XML 43 R17.htm IDEA: XBRL DOCUMENT
v3.8.0.1

Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2017
Income Tax Disclosure [Abstract] |
Income Taxes |
8. | INCOME TAXES
Effects of the Tax Cuts and Jobs Act On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (“TCJA”) was signed into U.S. law. Among other things, the TCJA reduces the U.S. federal corporate tax rate from 35% to 21% beginning in 2018 and requires companies to pay a one-time transition tax on previously unremitted earnings of non-U.S. subsidiaries that were previously tax deferred. ASC Topic 740, Accounting for Income Taxes, requires companies to recognize the effect of tax law changes in the period of enactment even though the effective date for most provisions is for tax years beginning after December 31, 2017. Given the significance of the legislation, the U.S. Securities and Exchange Commission (the "SEC") staff issued Staff Accounting Bulletin No. 118 (“SAB 118”), which allows registrants to record provisional amounts during a one year “measurement period” similar to that used when accounting for business combinations. However, the measurement period is deemed to have ended earlier when the registrant has obtained, prepared, and analyzed the information necessary to finalize its accounting. During the measurement period, impacts of the law are expected to be recorded at the time a reasonable estimate for all or a portion of the effects can be made, and provisional amounts can be recognized and adjusted as information becomes available, prepared, or analyzed. SAB 118 summarizes a three-step process to be applied at each reporting period to account for and qualitatively disclose: (1) the effects of the change in tax law for which accounting is complete; (2) provisional amounts (or adjustments to provisional amounts) for the effects of the tax law where accounting is not complete, but that a reasonable estimate has been determined; and (3) a reasonable estimate cannot yet be made and therefore taxes are reflected in accordance with law prior to the enactment of the Tax Cuts and Jobs Act. Amounts recorded where we consider accounting to be complete for the year ended December 31, 2017, principally relate to the reduction in the U.S. corporate income tax rate to 21%, which resulted in us recording an income tax benefit of $18.1 million to remeasure net deferred taxes liabilities. The TCJA includes a one-time mandatory repatriation transition tax on the net accumulated earnings and profits of a U.S. taxpayer’s foreign subsidiaries. We performed a preliminary earnings and profits analysis which resulted in us recording provisional U.S. federal income tax expense of $41.8 million, $3.8 million of non-US taxes and $0.3 million of state taxes associated with the repatriation of such earnings and profits. Although we have made a reasonable estimate of the tax associated with our net accumulated earnings, a final determination of the TCJA’s impact remains incomplete pending a full analysis of the provisions and their interpretations. Other significant provisions that are not yet effective but may impact income taxes in future years include: an exemption from U.S. tax on dividends of future earnings, limitation on the current deductibility of net interest expense in excess of 30% of adjusted taxable income, a limitation of the use of net operating losses generated after fiscal 2018 to 80% of taxable income but with an indefinite carryforward period, an incremental tax (base erosion anti-abuse tax or “BEAT”) on excessive amounts paid to foreign related parties, and a minimum tax on certain foreign earnings in excess of 10% of the foreign subsidiaries’ tangible assets (i.e., global intangible low-taxed income or “GILTI”). We are still evaluating whether to make a policy election to treat the GILTI tax as a period expense or to provide U.S. deferred taxes on foreign temporary differences that are expected to generate GILTI when they reverse in future years. Income taxes are recognized for the amount of taxes payable or refundable for the current year and deferred tax liabilities and assets for the future tax consequences of events that have been recognized in our consolidated financial statements or tax returns. The effects of income taxes are measured based on enacted tax laws and rates. The provision for (benefit from) income taxes from operations consisted of the following:
| Year ended December 31 |  |
In thousands | 2017 |  |  |  | 2016 |  |  |  | 2015 |  |
Current taxes |  |  |  |  |  |  |  |  |  |  |  |  |  |
Federal | $ | (1,961 | ) |  |  | $ | 2,216 |  |  |  | $ | 5,047 |  |
State |  | 64 |  |  |  |  | (1,112 | ) |  |  |  | (1,680 | ) |
Foreign |  | 14,292 |  |  |  |  | 10,203 |  |  |  |  | 12,536 |  |
|  | 12,395 |  |  |  |  | 11,307 |  |  |  |  | 15,903 |  |
Deferred taxes and other |  |  |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | 11,662 |  |  |  |  | (24,411 | ) |  |  |  | (7,287 | ) |
