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Income Taxes | 12 Months Ended
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Dec. 31, 2018
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes For financial reporting purposes, income before income taxes includes the following components ($ in millions):
| For the Years Ended December 31,
| 2018 |  | 2017 |  | 2016
United States | $ | 55.8 |  |  | $ | 42.6 |  |  | $ | 27.7 |
Foreign | 61.0 |  |  | 58.9 |  |  | 65.7 |
Total | $ | 116.8 |  |  | $ | 101.5 |  |  | $ | 93.4 |
An analysis of the provision (benefit) for income taxes from continuing operations follows ($ in millions):
| For the Years Ended December 31,
| 2018 |  | 2017 |  | 2016
Current income taxes: |  |  |  |  |
U.S. federal | $ | (9.2 | ) |  | $ | 53.2 |  |  | $ | 14.3 |
U.S. state | 0.8 |  |  | 0.6 |  |  | 0.1 |
Foreign | 11.6 |  |  | 14.2 |  |  | 17.2 |
| 3.2 |  |  | 68.0 |  |  | 31.6 |
Deferred income taxes: |  |  |  |  |
U.S. federal | 3.6 |  |  | (1.3 | ) |  | (2.7 | )
U.S. state | 1.4 |  |  | 2.9 |  |  | (4.0 | )
Foreign | 2.5 |  |  | — |  |  | (9.5 | )
| 7.5 |  |  | 1.6 |  |  | (16.2 | )
Total | $ | 10.7 |  |  | $ | 69.6 |  |  | $ | 15.4 |
A reconciliation of income taxes computed at the U.S. Federal statutory income tax rate to the provision for income taxes is as follows ($ in millions):
| For the Years Ended December 31,
| 2018 |  | 2017 |  | 2016
| Amount |  | Percent |  | Amount |  | Percent |  | Amount |  | Percent
Tax provision at U.S. statutory rate | $ | 24.5 |  |  | 21.0 | % |  | $ | 35.6 |  |  | 35.0 | % |  | $ | 32.6 |  |  | 35.0 | %
Foreign income tax rate differential | 1.0 |  |  | 0.9 |  |  | 0.7 |  |  | 0.7 |  |  | (9.0 | ) |  | (9.6 | )
State income tax, net of federal benefit | 1.7 |  |  | 1.5 |  |  | 2.7 |  |  | 2.6 |  |  | (2.5 | ) |  | (2.7 | )
Domestic production deduction | — |  |  | — |  |  | (2.4 | ) |  | (2.3 | ) |  | (0.9 | ) |  | (1.0 | )
Remeasurement of deferred taxes for tax law change | (1.8 | ) |  | (1.5 | ) |  | (11.8 | ) |  | (11.7 | ) |  | (7.0 | ) |  | (7.5 | )
Adjustments to valuation allowances | (2.5 | ) |  | (2.1 | ) |  | (2.8 | ) |  | (2.8 | ) |  | 3.5 |  |  | 3.7 |
U.S. tax reform transition tax | (11.6 | ) |  | (10.0 | ) |  | 51.4 |  |  | 50.6 |  |  | — |  |  | — |
Other, net | (0.6 | ) |  | (0.6 | ) |  | (3.8 | ) |  | (3.5 | ) |  | (1.3 | ) |  | (1.4 | )
Provision for income taxes | $ | 10.7 |  |  | 9.2 | % |  | $ | 69.6 |  |  | 68.6 | % |  | $ | 15.4 |  |  | 16.5 | %
On December 22, 2017, the Tax Act was enacted into law effective January 1, 2018. The new legislation contains several key tax provisions that affected the Company, which include but are not limited to a one-time deemed repatriation tax on post-1986 accumulated earnings and profits of the undistributed earnings of foreign subsidiaries (“transition tax”), a reduction of the federal corporate income tax rate from 35% to 21%, and other U.S. reform items. Due to the timing and significance of the Tax Act, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (“SAB 118”), which provided a measurement period of up to one year through December 31, 2018 to report the impact of the new US tax law. In 2018, the Company decreased its provisional estimates of transition tax, related currency implications, state taxes and deferred tax rate change effect of the new law by $13.9 million. The reduction from the provisional 2017 amounts were primarily due to the transition tax further analysis of accumulated earnings and foreign taxes paid. As of December 31, 2018, the Company has completed its accounting for the tax effects of the Tax Act. The effective tax rate for 2018 was 9.2 percent as compared with 68.6 percent in 2017. This change is primarily due to the amounts recorded for the Tax Act. While a provisional estimate of tax expense for the transition tax of $48.7 million was recorded in 2017, a tax benefit of $13.0 million for the finalization of our transition tax calculation was recorded in 2018. Further, our effective tax rate was impacted year over year by our foreign rate differential, global law changes resulting in the re-measurement of deferred tax assets and liabilities and other discrete items. Prior to the passage of the U.S. Tax Act, the Company asserted that substantially all of the undistributed earnings of its foreign subsidiaries were considered indefinitely reinvested and accordingly, no deferred taxes were provided. Due to the Tax Act, the Company has significant previously taxed income from its foreign subsidiaries, as a result of transition tax, that is generally able to be repatriated free of U. S. federal tax. In addition, future earnings of foreign subsidiaries are generally expected to be able to be repatriated free of U.S. federal income tax because these earnings were taxed in the U.S. under the GILTI regime or would be eligible for a dividends received deduction. Therefore, the Company does not intend to assert indefinite reinvestment on future cash earnings. While the Company will have to provide for withholding taxes and U.S. state taxes on the future earnings, these amounts are not expected to be significant. Net deferred income tax assets (liabilities) were comprised of the following ($ in millions):
| December 31,
| 2018 |  | 2017
Deferred Tax Assets |  |  |
Receivable allowances | $ | 0.8 |  |  | $ | 0.4 |
Reserves and accruals | — |  |  | 3.8 |
Inventory and other assets | 1.1 |  |  | 0.7 |
Postretirement and other employee benefits | 14.8 |  |  | 15.9 |
Net operating loss and tax credit carryforwards | 93.3 |  |  | 94.1 |
Investment in subsidiaries | 5.6 |  |  | — |
Intangibles | 60.0 |  |  | 73.6 |
Other | 1.2 |  |  | 4.7 |
| 176.8 |  |  | 193.2 |
Less: Valuation allowance | (172.1 | ) |  | (182.5 | )
Net deferred income tax assets | $ | 4.7 |  |  | $ | 10.7 |
Deferred Tax Liabilities |  |  |
Net fixed assets | $ | (51.9 | ) |  | $ | (40.5 | )
Reserves and accruals | (0.2 | ) |  | — |
Investment in subsidiaries | — |  |  | (9.8 | )
Derivatives | (0.3 | ) |  | (1.3 | )
Other | — |  |  | (0.4 | )
Net deferred income tax liabilities | $ | (52.4 | ) |  | $ | (52.0 | )
Total net deferred income tax liabilities | $ | (47.7 | ) |  | $ | (41.3 | )
As of December 31, 2018 the Company had approximately $92.0 million of tax-effected operating loss carryforwards available to further reduce future taxable income in various jurisdictions which will expire on various dates as follows:
| 2018
201 9-2022 | $ | 0.6 |
2023-2034 | 12.2 |
Indefinite | 79.2 |
| $ | 92.0 |
In addition, the Company has $1.3 million of state tax credits that will expire between 2019 - 2037. The Company's deferred tax asset valuation allowances are primarily the result of uncertainties regarding the future realization of recorded tax benefits on tax loss carryforwards for certain entities. The valuation allowance on deferred tax assets as of December 31, 2018, in Luxembourg, Spain and the Philippines total $156.5 million, $8.6 million and $2.2 million respectively, fully reserving the net deferred tax asset balances in these locations. In addition, there is a valuation allowance on a tax credit receivable of $3.9 million in Brazil. We believe that it is more likely than not that the benefit from certain state tax attributes will not be realized. In recognition of this risk, we have provided a valuation allowance of $0.9 million on the related deferred tax assets. The Company's assumptions, judgments and estimates relative to the valuation of these net deferred tax assets take into account available positive and negative evidence of realizability, including recent financial performance, the ability to realize benefits of restructuring and other recent actions, projections of the amount and category of future taxable income and tax planning strategies. Actual future operating results and the underlying amount and category of income in future periods could differ from the Company's current assumptions, judgments and estimates. The Company believes that it will generate sufficient future taxable income to realize the tax benefits related to the remaining net deferred tax assets. The following table summarizes the activity related to the Company's unrecognized tax benefits related to income taxes ($ in millions):
| December 31,
| 2018 |  | 2017 |  | 2016
Uncertain tax position balance at beginning of year | $ | 1.0 |  |  | $ | 2.4 |  |  | $ | 0.9 |
Increases related to current year tax positions | 0.6 |  |  | 0.3 |  |  | 2.0 |
Increases related to prior year tax positions | — |  |  | 0.4 |  |  | — |
Decreases related to prior year tax positions | (0.2 | ) |  | (2.0 | ) |  | — |
Decreases related to expiration of statute of limitations | (0.3 | ) |  | (0.1 | ) |  | (0.5 | )
Uncertain tax position balance at end of year | $ | 1.1 |  |  | $ | 1.0 |  |  | $ | 2.4 |
The liability for unrecognized tax benefits included $1.1 million as of December 31, 2018 that if recognized would impact the Company's effective tax rate. We do not anticipate a decrease in unrecognized tax benefits by the end of 2019 as a result of a lapse of the statute of limitations and other regulatory filings. The Company's policy with respect to penalties and interest in connection with income tax assessments or related to unrecognized tax benefits is to classify penalties as provision for income taxes and interest as interest expense in its Consolidated Statements of Income. There were no material income tax penalties or interest accrued during the years ended December 31, 2018, 2017 and 2016. The Company files income tax returns, including returns for its subsidiaries, with federal, state, local and foreign jurisdictions. Currently, the Company is under U.S. audit for tax years 2014 and 2015. The Company anticipates finalizing this audit during 2019. All expected impacts have been recorded in 2018 or earlier. The following tax years remain subject to examination by the respective major tax jurisdictions:
Jurisdiction | Fiscal Years
Belgium | 2015-2017
Brazil | 2013-2017
Canada | 2011-2017
China | 2015-2017
France | 2016-2017
Germany | 2014-2017
Hong Kong | 2012-2017
Luxembourg | 2014-2017
Philippines | 2015-2017
Poland | 2013-2017
Spain | 2014-2017
United Kingdom | 2012-2017
United States |
Federal | 2014-2017
State | 2014-2017

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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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