v3.7.0.1

Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2016
Income Tax Disclosure [Abstract] |
Income Taxes | (17) Income Taxes
|  | 2016 |  |  | 2015 |  |  | 2014 |
|  | (In millions) |
Income (loss) before income taxes: |  |  |  |  |  |  |  |  |  |  |  |
Domestic |  | $ | 53.5 |  |  |  | 97.8 |  |  |  | (8.8 | )
Foreign |  |  | 81.8 |  |  |  | 76.1 |  |  |  | 63.0 |
|  | $ | 135.3 |  |  |  | 173.9 |  |  |  | 54.2 |
Provision (benefit) for income taxes: |  |  |  |  |  |  |  |  |  |  |  |
Currently payable: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 21.9 |  |  |  | 31.7 |  |  |  | 43.8 |
Foreign |  |  | 27.5 |  |  |  | 23.6 |  |  |  | 18.8 |
State and local |  |  | 2.9 |  |  |  | 8.4 |  |  |  | 7.0 |
|  |  | 52.3 |  |  |  | 63.7 |  |  |  | 69.6 |
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | (9.3 | ) |  |  | (14.3 | ) |  |  | (81.5 | )
Foreign |  |  | (4.5 | ) |  |  | 4.0 |  |  |  | (0.4 | )
State and local |  |  | (0.1 | ) |  |  | (5.3 | ) |  |  | (6.8 | )
|  |  | (13.9 | ) |  |  | (15.6 | ) |  |  | (88.7 | )
Total income tax expense (benefit) |  | $ | 38.4 |  |  |  | 48.1 |  |  |  | (19.1 | )
The components of deferred taxes as of December 31 were as follows:
|  | 2016 |  |  | 2015 |
|  | (In millions) |
Deferred tax assets: |  |  |  |  |  |  |  |
Inventories |  | $ | 4.3 |  |  |  | 4.6 |
Property and equipment |  |  | 3.1 |  |  |  | 3.0 |
Accrued liabilities and other long-term liabilities |  |  | 14.1 |  |  |  | 13.0 |
Net operating losses |  |  | 17.9 |  |  |  | 12.9 |
Capitalized transactions costs |  |  | 7.0 |  |  |  | 5.5 |
Defined benefit pension plans |  |  | 11.9 |  |  |  | 6.6 |
Stock-based compensation |  |  | 14.2 |  |  |  | 14.2 |
Other |  |  | 6.0 |  |  |  | 11.2 |
|  |  | 78.5 |  |  |  | 71.0 |
Valuation allowance |  |  | (15.3 | ) |  |  | (11.8 | )
|  |  | 63.2 |  |  |  | 59.2 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Property and equipment |  |  | 90.1 |  |  |  | 91.2 |
Intangible assets |  |  | 169.6 |  |  |  | 181.7 |
Investments in foreign subsidiaries |  |  | 3.9 |  |  |  | 2.2 |
Debt issuance costs |  |  | 2.0 |  |  |  | 5.0 |
Other |  |  | 13.9 |  |  |  | 8.7 |
|  |  | 279.5 |  |  |  | 288.8 |
Net deferred tax liability |  | $ | 216.3 |  |  |  | 229.6 |
The balance sheet presentation of net deferred tax liability follows:
|  | 2016 |  |  | 2015 |
|  | (In millions) |
Assets: |  |  |  |  |  |  |  |
Deferred income taxes |  | $ | 7.4 |  |  |  | 1.7 |
Liabilities: |  |  |  |  |  |  |  |
Deferred income taxes |  |  | 223.7 |  |  |  | 231.3 |
Net deferred tax liability |  | $ | 216.3 |  |  |  | 229.6 |
The following is a reconciliation of tax computed at the U.S. federal statutory rate to the provision for income taxes allocated to income from continuing operations:
|  | 2016 |  |  | 2015 |  |  | 2014 |
|  | (In millions) |
U.S. federal statutory rate |  |  | 35 | % |  |  | 35 | % |  |  | 35 | %
Tax at U.S. federal statutory rate |  | $ | 47.3 |  |  |  | 60.9 |  |  |  | 19.0 |
Lower effective foreign tax rate |  |  | (7.7 | ) |  |  | (6.9 | ) |  |  | (6.1 | )
Change in valuation allowance |  |  | 3.6 |  |  |  | 2.4 |  |  |  | 4.8 |
Nondeductible transaction/other expenses |  |  | 3.1 |  |  |  | 1.7 |  |  |  | 3.6 |
Non-taxable income |  |  | (2.8 | ) |  |  | (2.6 | ) |  |  | (2.9 | )
Foreign tax credit - net |  |  | (2.6 | ) |  |  | — |  |  |  | — |
Tax holidays, credits and incentives |  |  | (2.5 | ) |  |  | (1.4 | ) |  |  | (4.7 | )
Domestic production activities deduction |  |  | (2.3 | ) |  |  | (3.6 | ) |  |  | (2.3 | )
Changes in unrecognized tax benefits |  |  | (1.9 | ) |  |  | 0.6 |  |  |  | (2.2 | )
Deferred tax on outside basis of foreign shares |  |  | 1.8 |  |  |  | (3.0 | ) |  |  | (31.6 | )
State and local taxes, net of federal tax benefit |  |  | 1.1 |  |  |  | 4.3 |  |  |  | (1.4 | )
Changes in prior-year estimates |  |  | 0.4 |  |  |  | (4.2 | ) |  |  | 2.6 |
Other, net |  |  | 0.9 |  |  |  | (0.1 | ) |  |  | (2.2 | )
Goodwill impairment |  |  | — |  |  |  | — |  |  |  | 4.3 |
Income tax expense (benefit) |  | $ | 38.4 |  |  |  | 48.1 |  |  |  | (19.1 | )
As of December 31, 2016, the Company has not made a provision for U.S. or additional foreign withholding taxes on approximately $265 million of the excess of the amount for financial reporting over the tax basis of investments in foreign subsidiaries that is indefinitely reinvested. Such amounts could become taxable upon the sale or liquidation of these foreign subsidiaries or upon dividend repatriation. If a U.S. deferred tax liability were to be recorded on those basis differentials, the estimated tax liability would approximate $24.8 million. For those wholly owned foreign subsidiaries where basis differentials are not indefinitely reinvested, the Company provides deferred income taxes on the basis differentials. As of December 31, 2016 and 2015, this deferred income tax liability totaled $3.9 million and $2.2 million, respectively. The Protecting Americans from Tax Hikes Act of 2015 extended the “look-through” rule under