XML 35 R19.htm IDEA: XBRL DOCUMENT
v3.6.0.2

Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2016
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes U.S. and foreign income before income taxes consist of the following (in millions):
| 2016 |  |  | 2015 |  |  | 2014 |
United States | $ | (85.4 | ) |  | $ | 3.5 |  |  | $ | 59.7 |
Foreign | 227.5 |  |  | 214.2 |  |  | 215.1 |
| $ | 142.1 |  |  | $ | 217.7 |  |  | $ | 274.8 |
The income tax provision (benefit) related to income before income taxes consists of the following components (in millions):
| 2016 |  |  | 2015 |  |  | 2014 |
Current: |  |  |  |  |
U.S. federal statutory tax | $ | 7.5 |  |  | $ | (9.9 | ) |  | $ | 13.9 |
State | 0.8 |  |  | 0.7 |  |  | 2.5 |
Foreign | 30.4 |  |  | 27.0 |  |  | 23.5 |
| 38.7 |  |  | 17.8 |  |  | 39.9 |
Deferred: |  |  |  |  |
U.S. federal statutory tax | (29.3 | ) |  | 4.6 |  |  | 10.7 |
State | (4.2 | ) |  | 3.0 |  |  | 2.7 |
Foreign | (2.5 | ) |  | (2.3 | ) |  | (2.6 | )
| (36.0 | ) |  | 5.3 |  |  | 10.8 |
Non-current tax expense (income) | 13.0 |  |  | 24.1 |  |  | 2.9 |
| $ | 15.7 |  |  | $ | 47.2 |  |  | $ | 53.6 |
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:
| 2016 |  |  | 2015 |  |  | 2014 |
U.S. federal statutory tax rate | 35.0 | % |  | 35.0 | % |  | 35.0 | %
Foreign earnings, net of foreign taxes | (42.4 | ) |  | (28.3 | ) |  | (18.2 | )
State income taxes, net of U.S. federal income tax benefit | (1.5 | ) |  | 1.1 |  |  | 1.3 |
U.S. tax on deemed dividends | 1.3 |  |  | 1.7 |  |  | 1.2 |
Sale of subsidiary | 3.8 |  |  | — |  |  | — |
Uncertain tax positions | 9.2 |  |  | 10.3 |  |  | 1.1 |
Other permanent differences | 5.6 |  |  | 1.9 |  |  | (0.9 | )
Effective income tax rate | 11.0 | % |  | 21.7 | % |  | 19.5 | %
For 2016, our effective income tax rate was 11.0%, for an income tax provision of $15.7 million, as compared to an effective income tax rate of 21.7% and an income tax provision of $47.2 million for 2015. The lower effective income tax rate for 2016, as compared to 2015, resulted principally from differences in the results of our subsidiaries in tax jurisdictions with different income tax rates. For 2015, our effective income tax rate was 21.7%, for an income tax provision of $47.2 million, as compared to an effective income tax rate of 19.5% and an income tax provision of $53.6 million for 2014. The higher effective income tax rate for 2015 resulted primarily from differences in the results of our subsidiaries in tax jurisdictions with different income tax rates. For 2014, our effective income tax rate was 19.5%, for an income tax provision of $53.6 million, as compared to an effective income tax rate of 18.5% and an income tax provision of $46.0 million for 2013. The effective income tax rate for 2014 remained relatively flat compared to 2013. However, there were underlying differences in the actual results of our subsidiaries in tax jurisdictions with different income tax rates as compared to 2013. U.S. income taxes have not been provided on undistributed earnings of foreign subsidiaries. As of December 31, 2016 and 2015, we had $1.6 billion and $1.4 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, |
| 2016 |  |  | 2015 |
Gross Deferred Tax Assets: |  |  |
Bad debt reserve | $ | 4.5 |  |  | $ | 5.0 |
Net operating loss | 38.6 |  |  | 13.0 |
Accrued and other share-based compensation | 26.2 |  |  | 20.6 |
Accrued expenses | 5.0 |  |  | — |
U.S. foreign income tax credits | 7.8 |  |  | 5.3 |
Other income tax credits | 0.2 |  |  | 0.7 |
Customer deposits | 6.3 |  |  | 5.7 |
Installment sale | — |  |  | 6.7 |
Cash flow hedges | 4.6 |  |  | 0.8 |
Unrealized foreign exchange | — |  |  | 2.7 |
Total gross deferred tax assets | 93.2 |  |  | 60.5 |
Less: Valuation allowance | 7.1 |  |  | 2.9 |
Gross deferred tax assets, net of valuation allowance | 86.1 |  |  | 57.6 |
Deferred Tax Liabilities: |  |  |
Depreciation | (8.5 | ) |  | (20.8 | )
Goodwill and intangible assets | (56.1 | ) |  | (56.2 | )
Unrealized foreign exchange | (8.0 | ) |  | — |
Prepaid expenses, deductible for tax purposes | (5.8 | ) |  | (4.4 | )
Accrued expenses | — |  |  | (2.5 | )
Unrealized derivatives | (2.4 | ) |  | (5.1 | )
Other | (0.7 | ) |  | — |
Total gross deferred tax liabilities | (81.5 | ) |  | (89.0 | )
Net deferred tax liability | $ | — |  |  | $ | (31.4 | )
Net deferred tax asset | 4.6 |  |  | — |
Reported on the consolidated balance sheets as: |  |  |
Identifiable intangible and other non-current assets for deferred tax assets, non-current | $ | 20.6 |  |  | $ | 5.2 |
Non-current income tax liabilities, net for deferred tax liabilities, non-current | $ | 16.0 |  |  | $ | 36.6 |
As of December 31, 2016 and 2015, we had net operating losses (“NOLs”) of approximately $106.2 million and $42.2 million, respectively. The NOLs as of December 31, 2016 originated in various countries including the United States, Brazil, Puerto Rico, France, and The Netherlands. We have recorded a deferred tax asset of $38.6 million reflecting the benefit of the NOL carryforward as of December 31, 2016. This deferred tax asset expires as follows (in millions):
Expiration Date | Deferred Tax Asset
December 31, 2021 | $ | 0.1 |
December 31, 2022 | 0.1 |
December 31, 2023 | 0.3 |
December 31, 2024 | 0.6 |
December 31, 2025 | 0.9 |
December 31, 2036 | 31.8 |
Indefinite | 4.8 |
Total | $ | 38.6 |
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, 2016, a valuation allowance of $7.1 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. 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 derivative gains and losses. The impact of this income tax concession decreased (increased) foreign income taxes by $2.7 million, $(7.7) million, and $6.3 million for 2016, 2015 and 2014 respectively. The impact of the income tax concession on basic earnings per common share was $0.04, $(0.11), and $0.09 for 2016, 2015 and 2014 respectively. On a diluted earnings per common share basis, the impact was $0.04, $(0.11), and $0.09 for 2016, 2015 and 2014 respectively. Income Tax Contingencies We recorded an increase of $11.2 million of liabilities related to unrecognized income tax benefits (“Unrecognized Tax Liabilities”) and a decrease of $0.1 million of assets related to unrecognized income tax benefits (“Unrecognized Tax Assets”) during 2016. In addition, during 2016, we recorded a decrease of $0.1 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, 2016, our Unrecognized Tax Liabilities, including penalties and interest, were $68.6 million and our Unrecognized Tax Assets were $1.6 million. We recorded an 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. The following is a tabular reconciliation of the total amounts of unrecognized income tax benefits for the year (in millions):
| 2016 |  |  | 2015 |  |  | 2014 |
Unrecognized Tax Liabilities – opening balance | $ | 46.7 |  |  | $ | 24.3 |  |  | $ | 26.5 |
Gross increases – tax positions in prior period | 18.0 |  |  | 9.2 |  |  | — |
Gross decreases – tax positions in prior period | (15.4 | ) |  | (4.8 | ) |  | (2.8 | )
Gross increases – tax positions in current period | 11.3 |  |  | 20.9 |  |  | 6.6 |
Gross decreases – tax positions in current period | — |  |  | — |  |  | — |
Settlements | — |  |  | — |  |  | (3.6 | )
Lapse of statute of limitations | (2.8 | ) |  | (2.9 | ) |  | (2.4 | )
Unrecognized Tax Liabilities – ending balance | $ | 57.8 |  |  | $ | 46.7 |  |  | $ | 24.3 |
If our uncertain tax positions as of December 31, 2016 are settled by the taxing authorities in our favor, our income tax expense would be reduced by $56.6 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 39.8%. As of December 31, 2016, 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 $(0.7) million during 2016 and income of $0.9 million and $0.6 million during 2015 and 2014, respectively. For penalties, we recorded income of $2.3 million, $0.3 million and $0.3 million during 2016, 2015 and 2014, respectively. As of December 31, 2016 and 2015, we had recognized liabilities of $4.3 million and $5.2 million for interest and $6.5 million and $4.2 million for penalties, respectively. During the quarter ended December 31, 2016, we reached an agreement with the IRS on the outstanding audit issues for 2011 and 2012. The matter had previously been provided for within our reserve estimates. In addition, during the quarter ended December 31, 2016, the Korean Branch of one of our subsidiaries received an income tax pre-assessment notice for $8.0 million (KRW 9.2 billion) for the years 2011 through 2014 from the South Korea tax authorities. We disagree with the Korean tax authorities' assessment and are appealing. 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
Jurisdiction | Examination in progress |  | Examination not yet initiated
United States | 2011 - 2012 |  | 2013 - 2016
Korea | 2011 - 2014 |  | 2015 - 2016
Singapore | None |  | 2011 - 2016
United Kingdom | 2014 |  | 2012 - 2016
Brazil | None |  | 2011 - 2016
Chile | None |  | 2014 - 2016
Denmark | None |  | 2012 - 2016

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=65882285&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=65882285&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=65882285&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=65882285&loc=d3e32537-109319 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration