Income Taxes

The components of loss from continuing operations before income taxes were as follows:



	Years Ended December 31,
	2016			2015
	(In millions)
U.S.	$	(34.9	)	$	(127.8	)
International	(4.8		)	(15.0		)
Total	$	(39.7	)	$	(142.8	)

The components of the income tax (provision) benefit from continuing operations were as follows:



	Years Ended December 31,
	2016			2015
	(In millions)
Current
International	(0.1		)	(0.1		)
Deferred
International	—			0.2
Total	$	(0.1	)	$	0.1

The income tax provision from continuing operations differs from the amount computed by applying the statutory United States income tax rate (35 percent) because of the following items:



	Years Ended December 31,
	2016			2015
	(In millions)
Tax at statutory U.S. tax rate	$	13.9		$	50.0
State income taxes, net of federal benefit	0.7			4.2
Net effect of international operations	(0.8		)	(2.5		)
Valuation allowances	(14.3		)	(40.8		)
Tax on unremitted earnings of foreign subsidiaries	3.1			—
U.S. tax on foreign earnings	(0.8		)	—
Stock-based compensation	(1.6		)	—
Uncertain tax positions	(0.1		)	—
Goodwill impairment	—			(10.8		)
Capital losses	—			—
Other	(0.2		)	—
Income tax (provision) benefit	$	(0.1	)	$	0.1

Our 2016 and 2015 tax (provision) benefit of $(0.1) million and $0.1 million relates to continuing operations outside the United States.

In 2016 and 2015 the net cash paid for income taxes, relating to both continuing and discontinued operations, was $0.1 million and $1.9 million, respectively.

Tax laws require certain items to be included in our tax returns at different times than the items are reflected in our results of operations. Some of these items are temporary differences that will reverse over time. We record the tax effect of temporary differences as deferred tax assets and deferred tax liabilities in our Consolidated Balance Sheets.

The components of net deferred tax assets and liabilities were as follows:



	As of December 31,
	2016			2015
	(In millions)
Accounts receivable allowances	$	0.4		$	2.1
Inventories	3.7			4.0
Compensation and employee benefits	3.9			5.6
Tax credit carryforwards	28.4			30.0
Net operating loss carryforwards	278.6			205.7
Accrued liabilities and other reserves	6.1			3.9
Pension	8.6			7.7
Property, plant and equipment	0.5			9.7
Intangible assets, net	—			49.2
Capital losses	14.1			14.1
Other, net	1.3			1.5
Total deferred tax assets	345.6			333.5
Valuation allowance	(340.5		)	(325.3		)
Net deferred tax assets	5.1			8.2
Intangible assets, net	(1.2		)	—
Unremitted earnings of foreign subsidiaries	(6.1		)	(9.4		)
Total deferred tax liabilities	(7.3		)	(9.4		)
Valuation allowance	1.2			—
Total deferred tax liabilities	(6.1		)	(9.4		)
Net deferred tax liabilities	$	(1.0	)	$	(1.2	)

We regularly assess the likelihood that our deferred tax assets will be recovered in the future. A valuation allowance is recorded to the extent we conclude a deferred tax asset is not considered to be more-likely-than-not to be realized. We consider all positive and negative evidence related to the realization of the deferred tax assets in assessing the need for a valuation allowance.

Our accounting for deferred tax consequences represents our best estimate of future events. A valuation allowance established or revised as a result of our assessment is recorded through income tax provision in our Consolidated Statements of Operations. Changes in our current estimates due to unanticipated events, or other factors, could have a material effect on our financial condition and results of operations.

We maintain a valuation allowance related to our U.S. deferred tax assets and the majority of our foreign deferred tax assets. The valuation allowance was $339.3 million and $325.3 million as of December 31, 2016 and 2015, respectively. The valuation allowance change in 2016 compared to 2015 was due primarily to operating losses and establishing a valuation allowance against the foreign entities' deferred tax assets.

In November 2015, the Financial Accounting Standards Board issued Accounting Standard Update (ASU) No. 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes, which amends the guidance requiring companies to separate deferred income tax liabilities and assets into current and non-current amounts in a classified statement of financial position. This accounting guidance simplifies the presentation of deferred income taxes, such that deferred tax liabilities and assets be classified as non-current in a classified statement of financial position. This determination is still required to be performed at a jurisdiction-by-jurisdiction basis. This accounting guidance is effective for the Company beginning in the first quarter of 2017, but we elected to adopt this guidance prospectively as of December 31, 2015. As a result, we classified all deferred tax liabilities and assets as non-current in the Consolidated Balance Sheet at December 31, 2015. The table below shows the components of our deferred tax balances as they are recorded on our Consolidated Balance Sheets:



	As of December 31
	2016			2015
	(In millions)
Deferred tax asset - current	—			—
Deferred tax asset - non-current	—			—
Deferred tax liability - current	—			—
Deferred tax liability - non-current	(1.0		)	(1.2		)
Total	$	(1.0	)	$	(1.2	)

Federal net operating loss carryforwards totaling $649.6 million will begin expiring in 2026. This figure includes $27.9 million of federal net operating loss carryforwards, subject to Internal Revenue Code section 382. We have state income tax loss carryforwards of $555.1 million, $1.0 million of which will expire between 2017 and 2019 and the remaining will expire at various dates up to 2036. We have U.S. and foreign tax credit carryforwards of $28.4 million, $5.0 million of which will expire between 2017 and 2019, $21.0 million of which will expire between 2020 and 2032 and $2.4 million may be carried forward indefinitely. Federal capital losses of $36.9 million will expire between 2018 and 2020. Of the aggregate foreign net operating loss carryforwards totaling $91.2 million, $0.9 million will expire between 2017 and 2019, $42.9 million will expire at various dates up to 2026 and $47.4 million may be carried forward indefinitely.

During the fourth quarter of 2014, the Company changed its assertion related to the permanent reinvestment of foreign unremitted earnings due to its reassessment of possible future cash needs associated with the continued execution of its strategic transformation. Accordingly, the permanent reinvestment assertion of foreign unremitted earnings was removed and a deferred tax liability was recorded for the estimated impact of future repatriation of the unremitted foreign earnings. The deferred tax liability as of December 31, 2016 is $7.3 million, and deferred tax assets net of valuation allowance is $6.3 million. The remaining net $1.0 million liability is related to foreign tax withholding, assuming such repatriation were to occur.

Our income tax returns are subject to review by various U.S. and foreign taxing authorities. As such, we record accruals for items that we believe may be challenged by these taxing authorities. The threshold for recognizing the benefit of a tax return position in the financial statements is that the position must be more-likely-than-not to be sustained by the taxing authorities based solely on the technical merits of the position. If the recognition threshold is met, the tax benefit is measured and recognized as the largest amount of tax benefit that, in our judgment, is greater than 50 percent likely to be realized.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:



	2016			2015
	(In Millions)
Beginning Balance	$	1.7		$	2.1
Additions:
Additions for tax positions of current years	—			0.3
Additions for tax positions of prior years	—			—
Reductions:
Reductions for tax positions of prior years	—			—
Settlements with taxing authorities	—			—
Reductions due to lapse of statute of limitations	(0.4		)	(0.7		)
Total	1.3			1.7

The total amount of unrecognized tax benefits, which excludes accrued interest and penalties described below, as of December 31, 2016 was $1.3 million. If the unrecognized tax benefits remaining at December 31, 2016 were recognized in our consolidated financial statements, $1.3 million would ultimately affect income tax expense and our related effective tax rate.

It is reasonably possible that the amount of the unrecognized tax benefits could increase or decrease significantly during the next twelve months; however, it is not possible to reasonably estimate the effect on the unrecognized tax benefit at this time.

Interest and penalties recorded for uncertain tax positions are included in our income tax provision. During the years ended December 31, 2016 and 2015, we recognized approximately $0.0 million benefit and $0.1 million expense, respectively, in interest and penalties. We had approximately $0.0 million and $0.1 million accrued, excluding the tax benefit of deductible interest, for the payment of interest and penalties at December 31, 2016 and 2015 , respectively. The reversal of accrued interest and penalties would affect income tax expense and our related effective tax rate.

Our federal income tax returns for 2013 through 2016 are subject to examination by the Internal Revenue Service (IRS). We currently have foreign tax audits underway in various jurisdictions. Based on available information, the uncertain tax position associated with these foreign audits have been assessed and included in our income tax provision. For state and foreign tax purposes, the statutes of limitation vary by jurisdiction. With few exceptions, we are no longer subject to examination by foreign tax jurisdictions or state and local tax jurisdictions for years before 2010.