INCOME TAXES

The Company’s provision for income taxes from continuing operations consists of the following:



	Year Ended December 31,
	2015			2014			2013
Current:
United States federal	$	(21.3	)	$	33.8		$	(3.1	)
Foreign	25.3			45.6			10.2
State and local	—			1.1			1.5
Total current	4.0			80.5			8.6
Deferred:
United States federal	6.0			(42.4		)	30.7
Foreign	(4.3		)	(27.5		)	34.0
State and local	2.9			2.2			(0.8		)
Total deferred	4.6			(67.7		)	63.9
Total	$	8.6		$	12.8		$	72.5

The Company’s combined pre-tax earnings from continuing operations relating to foreign subsidiaries or branches were $139.5, $143.8 and $99.1 during 2015, 2014 and 2013, respectively.

The following is a reconciliation of the statutory federal income tax rate with the effective tax rate from continuing operations for the tax expense in 2015, 2014 and 2013, respectively:



	Year Ended December 31,
	2015		2014		2013
U.S. federal statutory rate	35.0	%	35.0	%	35.0	%
Permanent differences	2.3		8.6		6.8
State and local income taxes, net of federal income tax	1.1		1.7		0.4
International rate differential, including tax holidays	(21.2	)	(29.8	)	(14.0	)
Foreign valuation allowances	1.0		2.3		—
Adjustments for uncertain tax positions	(12.9	)	1.2		2.3
Tax credits and other	0.6		(4.5	)	(10.4	)
Foreign repatriation, net of foreign tax credits	(1.0	)	(4.6	)	35.2
Effective rate	4.9	%	9.9	%	55.3	%

The decrease in the effective income tax rate in 2015 was driven by a shift in the geographical mix of worldwide income, the expiration of statutes of limitation on previously recognized uncertain tax positions, and the favorable resolution of certain income tax audits. As of December 31, 2015, the Company had $506.6 of undistributed earnings of its foreign subsidiaries for which it has not provided for U.S. federal income taxes or foreign withholding taxes because such earnings are intended to be reinvested indefinitely. It is not practicable to determine the amount of applicable taxes that would be due if such earnings were distributed.

The Company’s foreign taxes for 2015, 2014 and 2013 included $6.3, $3.9 and $2.5, respectively, of benefit derived from tax holidays in the Philippines, the Dominican Republic, Costa Rica, El Salvador, Malaysia, Honduras, Nicaragua and Tunisia. This resulted in (3.6)%, (3.0)% and (1.9)% impact to the effective tax rate in 2015, 2014 and 2013, respectively. The tax holidays in the Philippines will expire in 2016 through 2019. The Company will apply to extend these tax holidays for additional terms of one to two years in accordance with local law.

The components of deferred tax assets and liabilities are as follows:



	At December 31,
	2015			2014
Deferred tax assets:
Loss and credit carryforwards	$	91.8		$	104.7
Pension and employee benefits	37.7			44.7
Restructuring charges	0.3			1.3
Deferred revenue	3.2			2.9
Foreign currency hedges	16.2			11.4
Intercompany payables/receivables	62.0			48.3
Other	42.4			47.9
Valuation allowances	(36.2		)	(39.3		)
Total deferred tax assets	217.4			221.9
Deferred tax liabilities:
Depreciation and amortization	277.4			291.4
Deferred implementation costs	0.1			0.6
Contingent debt and accrued interest	77.9			67.7
Unremitted foreign earnings	15.8			15.7
Other	7.6			7.3
Total deferred tax liabilities	378.8			382.7
Net deferred tax liabilities	$	(161.4	)	$	(160.8	)

Deferred tax assets and liabilities in the preceding table, after netting by taxing jurisdiction, are in the following captions in the Consolidated Balance Sheets at December 31, 2015 and 2014.



	At December 31,
	2015			2014
Non-current deferred tax asset	$	14.6		$	15.0
Non-current deferred tax liability	176.0			175.8
Total deferred tax liability	$	(161.4	)	$	(160.8	)

As of December 31, 2015 and 2014, $6.6 and $5.2, respectively, of the valuation allowances relate to the Company’s foreign operations.

As of December 31, 2015, the Company has federal, state, and foreign operating loss carryforwards of $96.1, $673.2 and $54.4, respectively. The federal operating loss carryforwards and state operating loss carryforwards expire between 2016 and 2035. The foreign operating loss carryforwards include $10.0 with no expiration date; the remainder will expire between 2016 and 2035. The federal and state operating loss carryforwards include losses of $91.6 and $123.6, respectively, which were acquired in connection with business combinations. Utilization of the acquired federal and state tax loss carryforwards may be limited pursuant to Section 382 of the Internal Revenue Code of 1986.

As of December 31, 2015 and 2014, the liability for unrecognized tax benefits was $31.6 and $59.9, respectively, including $11.8 and $24.0 of accrued interest and penalties, respectively, and is recorded in Other long-term liabilities in the Consolidated Balance Sheets. The total amount of net unrecognized tax benefits that would affect income tax expense, if ever recognized in the Consolidated Financial Statements, is $29.0. This amount includes net interest and penalties of $10.2. The Company’s policy is to recognize interest and penalties accrued on unrecognized tax benefits as part of income tax expense. During 2015, the Company recognized a net benefit of $11.7 in interest and penalties, compared to net expense of $4.2 during 2014. The net benefit of $11.7 in 2015 includes $1.7 of expense related to interest and penalties accrued on positions still outstanding as of December 31, 2015.

A reconciliation of the beginning and ending total amounts of unrecognized tax benefits (exclusive of interest and penalties) is as follows:



	2015			2014
Balance at January 1	$	37.1		$	32.6
Additions based on tax positions related to the current year	0.2			0.4
Additions for tax positions of prior years	6.1			—
Additions for tax positions of Stream on the date of acquisition	—			5.9
Settlements	(5.0		)	0.5
Reductions for tax positions of prior years	0.1			(0.7		)
Lapse of statutes	(16.9		)	(1.6		)
Balance at December 31	$	21.6		$	37.1

The liability for unrecognized tax benefits related to discontinued operations at December 31, 2015 and 2014 was $10.7 and $11.8, respectively.

The Company is currently attempting to resolve income tax audits relating to prior years in various jurisdictions. The Company has received assessments from these jurisdictions related to transfer pricing and deductibility of expenses. The Company believes that it is appropriately reserved with regard to these assessments as of December 31, 2015. Furthermore, the Company believes that it is reasonably possible that the total amounts of unrecognized tax benefits will decrease between $4.0 and $26.0 prior to December 31, 2016, based upon resolution of audits; however, actual developments could differ from those currently expected.

The Company files income tax returns in the U.S. federal jurisdiction, and various states and foreign jurisdictions. With a few exceptions, the Company is no longer subject to examinations by tax authorities for years before 2002.