Income Taxes

Income taxes have been based on the following components of earnings from continuing operations before income taxes and equity in earnings (loss) of unconsolidated entities for the years ended December 31, 2014, 2013 and 2012:



	2014			2013			2012
U.S.	$	57.4		$	83.0		$	69.1
Foreign	(16.2		)	(26.3		)	(46.6		)
Total	$	41.2		$	56.7		$	22.5

The components of income tax expense (benefit) consists of the following for the years ended December 31, 2014, 2013 and 2012:



	2014			2013			2012
Federal:
Current	$	(11.6	)	$	24.9		$	(23.2	)
Deferred	21.1			(7.8		)	(4.2		)
State:
Current	(0.9		)	5.6			3.0
Deferred	1.3			(1.4		)	(6.6		)
Foreign:
Current	5.9			3.9			2.3
Deferred	4.4			(1.9		)	(2.8		)
Total income tax expense (benefit)	$	20.2		$	23.3		$	(31.5	)

The following table outlines the reconciliation of differences between the Federal statutory tax rate and the Company's effective tax rate for the years ended December 31, 2014, 2013 and 2012:



	2014		2013		2012
Federal statutory rate	35.0	%	35.0	%	35.0	%
Foreign rate differential	(4.5	)	6.0		19.2
State taxes, net of federal benefit	(0.2	)	4.3		3.6
Nondeductible transaction costs	0.6		0.3		3.0
Adjustment to valuation allowances	26.1		13.7		(3.7	)
Adjustment of deferred tax liabilities	10.1		(1.8	)	(14.0	)
Loss from foreign branches	0.6		(5.8	)	(30.8	)
Domestic production activity deduction	(1.6	)	(6.0	)	(3.4	)
Adjustment of uncertain tax positions⁽¹⁾	(22.9	)	1.9		(145.4	)
Other	5.8		(6.5	)	(3.6	)
Effective income tax rate	49.0	%	41.1	%	(140.1	)%

______________________________


(1)	During 2012, the Company settled pre-acquisition World Color Press income tax examinations with the Internal Revenue Service ("IRS") resulting in a $30.0 million income tax benefit.

Deferred Income Taxes

The significant deferred tax assets and liabilities as of December 31, 2014 and 2013, were as follows:



	2014			2013
Deferred tax assets:
Accrued liabilities	$	24.4		$	28.9
Accrued compensation	43.0			36.6
Allowance for doubtful accounts	18.7			19.8
Interest limitation	115.3			153.6
Pension, postretirement and workers compensation benefits	98.2			80.0
Net operating loss and other tax carryforwards	151.6			152.3
Other	24.8			24.7
Total deferred tax assets	476.0			495.9
Valuation allowance	(156.1		)	(151.5		)

Net deferred tax assets	$	319.9		$	344.4

Deferred tax liabilities:
Property, plant and equipment	$	(359.0	)	$	(362.5	)
Goodwill and intangible assets	(41.2		)	(67.4		)
Investment in U.S. subsidiaries	(240.9		)	(245.1		)
Other	(14.8		)	(16.5		)
Total deferred tax liabilities	(655.9		)	(691.5		)

Net deferred tax liabilities	$	(336.0	)	$	(347.1	)

The net deferred tax assets (liabilities) above are classified on the consolidated balance sheets at December 31, 2014 and 2013 as follows:



	2014			2013
Current net deferred tax asset	$	48.4		$	48.1
Non-current net deferred tax liability	(384.4		)	(395.2		)
Total	$	(336.0	)	$	(347.1	)

At December 31, 2014, the Company had foreign net operating loss carry forwards of $136.6 million and state net operating loss carry forwards of $679.2 million. Of the foreign net operating loss carry forwards, $41.9 million are available without expiration, while the remainder expire through 2034. The state net operating loss carry forwards expire in varying amounts through 2034. The Company also has $44.8 million of various state credit carry forwards, of which $30.9 million are available without expiration, while the remainder expire through 2029. At December 31, 2014, the Company has recorded a valuation allowance of $156.1 million against $55.3 million, $56.2 million and $44.6 million of federal, foreign and state deferred tax assets, respectively, that are not expected to be realized.

The Company considers its foreign earnings to be indefinitely invested. Accordingly, the Company does not currently provide for the additional United States and foreign income taxes which would become payable upon remission of undistributed earnings of foreign subsidiaries. The cumulative undistributed earnings of such subsidiaries at December 31, 2014, are not material.

Uncertain Tax Positions

The following table summarizes the activity of the Company's liability for unrecognized tax benefits at December 31, 2014, 2013 and 2012:



	2014			2013			2012
Balance at beginning of period	$	44.5		$	46.5		$	106.0
Additions due to acquisitions	—			—			22.9
Additions for tax positions of the current year	0.5			0.1			—
Additions for tax positions of prior years	2.4			0.7			15.2
Reductions for tax positions of prior years	(5.1		)	(0.5		)	(76.3		)
Settlements during the period	(0.3		)	(2.1		)	(7.8		)
Lapses of applicable statutes of limitations	(10.8		)	(0.2		)	(13.5		)
Foreign exchange and other	(0.1		)	—			—
Balance at end of period	$	31.1		$	44.5		$	46.5

As of December 31, 2014, $31.1 million of unrecognized tax benefits would impact the Company's effective tax rate, if recognized. Of that amount, it is reasonably possible that $1.8 million of the total amount of unrecognized tax benefits will decrease within 12 months due to resolution of audits or statute expirations.

During 2012, the Company settled pre-acquisition World Color Press income tax examinations with the IRS resulting in a net income tax benefit of $30.0 million. Included in this net benefit is $75.7 million related to a reduction for uncertain tax positions of prior years. In addition to the impact on the Company's uncertain tax positions, settlement of the examinations required an adjustment to certain tax attributes of the Company. The impact of the adjustments to these tax attributes resulted in a net income tax expense of $46.7 million.

The Company classified interest expense and any related penalties related to income tax uncertainties as a component of income tax expense. The following table summarizes the Company's interest expense (income) related to tax uncertainties and penalties recognized during the years ended December 31, 2014, 2013 and 2012:



	2014		2013			2012
Interest expense (income)	$	0.8	$	(1.0	)	$	(1.1	)
Penalties recognized	—		(0.2		)	—

Accrued interest and penalties related to income tax uncertainties are reported as components of other current liabilities and other long-term liabilities on the consolidated balance sheets. The following table summarizes the Company's liabilities for accrued interest and penalties related to income tax uncertainties at December 31, 2014 and 2013:



	2014		2013
Accrued interest
Other current liabilities	$	0.1	$	0.1
Other long-term liabilities	4.8		4.0
Total accrued interest	$	4.9	$	4.1

Accrued penalties
Other current liabilities	$	—	$	—
Other long-term liabilities	0.5		0.5
Total accrued penalties	$	0.5	$	0.5

The Company has tax years from 2010 through 2014 that remain open and subject to examination by the IRS. Tax years from 2007 through 2014 remain open and subject to examination in the Company's various major state jurisdictions within the United States.