State |  | 3,388 |  |  |  |  | (1,723 | ) |  |  |  | 564 |  |
Foreign |  | 3,976 |  |  |  |  | 4,079 |  |  |  |  | 4,821 |  |
|  | 19,026 |  |  |  |  | (22,055 | ) |  |  |  | (1,902 | ) |
Income tax provision (benefit) | $ | 31,421 |  |  |  | $ | (10,748 | ) |  |  | $ | 14,001 |  |
The following are the domestic and foreign components of pretax income (loss) from operations:
| Year ended December 31 |  |
In thousands | 2017 |  |  |  | 2016 |  |  |  | 2015 |  |
United States | $ | (40,920 | ) |  |  | $ | (63,315 | ) |  |  | $ | 2,382 |  |
Foreign |  | 80,255 |  |  |  |  | 74,121 |  |  |  |  | 76,194 |  |
Total pretax income | $ | 39,335 |  |  |  | $ | 10,806 |  |  |  | $ | 78,576 |  |
A reconciliation between the income tax provision, computed by applying the statutory federal income tax rate of 35% to income before income taxes, and the actual income tax provision is as follows:
| Year ended December 31 |  |
| 2017 |  |  |  | 2016 |  |  |  | 2015 |  |
Federal income tax provision at statutory rate |  | 35.0 | % |  |  |  | 35.0 | % |  |  |  | 35.0 | % |
State income taxes, net of federal income tax benefit |  | 0.4 |  |  |  |  | (15.0 | ) |  |  |  | 0.3 |  |
Foreign income tax rate differential |  | (28.7 | ) |  |  |  | (96.3 | ) |  |  |  | (8.6 | ) |
Rate changes due to enacted legislation |  | (0.6 | ) |  |  |  | (6.7 | ) |  |  |  | — |  |
Tax effect of credits |  | (16.1 | ) |  |  |  | (30.3 | ) |  |  |  | (1.9 | ) |
Provision for (resolution of ) tax matters |  | 16.9 |  |  |  |  | 2.8 |  |  |  |  | (2.1 | ) |
State benefit due to enacted legislation |  | (4.1 | ) |  |  |  | — |  |  |  |  | — |  |
Effect of U.S. tax law change (1) |  | 53.2 |  |  |  |  | — |  |  |  |  | — |  |
Valuation allowance |  | 23.3 |  |  |  |  | 7.1 |  |  |  |  | 0.4 |  |
Permanent differences on non-U.S. earnings |  | — |  |  |  |  | — |  |  |  |  | (4.4 | ) |
Other |  | 0.6 |  |  |  |  | 3.9 |  |  |  |  | (0.9 | ) |
Actual tax rate |  | 79.9 | % |  |  |  | (99.5 | )% |  |  |  | 17.8 | % |
| (1) | Due to the TCJA which was enacted in December 2017, provisional mandatory transition tax on accumulated foreign earnings was accrued as of December 31, 2017. Our U.S. deferred tax assets and liabilities as of December 31, 2017 were re-measured from 35% to 21%.
The provisional effects of the TCJA are $39.0 million of deferred income tax expense, including a $6.8 million reversal of a valuation allowance, and $18.1 million of deferred income tax benefit for the year ended December 31, 2017. The sources of deferred income taxes were as follows at December 31:
In thousands | 2017 |  |  |  | 2016 |  |
Reserves | $ | 3,145 |  |  |  | $ | 4,625 |  |
Environmental |  | 11,189 |  |  |  |  | 20,868 |  |
Compensation |  | 6,782 |  |  |  |  | 8,950 |  |
Post-retirement benefits |  | 12,570 |  |  |  |  | 18,318 |  |
Research & development expenses |  | 6,787 |  |  |  |  | 6,949 |  |
Inventories |  | 1,891 |  |  |  |  | 1,464 |  |
Tax carryforwards |  | 21,988 |  |  |  |  | 14,438 |  |
Other |  | 2,106 |  |  |  |  | 993 |  |
Deferred tax assets |  | 66,458 |  |  |  |  | 76,605 |  |
Valuation allowance |  | (7,405 | ) |  |  |  | (4,066 | ) |
Net deferred tax assets |  | 59,053 |  |  |  |  | 72,539 |  |
Property |  | (98,809 | ) |  |  |  | (81,837 | ) |
Intangible assets |  | (17,647 | ) |  |  |  | (16,561 | ) |
Pension |  | (21,941 | ) |  |  |  | (29,041 | ) |
Other |  | (4,110 | ) |  |  |  | — |  |
Deferred tax liabilities |  | (142,507 | ) |  |  |  | (127,439 | ) |
Net deferred tax liabilities | $ | (83,454 | ) |  |  | $ | (54,900 | ) |
Non-current deferred tax assets and liabilities are included in the following balance sheet captions:
| December 31 |  |
In thousands | 2017 |  |  |  | 2016 |  |
Other assets | $ | 117 |  |  |  | $ | 95 |  |
Deferred income taxes |  | 83,571 |  |  |  |  | 54,995 |  |
At December 31, 2017 we had federal, state and foreign tax net operating loss (“NOL”) carryforwards of $47.9 million, $188.4 million and $3.7 million, respectively. These NOL carryforwards are available to offset future taxable income, if any. The federal NOL carryforward expires in 2037, state NOLs expire at various times and in various amounts beginning in 2018 and through 2037. Certain foreign NOL carryforwards begin to expire after 2023. The state and foreign NOL carryforwards and federal tax credits on the income tax returns filed included unrecognized tax benefits taken in prior years. The NOLs for which a deferred tax asset is recognized for financial statement purposes in accordance with ASC 740 are presented net of these unrecognized tax benefits. In addition, we had various federal tax credit carryforwards totaling $9.1 million which begin to expire after 2035, state tax credit carryforwards totaling $0.2 million, which begin to expire in 2018, and foreign investment tax credits of $2.4 million which begin to expire after 2027. As of December 31, 2017 and 2016, we had a valuation allowance of $7.4 million and $4.1 million, respectively, against net deferred tax assets, primarily due to uncertainty regarding the ability to utilize state and foreign tax NOL carryforwards and certain state tax credits. In assessing the need for a valuation allowance, management considers all available positive and negative evidence in its analysis. Based on this analysis, we recorded a valuation allowance for the portion of deferred tax assets where the weight of available evidence indicated it is more likely than not that the deferred tax assets will not be realized. Tax credits and other incentives reduce tax expense in the year the credits are claimed. We recorded tax credits of $6.3 million, $1.1 million and $1.5 million in 2017, 2016 and 2015, respectively, related to research and development credits and fuels tax credits. As a result of the mandatory deemed repatriation provisions in the TCJA, we recorded a provisional estimate on $397.8 million of undistributed earnings of foreign subsidiaries in U.S. taxable income at the reduced tax rates. With respect to other basis differences in connection with our foreign subsidiaries at December 31, 2017, we assert that such basis differences are indefinite in duration, and as a result, no deferred taxes have been provided. As of December 31, 2017, 2016 and 2015, we had $26.9 million, $14.2 million and $12.2 million of gross unrecognized tax benefits, respectively. As of December 31, 2017, if such benefits were to be recognized, approximately $16.8 million would be recorded as a component of income tax expense, thereby affecting our effective tax rate. A reconciliation of the beginning and ending balances of the total amounts of gross unrecognized tax benefits is as follows:
In millions | 2017 |  |  |  | 2016 |  |  |  | 2015 |  |
Balance at January 1 | $ | 14.2 |  |  |  | $ | 12.2 |  |  |  | $ | 14.9 |  |
Increases in tax positions for prior years |  | 1.7 |  |  |  |  | 2.0 |  |  |  |  | 0.0 |  |
Decreases in tax positions for prior years |  | — |  |  |  |  | (1.4 | ) |  |  |  | (4.3 | ) |
Increases in tax positions for current year |  | 11.9 |  |  |  |  | 1.9 |  |  |  |  | 1.9 |  |
Settlements |  | — |  |  |  |  | (0.2 | ) |  |  |  | 0.0 |  |
Lapse in statutes of limitation |  | (0.9 | ) |  |  |  | (0.3 | ) |  |  |  | (0.3 | ) |
Balance at December 31 | $ | 26.9 |  |  |  | $ | 14.2 |  |  |  | $ | 12.2 |  |
We, or one of our subsidiaries, file income tax returns with the United States Internal Revenue Service, as well as various state and foreign authorities. The following table summarizes tax years that remain subject to examination by major jurisdiction:
| Open Tax Years |
Jurisdiction | Examinations not yet initiated |  |  | Examination in progress |
United States |  |  |  |  |
Federal | 2014 - 2017 |  |  | N/A |
State | 2013 - 2017 |  |  | 2014 |
Canada(1) | 2010-2013; 2017 |  |  | 2014 - 2016 |
Germany(1) | 2016 - 2017 |  |  | 2011 - 2015 |
France | 2015 - 2017 |  |  | 2012 |
United Kingdom | 2016 - 2017 |  |  | N/A |
Philippines | 2015, 2017 |  |  | 2016 |
(1) | includes provincial or similar local jurisdictions, as applicable.
The amount of income taxes we pay is subject to ongoing audits by federal, state and foreign tax authorities, which often result in proposed assessments. Management performs a comprehensive review of its global tax positions on a quarterly basis and accrues amounts for uncertain tax positions. Based on these reviews and the result of discussions and resolutions of matters with certain tax authorities and the closure of tax years subject to tax audit, reserves are adjusted as necessary. However, future results may include favorable or unfavorable adjustments to our estimated tax liabilities in the period the assessments are determined or resolved or as such statutes are closed. Due to potential for resolution of federal, state and foreign examinations, and the expiration of various statutes of limitation, it is reasonably possible our gross unrecognized tax benefits balance may decrease within the next twelve months by a range of zero to $0.6 million. The majority of this range relates to tax positions taken in the U.S. We recognize interest and penalties related to uncertain tax positions as income tax expense. The following table summarizes information related to interest and penalties on uncertain tax positions:
| As of or for the year ended December 31, |  |
In millions | 2017 |  |  |  | 2016 |  |  |  | 2015 |  |
Accrued interest payable | $ | 0.8 |  |  |  | $ | 0.5 |  |  |  | $ | 0.6 |  |
Interest expense (income) |  | 0.3 |  |  |  |  | (0.1 | ) |  |  | – |  |
Penalties | – |  |  |  | – |  |  |  | – |  |

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 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration