  | 1,859 |  |  | 1,685 |
| $ | 12,103 |  |  | $ | 20,856 |  |  | $ | 20,794 |
Deferred: |  |  |  |  |  |  |  |
Federal | $ | 1,640 |  |  | $ | (472 | ) |  | $ | (481 | )
Foreign | (8,699 | ) |  | (434 | ) |  | (1,888 | )
State | (131 | ) |  | (73 | ) |  | (89 | )
| $ | (7,190 | ) |  | $ | (979 | ) |  | $ | (2,458 | )
Total: |  |  |  |  |  |  |  |
Federal | $ | 4,230 |  |  | $ | 15,490 |  |  | $ | 14,636 |
Foreign | 2 |  |  | 2,601 |  |  | 2,104 |
State | 681 |  |  | 1,786 |  |  | 1,596 |
Total Income Tax Expense | $ | 4,913 |  |  | $ | 19,877 |  |  | $ | 18,336 |
U.S. income taxes have been provided on approximately $11,636 of undistributed earnings of non-U.S. subsidiaries as a result of the transition tax required by the Tax Act. In general, it is our practice and intention to permanently reinvest the earnings of our foreign subsidiaries and repatriate earnings only when the tax impact is zero or immaterial and that position has not changed following incurring the transition tax under the Tax Act. No deferred taxes have been provided for withholding taxes or other taxes that would result upon repatriation of our foreign investments to the United States. Tax loss carryforwards and expiration periods by international operation as of December 31, 2017 were as follows:
| Amount |  | Carryforward Period
Netherlands | $ | 23,733 |  |  | 9 years
Germany | 12,068 |  |  | Unlimited
Sweden | 1,586 |  |  | Unlimited
Norway | 655 |  |  | Unlimited
Spain | 4,555 |  |  | Unlimited
Total | $ | 42,597 |  |  |
Because of the uncertainty regarding realization of the Netherlands and Sweden tax loss carryforwards, valuation allowances were established. We have Netherlands foreign tax credit carryforwards of $1,575. Because of the uncertainty regarding utilization of the Netherlands foreign tax credit carryforward, a valuation allowance was established. A valuation allowance for the remaining deferred tax assets is not required since it is more likely than not that they will be realized through carryback to taxable income in prior years, future reversals of existing taxable temporary differences and future taxable income. Our effective income tax rate varied from the U.S. federal statutory tax rate for the three years ended December 31 as follows:
| 2017 |  | 2016 |  | 2015
Tax at statutory rate | 35.0 | % |  | 35.0 | % |  | 35.0 | %
(Decreases) increases in the tax rate from: |  |  |  |  |  |  |
State and local taxes, net of federal benefit | (21.1 | ) |  | 1.7 |  |  | 2.2 |
Effect of foreign operations | (70.8 | ) |  | (5.5 | ) |  | (5.1 | )
Transaction costs | (226.3 | ) |  | — |  |  | — |
Effect of 2018 deferred rate change | (154.3 | ) |  | — |  |  | — |
Transition Tax | (28.0 | ) |  | — |  |  | — |
Impairment of Long-Lived Assets | — |  |  | — |  |  | 7.0 |
Effect of changes in valuation allowances | (126.5 | ) |  | 1.9 |  |  | 1.5 |
Domestic production activities deduction | 28.3 |  |  | (2.2 | ) |  | (2.7 | )
Share-based payments | 90.4 |  |  | — |  |  | — |
Research & Development credit | 82.9 |  |  | (1.3 | ) |  | (1.7 | )
Other, net | 10.2 |  |  | 0.3 |  |  | 0.2 |
Effective income tax rate | (380.2 | )% |  | 29.9 | % |  | 36.4 | %
Deferred tax assets and liabilities were comprised of the following as of December 31:
| 2017 |  | 2016
Deferred Tax Assets: |  |  |
Inventories, principally due to changes in inventory reserves | $ | 4,757 |  |  | $ | 332 |
Employee wages and benefits, principally due to accruals for financial reporting purposes | 11,031 |  |  | 14,723 |
Warranty reserves accrued for financial reporting purposes | 2,578 |  |  | 3,617 |
Receivables, principally due to allowance for doubtful accounts and tax accounting method for equipment rentals | 2,138 |  |  | 1,413 |
Tax loss carryforwards | 11,383 |  |  | 7,821 |
Tax credit carryforwards | 1,575 |  |  | 1,228 |
Other | 3,630 |  |  | 2,126 |
Gross Deferred Tax Assets | $ | 37,092 |  |  | $ | 31,260 |
Less: valuation allowance | (9,691 | ) |  | (6,865 | )
Total Net Deferred Tax Assets | $ | 27,401 |  |  | $ | 24,395 |
Deferred Tax Liabilities: |  |  |  |  |
Property, Plant and Equipment, principally due to differences in depreciation and related gains | 9,042 |  |  | 6,947 |
Goodwill and Intangible Assets | 60,450 |  |  | 4,180 |
Total Deferred Tax Liabilities | $ | 69,492 |  |  | $ | 11,127 |
Net Deferred Tax (Liabilities) Assets | $ | (42,091 | ) |  | $ | 13,268 |
The valuation allowance at December 31, 2017 principally applies to the Netherlands tax loss and tax credit carryforwards that, in the opinion of management, are more likely than not to expire unutilized. However, to the extent that tax benefits related to these carryforwards are realized in the future, the reduction in the valuation allowance will reduce income tax expense. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
| 2017 |  | 2016
Balance at January 1, | $ | 2,477 |  |  | $ | 2,326 |
Increases as a result of tax positions taken during the current year | 329 |  |  | 545 |
Increase related to prior period tax positions of acquired entities | 236 |  |  | — |
Decreases relating to settlement with tax authorities | (68 | ) |  | (6 | )
Reductions as a result of a lapse of the applicable statute of limitations | (770 | ) |  | (523 | )
Increases as a result of foreign currency fluctuations | 28 |  |  | 135 |
Balance at December 31, | $ | 2,232 |  |  | $ | 2,477 |
Included in the balance of unrecognized tax benefits at December 31, 2017 and 2016 are potential benefits of $1,992 and $2,114, respectively, that if recognized, would affect the effective tax rate from continuing operations. We recognize potential accrued interest and penalties related to unrecognized tax benefits as a component of income tax expense. In addition to the liability of $2,232 and $2,477 for unrecognized tax benefits as of December 31, 2017 and 2016, there was approximately $482 and $490, respectively, for accrued interest and penalties. To the extent interest and penalties are not assessed with respect to uncertain tax positions, the amounts accrued will be revised and reflected as an adjustment to income tax expense. We and our subsidiaries are subject to U.S. federal income tax as well as income tax of numerous state and foreign jurisdictions. We are generally no longer subject to U.S. federal tax examinations for taxable years before 2014 and, with limited exceptions, state and foreign income tax examinations for taxable years before 2013. We are currently under examination by the Internal Revenue Service for the 2015 tax year. Although the outcome of this matter cannot currently be determined, we believe adequate provision has been made for any potential unfavorable financial statement impact. We are currently undergoing income tax examinations in various state and foreign jurisdictions covering 2014 to 2016. Although the final outcome of these examinations cannot be currently determined, we believe that we have adequate reserves with respect to these examinations. We do not anticipate that total unrecognized tax benefits will change significantly within the next 12 months.

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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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