subpart F of the U.S. Internal Revenue Code through 2019. The “look-through rule” provides an exception to the U.S. taxation of certain income generated by foreign subsidiaries. As a result of this change in law, the Company recorded a $3.2 million income tax benefit in 2015, to derecognize a portion of the deferred tax liabilities previously recorded. In the fourth quarter of 2014, MPG made the assertion that the earnings of certain foreign subsidiaries within the Metaldyne segment are indefinitely reinvested. This determination resulted from the Refinancing in October 2014 and the IPO in December 2014, which added significant flexibility to the Company’s capital structure. The assertion is also supported by the operational and investing needs of the Company’s foreign locations. As a result of this change, the Company recorded a $31.6 million deferred tax benefit for the year ended December 31, 2014 to derecognize a portion of the deferred tax liabilities previously recorded. As of December 31, 2016 and 2015, certain foreign subsidiaries have NOL carryforward balances totaling $57.6 million and $40.2 million, respectively. Of the December 31, 2016 balance, foreign NOL carryforwards totaling $5.4 million will expire in various years ranging from 2018 through 2025, while the remaining balance of $52.3 million has no expiration date. The Company continues to maintain a valuation allowance related to its net deferred tax assets in multiple jurisdictions. As of December 31, 2016 and 2015, the Company had valuation allowances of $15.3 million and $11.8 million, respectively, primarily related to tax loss and credit carryforwards. For its U.S. federal income tax provision, the Company has recorded a research and experimentation tax credit of $2.4 million and $1.3 million for the year ended December 31, 2016 and 2015, respectively. A reconciliation of the total amounts of unrecognized tax benefits for the years ended December 31 follows:
|  | 2016 |  |  | 2015 |  |  | 2014 |
|  | (In millions) |
Beginning balance |  | $ | 7.2 |  |  |  | 7.4 |  |  |  | 9.6 |
Additions to tax positions related to the current period |  |  | 0.5 |  |  |  | 0.3 |  |  |  | 0.3 |
Additions to tax positions related to the prior period |  |  | 0.2 |  |  |  | 0.4 |  |  |  | 0.3 |
Reductions in tax positions resulting from settlements with taxing authorities |  |  | (3.5 | ) |  |  | — |  |  |  | (1.3 | )
Reductions in tax positions resulting from a lapse of the statute of limitations |  |  | (0.1 | ) |  |  | — |  |  |  | (0.2 | )
Other |  |  | (0.2 | ) |  |  | (0.9 | ) |  |  | (1.3 | )
Ending balance |  | $ | 4.1 |  |  |  | 7.2 |  |  |  | 7.4 |
The reserve for unrecognized tax benefits totaled $4.1 million and $4.5 million as of December 31, 2016 and 2015, respectively. This reserve primarily consists of foreign tax contingencies related to ongoing tax audits. Additionally, as of December 31, 2015, deferred tax assets related to net operating losses were reduced by $2.7 million. The deferred tax assets were re-established during the year ended December 31, 2016 due to a favorable resolution of an audit issue for one of the Company’s foreign subsidiaries. All of the Company’s unrecognized tax benefits would, if recognized, reduce its effective tax rate. In connection with the Metaldyne Transaction, the former owner’s stockholders have indemnified Metaldyne for certain pre-closing taxes. An indemnification asset of $4.7 million and $7.6 million related to the foreign tax contingencies, including interest and penalties, is recorded in receivables, net as of December 31, 2016 and 2015, respectively. The Company recognizes both interest and penalties accrued with respect to an underpayment of income taxes as income tax expense. Related to the unrecognized tax benefits noted above, the amount of interest and penalty expense was $0.1 million, $0.2 million, and $0.2 million for the years ended December 31, 2016, 2015, and 2014, respectively. The accrued liability for penalties and interest as of December 31, 2016, 2015 and 2014 was $1.4 million, $1.3 million and $1.1 million, respectively. The Company has open tax years from 2004 to 2016 with varying taxing jurisdictions where taxes remain subject to examination including, but not limited to, the United States of America, Spain, France, Germany, and India. All necessary adjustments for the anticipated outcomes of ongoing examinations have been properly addressed or accrued. As of December 31, 2016 and 2015, since existing examinations remain pending, it is not possible to reasonably estimate the expected change to the total amount of unrecognized tax benefits over the next twelve months.

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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 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32559-109319 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32718-109319 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32537-109319 + Details
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