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Income Taxes | 12 Months Ended
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Dec. 31, 2017
Income Tax Disclosure [Abstract] |
Income Taxes | 12. Income Taxes Income (loss) from continuing operations are summarized below:
(in millions) |  | 2017 |  |  | 2016 |  |  | 2015 |
(Loss) income from continuing operations before income taxes: |  |  |  |  |  |  |  |  |  |  |  |
Domestic |  | $ | (98.5 | ) |  | $ | (293.0 | ) |  | $ | (184.0 | )
Foreign |  |  | 59.0 |  |  |  | 24.9 |  |  |  | 73.0 |
Total |  | $ | (39.5 | ) |  | $ | (268.1 | ) |  | $ | (111.0 | )
Income tax provision (benefit) from continuing operations is summarized as follows:
(in millions) |  | 2017 |  |  | 2016 |  |  | 2015 |
Current: |  |  |  |  |  |  |  |  |  |  |  |
Federal and state |  | $ | (12.8 | ) |  | $ | (13.0 | ) |  | $ | (48.6 | )
Foreign |  |  | 7.4 |  |  |  | 12.1 |  |  |  | 11.9 |
Total current |  | $ | (5.4 | ) |  | $ | (0.9 | ) |  | $ | (36.7 | )
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
Federal and state |  | $ | (7.0 | ) |  | $ | 98.7 |  |  | $ | (8.3 | )
Foreign |  |  | (37.1 | ) |  |  | 2.7 |  |  |  | 3.9 |
Total deferred |  | $ | (44.1 | ) |  | $ | 101.4 |  |  | $ | (4.4 | )
Provision (benefit) for taxes on income |  | $ | (49.5 | ) |  | $ | 100.5 |  |  | $ | (41.1 | )
The federal statutory income tax rate is reconciled to the Company’s effective income tax rate for continuing operations for the years ended December 31, 2017, 2016 and 2015 as follows:
|  | 2017 |  |  | 2016 |  |  | 2015 |
Federal income tax at statutory rate |  |  | 35.0 | % |  |  | 35.0 | % |  |  | 35.0 | %
State income provision (benefit) |  |  | 16.3 |  |  |  | 2.3 |  |  |  | 5.7 |
Manufacturing & research incentives |  |  | 7.9 |  |  |  | 2.0 |  |  |  | (0.4 | )
Taxes on foreign income which differ from the U.S. statutory rate |  |  | 41.5 |  |  |  | 2.4 |  |  |  | 8.3 |
Adjustments for unrecognized tax benefits |  |  | 0.5 |  |  |  | (4.0 | ) |  |  | 1.5 |
Adjustments for valuation allowances |  |  | 287.7 |  |  |  | (69.8 | ) |  |  | (8.5 | )
Spin-off tax costs |  |  | — |  |  |  | (1.3 | ) |  |  | (1.8 | )
U.S. Tax Reform |  |  | (228.3 | ) |  |  | — |  |  |  | — |
Other items |  |  | (35.4 | ) |  |  | (4.1 | ) |  |  | (2.8 | )
Effective tax rate |  |  | 125.2 | % |  |  | (37.5 | )% |  |  | 37.0 | %
On December 22, 2017, the President of the United States signed into law the Tax Reform Act. The legislation significantly changes U.S. tax law by, among other things, lowering corporate income tax rates, and imposing a repatriation tax on deemed repatriated earnings of foreign subsidiaries. The Tax Reform Act permanently reduces the U.S. corporate income tax rate from a maximum of 35% to a flat 21% rate, effective January 1, 2018. As a result of the reduction in the U.S. corporate income tax rate from 35% to 21% under the Tax Reform Act, the Company revalued its ending net deferred tax assets and offsetting valuation allowance at December 31, 2017, resulting in a net tax benefit of $6.5 million. The Tax Reform Act provided for a one-time deemed mandatory repatriation of post-1986 undistributed foreign subsidiary earnings and profits (“E&P”) through the year ended December 31, 2017. The Company calculated a provisional $54.0 million of federal and state income tax expense for this item. After the utilization of net operating losses, the Company expects no U.S. cash tax impact. On December 22, 2017, the SEC staff issued Staff Accounting Bulletin No. 118 (“SAB 118”) to address the application of U.S. GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Tax Reform Act. The Company has recognized the provisional federal and state tax impacts related to deemed repatriated earnings and the revaluation of deferred tax assets and liabilities and included these amounts in its consolidated financial statements for the year ended December 31, 2017. The ultimate impact may differ from these provisional amounts, possibly materially, due to, among other things, additional analysis, changes in interpretations and assumptions the Company has made, additional regulatory guidance that may be issued, and actions the Company may take as a result of the Tax Reform Act. In addition, the Company is still analyzing its permanent reinvestment assertion in light of the Tax Reform Act. The accounting is expected to be complete in the fourth quarter of 2018. Beginning in 2018, the Tax Reform Act includes two new U.S. corporate tax provisions, the global intangible low-taxed income (“GILTI”) and the base-erosion and anti-abuse tax (“BEAT”) provisions. The GILTI provision 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. The BEAT provision in the Tax Reform Act eliminate the deduction of certain base-erosion payments made to related foreign corporates, and impose a minimum tax if greater than regular tax. The Company is still evaluating the potential impact of the GILTI and BEAT provisions and accordingly has not recorded a provisional estimate for the year ended December 31, 2017. The 2017, 2016 and 2015 effective tax rates were favorably impacted by income earned in jurisdictions where the statutory rate was less than 35%. The rate reconciling items included above, when adjusted for actual dollar values, are consistent with prior year. The percentage impacts are higher in 2017 due to the lower consolidated pretax loss. As of each reporting date, the Company's management considers new evidence, both positive and negative, that could impact management's view with regard to future realization of deferred tax assets. Due to the Spin-Off that occurred in the first quarter of 2016, management reevaluated the deferred tax assets related to the domestic crane operations and determined that it was more likely than not that deferred tax assets related to its domestic crane operations were not realizable and the Company recorded a valuation allowance. The Company has recorded valuation allowances on the deferred tax assets in Brazil, China Leasing, Germany, India, Slovakia, U.K., and the U.S. as it is more likely than not that they will not be utilized. Also during 2017, the Company released a $40.2 million valuation allowance in France. The 2017 tax provision was impacted by a net decrease of $113.8 million related to valuation allowances in these jurisdictions, with the primary drivers being the French valuation allowance release noted above, Internal Revenue Service audit resolution of $13.7 million, and U.S. tax reform impact of $68.9 million. The Company will continue to periodically evaluate its valuation allowance requirements in light of changing facts and circumstances and may adjust its deferred tax asset valuation allowances accordingly. It is reasonably possible that the Company will either add to, or reverse a portion of its existing deferred tax asset valuation allowances in the future. Such changes in the deferred tax asset valuation allowances will be reflected in the current operations through the Company’s income tax provision and could have a material effect on operating results. For 2017, the only significant item included in Other items was the IRS audit resolution. For 2016, the only significant item included in Other items was the net operating loss. For 2015, no items included in Other items are individually, or when appropriately aggregated, significant. Note certain prior period numbers were reclassified to conform to current year presentation. Temporary differences and carryforwards that give rise to deferred tax assets and liabilities include the following items:
(in millions) |  | 2017 |  |  | 2016 |
Non-current deferred tax assets (liabilities): |  |  |  |  |  |  |  |
Inventories |  | $ | 16.5 |  |  | $ | 14.2 |
Accounts receivable |  |  | (5.4 | ) |  |  | (4.6 | )
Property, plant and equipment |  |  | (9.7 | ) |  |  | 19.0 |
Intangible assets |  |  | (33.8 | ) |  |  | (35.9 | )
Deferred employee benefits |  |  | 47.3 |  |  |  | 71.8 |
Product warranty reserves |  |  | 5.5 |  |  |  | 6.1 |
Product liability reserves |  |  | 5.0 |  |  |  | 7.8 |
Tax credits |  |  | 6.7 |  |  |  | 4.9 |
Loss carryforwards |  |  | 159.2 |  |  |  | 145.4 |
Deferred revenue |  |  | 7.4 |  |  |  | 10.8 |
Transition tax |  |  | (26.2 | ) |  |  | — |
Other |  |  | 2.2 |  |  |  | (1.7 | )
Total non-current deferred tax assets |  |  | 174.7 |  |  |  | 237.8 |
Less valuation allowance |  |  | (162.3 | ) |  |  | (269.6 | )
Net deferred tax assets (liabilities), non-current |  | $ | 12.4 |  |  | $ | (31.8 | )
The net deferred tax assets (liabilities) are reflected in the Consolidated Balance Sheets for the years ended December 31, 2017 and December 31, 2016 as follows:
(in millions) |  | 2017 |  |  | 2016 |
Long-term income tax assets, included in other non-current assets |  | $ | 25.4 |  |  | $ | 4.8 |
Long-term deferred income tax liability |  |  | (13.0 | ) |  |  | (36.6 | )
Net deferred income tax asset (liability) |  | $ | 12.4 |  |  | $ | (31.8 | )
The Company has not provided for additional U.S. state and foreign taxes on approximately $564.6 million of undistributed earnings of consolidated non-U.S. subsidiaries included in stockholders’ equity. Such earnings could become taxable upon sale or liquidation of these non-U.S. subsidiaries or upon dividend repatriation of cash balances. The amount of unrecognized tax liability on such earnings is not material. At December 31, 2017, approximately $83.1 million of the Company’s total cash and cash equivalents were held by its foreign subsidiaries. This cash is associated with earnings that the Company has asserted are permanently reinvested. The Company has no current plans to repatriate cash or cash equivalents held by its foreign subsidiaries because it plans to reinvest such cash and cash equivalents to support its operations and continued growth plans outside the U.S. through the funding of capital expenditures, acquisitions, research, operating expenses or other similar cash needs of these operations. Further, the Company does not currently forecast a need for these funds in the U.S. because its U.S. operations and debt service are supported by the cash generated by its U.S. operations. The Company has approximately $131.3 million of domestic federal loss carryforwards, which are available to reduce future domestic federal tax liabilities. The federal net operating loss carryforward expires 2036-2037. All of the domestic loss carryforwards are offset by a valuation allowance. The Company has approximately $657.3 million of state net operating loss carryforwards, which are available to reduce future state tax liabilities. These state net operating loss carryforwards expire at various times through 2037. The Company has recorded a full valuation allowance related to the state net operating losses. The Company has approximately $396.5 million of foreign loss carryforwards, which are available to reduce future foreign tax liabilities. Substantially all of the foreign loss carryforwards are not subject to any time restrictions on their future use, and $242.9 million are offset by a valuation allowance. The Company or one of its subsidiaries files income tax returns in the U.S. federal jurisdiction, and various state and foreign jurisdictions. The following table provides the open tax years for which the Company could be subject to income tax examination by the tax authorities in its major jurisdictions:
Jurisdiction |  | Open Years
U.S. Federal |  | 2012 — 2017
China |  | 2007 — 2017
France |  | 2013 — 2017
Germany |  | 2011 — 2017
Among other regular and ongoing examinations by federal and state jurisdictions globally, the Company closed the audit with the Internal Revenue Service for calendar years 2012 to 2014. The statute is still open for these years; however, no adjustments are anticipated. There have been no significant developments with respect to the Company’s ongoing tax audits in other jurisdictions. The Company regularly assesses the likelihood of an adverse outcome resulting from examinations to determine the adequacy of its tax reserves. As of December 31, 2017, the Company believes that it is more likely than not that the tax positions it has taken will be sustained upon the resolution of its audits resulting in no material impact on its consolidated financial position and the results of operations and cash flows. However, the final determination with respect to any tax audits, and any related litigation, could be materially different from the Company’s estimates and/or from its historical income tax provisions and accruals and could have a material effect on operating results and/or cash flows in the periods for which that determination is made. In addition, future period earnings may be adversely impacted by litigation costs, settlements, penalties, and/or interest assessments. During the years ended December 31, 2017, 2016 and 2015, the Company recorded a change to gross unrecognized tax benefits including interest and penalties of $(1.7) million, $4.9 million, and $(1.9) million, respectively. During the years ended December 31, 2017, 2016 and 2015, the Company recognized in the Consolidated Statements of Operations $0.3 million, $2.8 million, and $(0.5) million, respectively, for interest and penalties related to uncertain tax liabilities, which the Company recognizes as a part of income tax expense. As of December 31, 2017 and 2016, the Company has accrued interest and penalties of $7.7 million and $7.4 million, respectively. A reconciliation of the beginning and ending amount of unrecognized tax benefits for the years ended December 31, 2017, 2016 and 2015 is as follows:
(in millions) |  | 2017 |  |  | 2016 |  |  | 2015 |
Balance at beginning of year |  | $ | 21.5 |  |  | $ | 19.4 |  |  | $ | 20.8 |
Additions based on tax positions related to the current year |  |  | 0.9 |  |  |  | 1.1 |  |  |  | 1.3 |
Additions for tax positions of prior years |  |  | 4.9 |  |  |  | 5.0 |  |  |  | 0.2 |
Reductions for tax positions of prior years |  |  | (0.5 | ) |  |  | (3.6 | ) |  |  | — |
Reductions based on settlements with taxing authorities |  |  | (6.7 | ) |  |  | — |  |  |  | — |
Reductions for lapse of statute |  |  | (0.6 | ) |  |  | (0.4 | ) |  |  | (2.9 | )
Balance at end of year |  | $ | 19.5 |  |  | $ | 21.5 |  |  | $ | 19.4 |
Approximately $13.1 million, $14.6 million, and $9.9 million of the Company’s unrecognized tax benefits as of December 31, 2017, 2016, and 2015 would affect the effective tax rate. Note certain prior period numbers were reclassified to conform to current year presentation. During the next twelve months, it is reasonably possible that federal, state and foreign tax audit resolutions could reduce unrecognized tax benefits and income tax expense by up to $9.0 million, either because the Company’s tax positions are sustained on audit or settled, or the applicable statute of limitations closes. The Company has a Tax Matters Agreement with Manitowoc Foodservice, Inc. that provides that MFS shall be liable for and shall indemnify the Company against certain U.S. (including states) and foreign income taxes resulting from tax obligations arising due to operations reported on a separate company basis prior to March 4, 2016, where MFS has retained the legal entity post Spin-Off. In addition, the Company is liable for and shall indemnify MFS against certain U.S. (including states) and foreign income taxes arising due to operations prior to March 4, 2016, where such taxes result from combined filings (i.e., when the legal entities of the Company filed as a combined group with legal entities of MFS prior to the Spin-Off) or relate to operations where the Company has retained the legal entity past separation.

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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://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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