Income Taxes

Income before income taxes and Provision for (benefit from) income taxes consisted of the following:



	Year Ended December 31,
	2016			2015			2014
	(In thousands)
Income (loss) before income taxes:
Domestic operations	$	(20,795	)	$	(16,487	)	$	53,153
Foreign operations	228,794			253,389			305,095
	$	207,999		$	236,902		$	358,248
Provision for (benefit from) income taxes:
Current:
Federal	$	623		$	465		$	798
State	(490		)	1,076			2,047
Foreign	64,357			70,900			74,618
	$	64,490		$	72,441		$	77,463
Deferred:
Domestic operations	$	3,723		$	(1,231	)	$	(127,114	)
Foreign operations	(5,405		)	(21,486		)	(12,374		)
	(1,682		)	(22,717		)	(139,488		)
	$	62,808		$	49,724		$	(62,025	)

The Company’s Provision for (benefit from) income taxes differs from the amount that would be computed by applying the U.S. federal statutory rate as follows:



	Year Ended December 31,
	2016			2015			2014
	(In thousands)
Taxes calculated at the U.S. federal statutory rate	$	72,800		$	82,940		$	125,386
State taxes	496			768			2,323
Effect of tax rates on international operations	(25,813		)	(34,513		)	(34,619		)
Change in enacted international tax rates	(2,434		)	(4,415		)	(149		)
Changes in valuation allowance and tax reserves	10,587			1,784			(156,071		)
Other	7,172			3,160			1,105
Provision for (benefit from) income taxes	$	62,808		$	49,724		$	(62,025	)

Deferred income taxes, net reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The significant components of deferred tax assets and liabilities, in addition to the reconciliation of the beginning and ending amount of gross unrecognized tax benefits, are as follows:



	December 31,
	2016			2015
	(In thousands)
Deferred tax assets:
Post-retirement benefit obligation	$	66,911		$	75,045
Expenses currently not deductible	105,780			109,283
Net operating loss carryforward	211,205			211,627
Tax credit carryforward	10,882			10,343
Depreciation and amortization	7,879			7,533
Other	14,957			25,379
Valuation allowance	(153,740		)	(161,030		)
Deferred tax assets, net	$	263,874		$	278,180
Deferred tax liabilities:
Depreciation and amortization	$	(292,906	)	$	(317,464	)
Post-retirement benefit obligation	(14,990		)	(13,581		)
Inventory	(18,309		)	(17,122		)
Other	(178,166		)	(174,367		)
Total deferred tax liabilities	$	(504,371	)	$	(522,534	)
Total deferred tax liabilities, net	$	(240,497	)	$	(244,354	)

The Company evaluates the recoverability of its deferred tax assets on a jurisdictional basis by considering whether deferred tax assets will be realized on a more likely than not basis. To the extent a portion or all of the applicable deferred tax assets do not meet the more likely than not threshold, a valuation allowance is recorded. During the year ended December 31, 2016, the valuation allowance decreased from $161.0 million to $153.7 million with a net increase of $6.2 million recognized in Provision for (benefit from) income taxes, a decrease of $1.8 million recognized in Other comprehensive loss and a $11.7 million decrease related to changes in foreign currency rates. Consideration was given to U.S. tax planning strategies and future U.S. taxable income as to how much of the relevant deferred tax asset could be realized on a more likely than not basis.

The Company has U.S. net operating loss carryforwards of $326.9 million expiring in years 2021 through 2033, and alternative minimum tax credits of $9.0 million that may be carried forward indefinitely. Tax credit carryforwards include U.S. minimum tax credits. The Company’s ability to use these various carryforwards to offset any taxable income generated in future taxable periods may be limited under Section 382 and other federal tax provisions.

For the years ended December 31, 2016, 2015 and 2014, all undistributed earnings of the Company’s controlled international subsidiaries are considered to be permanently reinvested outside the U.S. and no tax expense in the U.S. has been recognized under the applicable accounting standard for these reinvested earnings. The amount of unremitted earnings from the Company’s international subsidiaries, subject to local statutory restrictions, as of December 31, 2016 is approximately $1.6 billion. The amount of deferred tax liability that would have been recognized had such earnings not been indefinitely reinvested is not reasonably determinable.

The Company records a liability for unrecognized income tax benefits for the amount of benefit included in its previously filed income tax returns and in its financial results expected to be included in income tax returns to be filed for periods through the date of its Consolidated Financial Statements for income tax positions for which it is more likely than not that a tax position will not be sustained upon examination by the respective taxing authority. A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows (inclusive of associated interest and penalties):



	(In thousands)
Balance, December 31, 2014	$	77,525
Addition for tax positions taken in prior periods	3,924
Addition for tax positions taken in the current period	924
Reduction for tax positions taken in prior periods ⁽¹⁾	(23,616		)
Other, including the impact of foreign currency translation	(5,879		)
Balance, December 31, 2015	52,878
Addition for tax positions taken in prior periods	6,552
Addition for tax positions taken in the current period	1,418
Reduction for tax positions taken in prior periods ⁽¹⁾	(2,248		)
Other, including the impact of foreign currency translation	608
Balance, December 31, 2016	$	59,208

⁽¹⁾Includes reductions for lapses in statute of limitations.

The Company is routinely examined by tax authorities around the world. Tax examinations remain in process in multiple countries, including but not limited to Sweden, China, Indonesia, France, the Netherlands, Mexico, Brazil and various U.S. states. The Company files numerous group and separate tax returns in U.S. federal and state jurisdictions, as well as international jurisdictions. In the U.S., tax years dating back to 2003 remain subject to examination, due to tax attributes available to be carried forward to open or future tax years. With some exceptions, other major tax jurisdictions generally are not subject to tax examinations for years beginning before 2010.

The Company’s total unrecognized tax benefits were $59.2 million and $52.9 million as of December 31, 2016 and 2015, respectively, inclusive of $8.6 million and $6.4 million, respectively, of interest and penalties. These amounts were offset by tax benefits of $0.1 million as of both December 31, 2016 and 2015. The net liabilities for uncertain tax positions as of December 31, 2016 and 2015 were $59.1 million and $52.8 million, respectively, and, if recognized, would favorably impact the effective tax rate. The Company records interest and penalties on uncertain tax positions as a component of Provision for (benefit from) income taxes, which was $2.7 million, $1.8 million and $2.5 million for the years ended December 31, 2016, 2015 and 2014, respectively.

Due to the difficulty in predicting with reasonable certainty when tax audits will be fully resolved and closed, the range of reasonably possible significant increases or decreases in the liability for unrecognized tax benefits that may occur within the next 12 months is difficult to ascertain. Currently, the Company estimates that it is reasonably possible that the expiration of various statutes of limitations, resolution of tax audits and court decisions may reduce its tax expense in the next 12 months up to $3.4 million.