XML 34 R18.htm IDEA: XBRL DOCUMENT
v3.3.1.900

Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2015
Income Taxes |
Income Taxes | 9. Income Taxes U.S. and foreign income before income taxes consist of the following (in millions):
|  | 2015 |  | 2014 |  | 2013
United States |  | $ | 1.2 |  | $ | 56.5 |  | $ | 31.8
Foreign |  |  | 218.1 |  |  | 213.0 |  |  | 214.9
|  | $ | 219.3 |  | $ | 269.5 |  | $ | 246.7
The income tax provision (benefit) related to income before income taxes consists of the following components (in millions):
|  | 2015 |  | 2014 |  | 2013
Current: |  |  |  |  |  |  |  |  |
U.S. federal statutory tax |  | $ | (10.7) |  | $ | 14.8 |  | $ | 8.2
State |  |  | 0.6 |  |  | 2.5 |  |  | 1.8
Foreign |  |  | 29.6 |  |  | 22.0 |  |  | 36.2
|  |  | 19.5 |  |  | 39.3 |  |  | 46.2
Deferred: |  |  |  |  |  |  |  |  |
U.S. federal statutory tax |  |  | 4.6 |  |  | 10.7 |  |  | 2.2
State |  |  | 3.0 |  |  | 2.7 |  |  | 0.6
Foreign |  |  | (14.8) |  |  | (3.0) |  |  | (11.0)
|  |  | (7.2) |  |  | 10.4 |  |  | (8.2)
Non-current tax expense (income) |  |  | 24.0 |  |  | 1.4 |  |  | 1.5
|  | $ | 36.3 |  | $ | 51.1 |  | $ | 39.5
Non‑current tax expense (income) is primarily related to income tax associated with the reserve for uncertain tax positions. A reconciliation of the U.S. federal statutory income tax rate to our effective income tax rate is as follows:
|  | 2015 |  | 2014 |  | 2013 |
U.S. federal statutory tax rate |  | 35.0 | % | 35.0 | % | 35.0 | %
Foreign earnings, net of foreign taxes |  | (28.2) |  | (18.1) |  | (18.7) |
State income taxes, net of U.S. federal income tax benefit |  | 1.1 |  | 1.3 |  | 0.6 |
U.S. tax on deemed dividends |  | 6.1 |  | 1.0 |  | 1.4 |
Brazil foreign currency effect on other comprehensive income |  | (5.4) |  | (1.5) |  | (1.4) |
Other permanent differences |  | 8.0 |  | 1.3 |  | (0.9) |
Effective income tax rate |  | 16.6 | % | 19.0 | % | 16.0 | %
For 2015, our effective income tax rate was 16.6%, for an income tax provision of $36.3 million, as compared to an effective income tax rate of 19.0% and an income tax provision of $51.1 million for 2014. The lower effective income tax rate for 2015, as compared to 2014, resulted principally from differences in the results of our subsidiaries in tax jurisdictions with different income tax rates and a 2014 U.S. gain on the sale of the crude oil joint venture. Without the gain on the sale of the crude oil joint venture interests, the 2014 effective income tax rate would have been 17.7%. For 2014, our effective income tax rate was 19.0%, for an income tax provision of $51.1 million, as compared to an effective income tax rate of 16.0% and an income tax provision of $39.5 million for 2013. The higher effective income tax rate for 2014 resulted primarily from differences in the results of our subsidiaries in tax jurisdictions with different income tax rates and a U.S. gain on the sale of the crude oil joint venture interests as compared to 2013. Without the gain on the sale of the crude oil joint venture interests, for 2014, our effective income tax rate would have been 17.7%. For 2013, our effective income tax rate was 16.0%, for an income tax provision of $39.5 million, as compared to an effective income tax rate of 16.0% and an income tax provision of $38.2 million for 2012. The effective income tax rate for 2013 remained flat compared to 2012. However, there were underlying differences in the actual results of our subsidiaries in tax jurisdictions with different income tax rates as compared to 2012 and differences in outstanding uncertain tax positions net of certain nonrecurring discrete tax items including statute lapses, audit settlements, and a change in estimate. U.S. income taxes have not been provided on undistributed earnings of foreign subsidiaries. As of December 31, 2015 and 2014, we had $1.5 billion and $1.3 billion, respectively, of earnings attributable to foreign subsidiaries. Our intention is to reinvest these earnings permanently in active non‑U.S. business operations. Therefore, no income tax liability has been accrued for these earnings. Because of the availability of U.S. foreign tax credits, it is not practicable to determine the amount of U.S. income tax payable if such earnings are not reinvested indefinitely. The temporary differences which comprise our net deferred tax liabilities are as follows (in millions):
|  | As of December 31,
|  | 2015 |  | 2014
Gross Deferred Tax Assets: |  |  |  |  |  |
Bad debt reserve |  | $ | 5.0 |  | $ | 5.5
Net operating loss |  |  | 13.0 |  |  | 4.8
Accrued and other share-based compensation |  |  | 20.6 |  |  | 21.6
Accrued expenses |  |  | — |  |  | 8.6
U.S. foreign income tax credits |  |  | 5.3 |  |  | —
Other income tax credits |  |  | 0.7 |  |  | —
Customer deposits |  |  | 5.7 |  |  | 6.1
Installment sale |  |  | 6.7 |  |  | 6.6
Cash flow hedges |  |  | 0.8 |  |  | —
Unrealized foreign exchange |  |  | 18.2 |  |  | 7.6
Total gross deferred tax assets |  |  | 76.0 |  |  | 60.8
Less: Valuation allowance |  |  | 2.9 |  |  | —
Gross deferred tax assets, net of valuation allowance |  |  | 73.1 |  |  | 60.8
Deferred Tax Liabilities: |  |  |  |  |  |
Depreciation |  |  | (20.8) |  |  | (13.1)
Goodwill and intangible assets |  |  | (56.2) |  |  | (45.3)
Prepaid expenses, deductible for tax purposes |  |  | (4.4) |  |  | (4.5)
Accrued expenses |  |  | (2.5) |  |  | —
Unrealized derivatives |  |  | (5.1) |  |  | (8.2)
Other |  |  | — |  |  | (1.2)
Total gross deferred tax liabilities |  |  | (89.0) |  |  | (72.3)
Net deferred tax liability |  | $ | (15.9) |  | $ | (11.5)
Reported on the consolidated balance sheets as: |  |  |  |  |  |
Other current assets for deferred tax assets, current |  | $ | — |  | $ | 22.8
Identifiable intangible and other non-current assets for deferred tax assets, non-current |  | $ | 20.7 |  | $ | 15.6
Accrued expenses and other current liabilities for deferred tax liabilities, current |  | $ | — |  | $ | 0.4
Non-current income tax liabilities, net for deferred tax liabilities, non-current |  | $ | 36.6 |  | $ | 49.4
As of Dec ember 31, 2015 and 2014, we had net operating losses (“NOLs”) of approximately $42.2 million and $19.9 million, respectively. The NOLs as of December 31, 2015 originated in various countries including the United States, Brazil, Puerto Rico, the United Kingdom, Chile, Argentina and The Netherlands. Our NOL carryforward includes $6.0 million from the acquisition of Pester which is subject to an annual limitation as a result of the change in ownership pursuant to Section 382 of the Internal Revenue Code of 1986, as amended. We have recorded a deferred tax asset of $13.0 million reflecting the benefit of the NOL carryforward as of December 31, 2015. This deferred tax asset expires as follows (in millions):
|  | Deferred
Expiration Date |  | Tax Asset
December 31, 2016 |  | $ | 0.1
December 31, 2020 |  |  | 0.6
December 31, 2021 |  |  | 0.1
December 31, 2022 |  |  | 0.1
December 31, 2023 |  |  | 0.3
December 31, 2024 |  |  | 1.1
December 31, 2025 |  |  | 0.1
March 31, 2032 |  |  | 0.3
March 31, 2033 |  |  | 0.5
March 31, 2034 |  |  | 1.2
December 31, 2035 |  |  | 5.6
Indefinite |  |  | 3.0
Total |  | $ | 13.0
We assessed the available positive and negative evidence to estimate if sufficient future taxable income will be generated to use the existing deferred tax assets. On the basis of this evaluation, as of December 31, 2015, a valuation allowance of $2.9 million has been recorded to recognize only the portion of the deferred tax asset that is more likely than not to be realized. The amount of the deferred tax asset considered realizable could be adjusted if estimates of future taxable income during the carryforward period change or if objective negative evidence in the form of cumulative losses is no longer present and additional weight may be given to subjective evidence such as growth projections. In addition, as a result of certain realization requirements of accounting guidance on stock compensation, the table of deferred tax assets and liabilities shown above does not include certain deferred tax assets as of Decembe r 31, 2015 and 2014 that arose directly from income tax deductions related to equity compensation in excess of compensation recognized for financial reporting. As of December 31, 2015 and 2014, we had no foreign tax credits related to the excess stock compensation deductions that resulted in an income tax deduction or credit before the realization of the income tax benefit from the deduction or credit. We use the “with and without” method for purposes of determining when excess income tax benefits have been realized. As of December 31, 2015 and 2014, our annual capital in excess of par value pool of windfall income tax benefits related to employee compensation was estimated to be nil and $1.0 million, respectively. As of December 31, 2015, we had unrecognized U.S. NOLs of $4.5 million related to the exercise of stock awards. When realized, the U.S. NOL will resu lt in a benefit recorded in additional paid in capital of $1.6 million, with a corresponding decrease in income tax payable. We operated under a special income tax concession in Singapore which began January 1, 2008. Our current five year special income tax concession was effective on January 1, 2013. The special income tax concession is conditional upon our meeting certain employment and investment thresholds which, if not met in accordance with our agreement, may eliminate the benefit beginning with the first year in which the conditions are not satisfied. The income tax concession reduces the income tax rate on qualified sales and the impact of this income tax concession decreased foreign income taxes by $5.0 million, $7.5 million and $6.2 million for 2015, 2014 and 2013, respectively. The impact of the income tax concession on basic earnings per common share was $0.07 for 2015, $0.11 for 2014 and $0.09 for 2013. On a diluted earnings per common share basis, the impact was $0.07 f or 2015, $0.10 for 2014 and $0.09 for 2013. Income Tax Contingencies We recorded a n increase of $22.4 million of liabilities related to unrecognized income tax benefits (“Unrecognized Tax Liabilities”) and a decrease of $0.4 million of assets related to unrecognized income tax benefits (“Unrecognized Tax Assets”) during 2015. In addition, during 2015, we recorded a decrease of $0.7 million to our Unrecognized Tax Liabilities related to a foreign currency translation gain, which is included in other income (expense), net, in the accompanying consolidated statements of income and comprehensive income. As of December 31, 2015, our Unrecognized Tax Liabilities, including penalties and interest, were $56.1 million and our Unrecognized Tax Assets were $1.9 million. We recorded a decrease of $2.1 million of liabilities related to unrecognized income tax benefits (“Unrecognized Tax Liabilities”) and a decrease of $4.5 million of assets related to unrecognized income tax benefits (“Unrecognized Tax Assets”) during 2014. In addition, during 2014, we recorded a decrease of $0.5 million to our Unrecognized Tax Liabilities related to a foreign currency translation gain, which is included in other income (expense), net, in the accompanying consolidated statements of income and comprehensive income. As of December 31, 2014, our Unrecognized Tax Liabilities, including penalties and interest, were $33.0 million and our Unrecognized Tax Assets were $2.3 million. The following is a tabular reconciliation of the total amounts of unrecognized income tax benefits for the year (in millions):
|  | 2015 |  | 2014 |  | 2013
Unrecognized Tax Liabilities – opening balance |  | $ | 24.3 |  | $ | 26.5 |  | $ | 22.3
Gross increases – tax positions in prior period |  |  | 9.2 |  |  | — |  |  | 2.6
Gross decreases – tax positions in prior period |  |  | (4.8) |  |  | (2.8) |  |  | —
Gross increases – tax positions in current period |  |  | 20.9 |  |  | 6.6 |  |  | 5.0
Gross decreases – tax positions in current period |  |  | — |  |  | — |  |  | —
Settlements |  |  | — |  |  | (3.6) |  |  | —
Lapse of statute of limitations |  |  | (2.9) |  |  | (2.4) |  |  | (3.4)
Unrecognized Tax Liabilities – ending balance |  | $ | 46.7 |  | $ | 24.3 |  | $ | 26.5
If our uncertain tax positions as of December 31, 2015 are settled by the taxing authorities in our favor, our income tax expense would be reduced by $45.3 million (exclusive of interest and penalties) in the period the matter is considered settled in accordance with Accounting Standards Codification 740. This would have the impact of reducing our 2015 effective income tax rate by 20.7%. As of December 31, 2015, it does not appear that the total amount of our unrecognized income tax benefits will significantly increase or decrease within the next twelve months. We record accrued interest and penalties related to unrecognized income tax benefits as income tax expense. Related to the uncertain income tax benefits noted above, for interest we recorded expense of $0.9 m illion during 2015 and income of $0.6 million and $0.6 million during 2014 and 2013, respectively. For penalties, we recorded income of $0.3 million, $0.3 million and $0.3 million during 2015, 2014 and 2013, respectively. As of December 31, 2015 and 2014, we had recognized liabilities of $5.2 million and $4.2 million for interest and $4.2 million and $4.5 million for penalties, respectively. In many cases, our uncertain tax positions are related to tax years that remain subject to examination by the relevant taxing authorities. The following table summarizes these open tax years by jurisdiction with major uncertain tax positions:
|  | Open Tax Year
|  | Examination |  | Examination not
Jurisdiction |  | in progress |  | yet initiated
United States |  | 2011,2012 |  | 2013 - 2015
Singapore |  | None |  | 2011 - 2015
United Kingdom |  | None |  | 2012 - 2015
Brazil |  | 2009 |  | 2010 - 2015
Chile |  | None |  | 2013 - 2015
Denmark |  | None |  | 2013 - 2015

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration