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Income Taxes | 12 Months Ended
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Dec. 31, 2019
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes Current income tax expense represents the amounts expected to be reported on the Company's income tax returns, and deferred income tax expense or benefit represents the change in net deferred tax assets and liabilities. Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities as measured by the enacted income tax rates that will be in effect when these differences reverse. Valuation allowances are recorded as appropriate to reduce deferred tax assets to the amount considered more likely than not to be realized. On December 22, 2017, the Tax Act was signed into law. The Tax Act significantly changed U.S. tax law by, among other things, lowering corporate income tax rates, implementing a territorial tax system and imposing a repatriation tax on deemed repatriated earnings of foreign subsidiaries. The Tax Act permanently reduced the U.S. corporate income tax rate from a maximum of 35% to a 21% rate, effective January 1, 2018. Included in the Tax Act were the global intangible low-taxed income ("GILTI") provisions. The Company elected to account for GILTI tax in the period in which it is incurred. The GILTI provisions require the Company to include in its U.S. income tax return foreign subsidiary earnings in excess of an allowable return on the foreign subsidiary's tangible assets. Income (loss) from continuing operations before income taxes and equity income as reported on the Consolidated Statements of Operations consists of the following:
(In thousands) |  | 2019 |  | 2018 |  | 2017
U.S. |  | $ | (13,934 | ) |  | $ | 28,281 |  |  | $ | (9,235 | )
International |  | 70,405 |  |  | 85,368 |  |  | 84,637 |
Total income (loss) from continuing operations before income taxes and equity income |  | $ | 56,471 |  |  | $ | 113,649 |  |  | $ | 75,402 |
Income tax expense as reported on the Consolidated Statements of Operations consists of the following:
(In thousands) |  | 2019 |  | 2018 |  | 2017
Income tax expense (benefit): |  |  |  |  |  |
Currently payable: |  |  |  |  |  |
U.S. federal |  | $ | 903 |  |  | $ | (7 | ) |  | $ | 654 |
U.S. state |  | 233 |  |  | 177 |  |  | 54 |
International |  | 23,775 |  |  | 17,127 |  |  | 19,763 |
Total income taxes currently payable |  | 24,911 |  |  | 17,297 |  |  | 20,471 |
Deferred U.S. federal |  | (5,924 | ) |  | 1,854 |  |  | 46,372 |
Deferred U.S. state |  | (1,303 | ) |  | (10,911 | ) |  | 1,121 |
Deferred international |  | 2,530 |  |  | (2,741 | ) |  | 10,226 |
Total income tax expense from continuing operations |  | $ | 20,214 |  |  | $ | 5,499 |  |  | $ | 78,190 |
Cash payments for income taxes were $115.6 million, $26.8 million and $24.9 million for 2019, 2018 and 2017, respectively. The increase in cash payments for 2019 primarily relates to payments associated with the gain on the sale of AXC. A reconciliation of the normal expected statutory U.S. federal income tax expense (benefit) to the actual Income tax expense from continuing operations as reported on the Consolidated Statements of Operations is as follows:
(In thousands) |  | 2019 |  | 2018 |  | 2017
U.S. federal income tax expense |  | $ | 11,859 |  |  | $ | 23,866 |  |  | $ | 26,391 |
U.S. state income taxes, net of federal income tax benefit |  | (274 | ) |  | 566 |  |  | 642 |
U.S. other domestic deductions and credits |  | (1,322 | ) |  | (2,407 | ) |  | (364 | )
Difference in effective tax rates on international earnings and remittances |  | 9,550 |  |  | 5,394 |  |  | 647 |
Uncertain tax position contingencies and settlements |  | 310 |  |  | (1,180 | ) |  | (1,518 | )
Changes in realization on beginning of the year deferred tax assets |  | 2,343 |  |  | (6,937 | ) |  | 1,983 |
U.S. non-deductible expenses |  | 2,554 |  |  | 1,128 |  |  | 609 |
Impact of U.S. tax reform |  | 1,643 |  |  | (11,686 | ) |  | 49,811 |
State deferred tax rate change |  | (3,353 | ) |  | — |  |  | 623 |
Foreign derived intangible income deduction |  | — |  |  | (2,366 | ) |  | — |
Employee share-based payments |  | (3,064 | ) |  | (736 | ) |  | (346 | )
Other, net |  | (32 | ) |  | (143 | ) |  | (288 | )
Total income tax expense from continuing operations |  | $ | 20,214 |  |  | $ | 5,499 |  |  | $ | 78,190 |
At December 31, 2019, 2018 and 2017, the Company's annual effective income tax rate on income from continuing operations was 35.8%, 4.8% and 103.7%, respectively. The Company’s international income from continuing operations before income taxes and equity income (loss) was $70.4 million and $85.4 million for 2019 and 2018, respectively. In 2018, the Company recorded an $8.3 million income tax benefit in the second quarter of 2018 arising from the adjustment to certain existing deferred tax asset valuation allowances as the result of the Altek acquisition. The Company's total international income tax expense increased from $14.4 million in 2018 to $26.3 million in 2019 primarily due to the Altek adjustment in 2018 not recurring in 2019, the change in mix of income and withholding taxes on remitted earnings. The Company’s differences in effective income tax rates for 2019 and 2018 on international earnings and remittances was $9.6 million and $5.4 million, respectively, which included U.S income tax expense on international deemed remittances of $1.0 million and $3.5 million respectively. This increase is primarily due to the change in mix of income and withholding taxes on remitted earnings. The Company's U.S. income from continuing operations before income taxes and equity income was a $13.9 million loss for 2019 and $28.3 million of income for 2018. In 2018, the Company finalized the impact of the Tax Act and recognized a $11.7 million income tax benefit because of the change in expected realization of foreign tax credit and state net operating loss carryforwards ("NOLs"). The Company's total U.S. income tax benefit decreased from $8.9 million in 2018 to $6.1 million in 2019 primarily due to the impact of the Tax Act in 2018 and the foreign derived intangible income deduction not recurring in 2019, partially offset by decreased U.S. income from continuing operations, and the increased income tax benefit recognized for the stock grants vested in 2019. The income tax effects of the temporary differences giving rise to the Company's deferred tax assets and liabilities at December 31, 2019 and 2018 are as follows:
|  | 2019 |  | 2018
(In thousands) |  | Asset |  | Liability |  | Asset |  | Liability
Depreciation and amortization (a) |  | $ | — |  |  | $ | 58,229 |  |  | $ | — |  |  | $ | 8,714 |
Expense accruals |  | 18,421 |  |  | — |  |  | 18,827 |  |  | — |
Inventories |  | 4,568 |  |  | — |  |  | 3,071 |  |  | — |
Provision for receivables |  | 1,109 |  |  | — |  |  | 689 |  |  | — |
Deferred revenue |  | — |  |  | 3,222 |  |  | — |  |  | 3,122 |
Operating loss carryforwards |  | 85,378 |  |  | — |  |  | 81,755 |  |  | — |
Foreign tax credit carryforwards |  | 24,219 |  |  | — |  |  | 25,814 |  |  | — |
Capital loss carryforwards |  | — |  |  | — |  |  | 9,759 |  |  | — |
Pensions |  | 38,766 |  |  | — |  |  | 40,442 |  |  | — |
Currency adjustments |  | 462 |  |  | — |  |  | 3,796 |  |  | — |
Deferred financing costs |  | — |  |  | 566 |  |  | — |  |  | 2,226 |
Post-retirement benefits |  | 411 |  |  | — |  |  | 471 |  |  | — |
Stock based compensation |  | 6,572 |  |  | — |  |  | 5,832 |  |  | — |
Other |  | — |  |  | 769 |  |  | 5,477 |  |  | — |
Subtotal |  | 179,906 |  |  | 62,786 |  |  | 195,933 |  |  | 14,062 |
Valuation allowance |  | (127,074 | ) |  | — |  |  | (137,450 | ) |  | — |
Total deferred income taxes |  | $ | 52,832 |  |  | $ | 62,786 |  |  | $ | 58,483 |  |  | $ | 14,062 |
(a) | The increase in 2019 is primarily related to the Clean Earth acquisition. See Note 3, Acquisitions and Dispositions, for additional information.
The deferred tax asset and liability balances recognized on the Consolidated Balance Sheets at December 31, 2019 and 2018 are as follows:
(In thousands) |  | 2019 |  | 2018
Deferred income tax assets |  | $ | 14,288 |  |  | $ | 48,551 |
Other liabilities |  | 24,242 |  |  | 4,130 |
At December 31, 2019, the tax-effected amount of NOLs totaled $85.4 million. Tax-effected NOLs from international operations are $66.5 million. Of that amount, $57.0 million can be carried forward indefinitely and $9.5 million will expire at various times between 2020 and 2040. Tax-effected U.S. state NOLs are $12.9 million. Of that amount, $3.3 million expire at various times between 2020 and 2024, $1.9 million expire at various times between 2025 and 2029, $3.2 million expire at various times between 2030 and 2034 and $4.5 million expire at various times between 2035 and 2039. At December 31, 2019, the tax-effected amount of U.S. Federal NOLs totaled $6.0 million which can be carried forward indefinitely. Valuation allowances of $127.1 million and $137.5 million at December 31, 2019 and 2018, respectively, related principally to deferred tax assets for pension liabilities, NOLs, foreign tax credit carryforwards, capital loss carryforwards and foreign currency translation that are uncertain as to realizability. In 2019, the Company recorded a valuation allowance reduction of $12.5 million related to capital loss carryforwards, foreign tax credit carryforwards and state net operating loss carryforwards due to the losses and foreign tax credit carryforwards being utilized to reduce the tax liabilities on the capital gain realized as a result of the sale of AXC and PK. In addition, the Company recorded a valuation allowance reduction (and corresponding reduction to deferred tax assets) of $5.6 million due to the merger and liquidation of certain foreign dormant entities resulting in the loss of certain tax attributes, offset by a net increase of $7.9 million related to losses in certain jurisdictions where the Company determined that it is more likely than not that these assets will not be realized. In 2018, the Company finalized the impact of the Tax Act and reduced the provisional valuation allowance by $15.2 million because of the expected realization of foreign tax credits and state NOLs. In addition, the U.K. valuation allowance was reduced by $13.6 million as a result of the Altek acquisition and a change in estimate of interest deductions. The Company recorded a valuation allowance reduction of $8.7 million from the effects of foreign currency translation adjustments, partially offset by the net increase related to losses in certain jurisdictions where the Company determined that it is more likely than not that these assets will not be realized. The Tax Act introduced a transition tax and a territorial tax system, which was effective beginning in 2018. The territorial tax system impacts the Company's overall global capital and legal entity structure, working capital, and repatriation plan on a go-forward basis. The Company asserts that all foreign earnings will be indefinitely reinvested to the extent of local needs and earnings that would be distributed in a taxable manner. The Company therefore intends to limit distributions to earnings previously taxed in the U.S., or earnings that would qualify for the 100 percent dividends received deduction provided for in the Tax Act, and earnings that would not result in any significant foreign taxes. Therefore, the Company has not recognized a deferred tax liability on its investment in foreign subsidiaries. The Company recognizes accrued interest and penalty expense related to unrecognized income tax benefits in income tax expense. The Company recognized an income tax expense of $0.3 million during 2019 and an income tax benefit of $0.2 million during 2018 for interest and penalties primarily due to the expiration of statutes of limitation and resolution of examinations. The Company did not recognize any income tax expense or benefit for interest and penalties during 2017. The Company has accrued $1.2 million, $0.9 million and $1.1 million for the payment of interest and penalties at December 31, 2019, 2018 and 2017, respectively. A reconciliation of the change in the unrecognized income tax benefits balance from January 1, 2017 to December 31, 2019 is as follows:
(In thousands) |  | Unrecognized Income Tax Benefits |  | Deferred Income Tax Benefits |  | Unrecognized Income Tax Benefits, Net of Deferred Income Tax Benefits
Balances, January 1, 2017 |  | $ | 4,582 |  |  | $ | (30 | ) |  | $ | 4,552 |
Additions for tax positions related to the current year (includes currency translation adjustment) |  | 658 |  |  | (2 | ) |  | 656 |
Other reductions for tax positions related to prior years |  | (321 | ) |  | — |  |  | (321 | )
Statutes of limitation expirations |  | (1,296 | ) |  | 1 |  |  | (1,295 | )
Balance at December 31, 2017 |  | 3,623 |  |  | (31 | ) |  | 3,592 |
Additions for tax positions related to the current year (includes currency translation adjustment) |  | 196 |  |  | (1 | ) |  | 195 |
Statutes of limitation expirations |  | (1,397 | ) |  | 6 |  |  | (1,391 | )
Balance at December 31, 2018 |  | 2,422 |  |  | (26 | ) |  | 2,396 |
Additions for tax positions related to the current year (includes currency translation adjustment) |  | 414 |  |  | (7 | ) |  | 407 |
Additions for tax positions related to prior years (includes currency translation adjustment) |  | 681 |  |  | — |  |  | 681 |
Statutes of limitation expirations |  | (326 | ) |  | 2 |  |  | (324 | )
Settlements |  | (62 | ) |  | 9 |  |  | (53 | )
Total unrecognized income tax benefits that, if recognized, would impact the effective income tax rate at December 31, 2019 |  | $ | 3,129 |  |  | $ | (22 | ) |  | $ | 3,107 |
Within the next twelve months, it is reasonably possible that up to $0.3 million of unrecognized income tax benefits will be recognized upon settlement of income tax examinations and the expiration of various statutes of limitations. The Company files income tax returns as prescribed by the tax laws of the jurisdictions in which it operates. With few exceptions, the Company is no longer subject to U.S and international income tax examinations by tax authorities through 2013.

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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