Income Taxes (Tables)

12 Months Ended

Dec. 31, 2017

Components of Earnings from Continuing Operations Before Income Taxes

Income taxes have been based on the following components of earnings (loss) from continuing operations before income taxes for the years ended December 31, 2017, 2016 and 2015:

	2017			2016			2015
U.S.	$	(12.1	)	$	(617.9	)	$	(36.3	)
Foreign		87.6			120.7			25.6
Total	$	75.5		$	(497.2	)	$	(10.7	)

Components of Income Tax Expense (Benefit) from Continuing Operations

The components of income tax expense (benefit) from continuing operations for the years ended December 31, 2017, 2016 and 2015 were as follows:

	2017			2016			2015
Federal:
Current	$	60.9		$	(7.3	)	$	8.5
Deferred		31.0			(51.7	)		(11.9	)
State:
Current		0.2			(6.0	)		(8.3	)
Deferred		(6.0	)		12.5			(4.6	)
Foreign:
Current		26.4			34.4			19.7
Deferred		(3.8	)		5.8			17.6
Total	$	108.7		$	(12.3	)	$	21.0

Reconciliation of Differences Between Federal Statutory and Effective Income Tax Rate

The Tax Act was signed into law on December 22, 2017 and represents the most significant change to U.S. tax law since 1986. Key changes of the Tax Act are not limited to, but include the following: reduces the U.S. federal statutory rate from 35% to 21%; creates a territorial tax system rather than a worldwide system, generally allowing companies to repatriate future foreign-sourced earnings without incurring additional U.S. taxes; subjects certain foreign earnings on which U.S. income tax is currently deferred to a one-time transition tax; provides for new anti-deferral provisions to tax certain foreign earnings and a new base erosion tax; limits the deduction for net interest expense incurred by U.S. Companies; and eliminates or reduces certain other deductions.

Also on December 22, 2017, the SEC issued Staff Accounting Bulletin 118 (SAB 118) which provides guidance for companies analyzing their accounting for the income tax effects of the Tax Act. SAB 118 provides that a company may report provisional amounts based on reasonable estimates. The provisional estimates are then subject to adjustment during a measurement period up to one year and should be accounted for as a prospective change.

During 2017, we recorded provisional estimates of the impact of the Tax Act within our income tax expense. To determine the amount of the transition tax, we were required to quantify, among other factors, the amount of post-1986 earnings and profits of applicable foreign subsidiaries, as well as the amount of non-U.S. tax paid on those earnings. We were able to make a reasonable estimate of the transition tax and impact to deferred taxes; however, we will continue to analyze our data and refine our estimated amounts accordingly. We will also continue to interpret any guidance or subsequent clarification of the tax law. As a result, we may make adjustments to the provisional amounts recorded, in accordance with the guidance outlined in SAB 118.

The following table outlines the reconciliation of differences between the Federal statutory tax rate and the Company’s effective income tax rate:

	2017			2016			2015
Federal statutory tax rate		35.0	%		35.0	%		35.0	%
Change in valuation allowances		2.8			(7.1	)		(225.5	)
Venezuelan devaluation and sale		—			—			(122.8	)
State and local income taxes, net of U.S. federal income tax benefit		(2.9	)		—			36.0
Impairment charges		6.6			(32.3	)		(57.8	)
Foreign tax		4.2			(1.2	)		(19.8	)
Adjustment of uncertain tax positions and interest		(3.2	)		0.5			45.9
Reorganization		—			3.9			—
Foreign tax rate differential		(21.2	)		3.0			169.7
Impact of the Tax Act		146.2			—			—
Tax impact of net gain on sale of Donnelley Financial and LSC shares		(21.6	)		—			—
Other		(1.9	)		0.7			(57.0	)
Effective income tax rate		144.0	%		2.5	%		(196.3	%)

Significant Deferred Tax Assets and Liabilities

The significant deferred tax assets and liabilities at December 31, 2017 and 2016 were as follows:

	2017			2016
Deferred tax assets:
Pension and other postretirement benefits plan liabilities	$	58.8		$	100.1
Net operating losses and other tax carryforwards		255.1			164.9
Accrued liabilities		51.5			86.1
Foreign depreciation		19.4			14.6
Other		16.5			25.1
Total deferred tax assets		401.3			390.8
Valuation allowances		(238.3	)		(154.1	)
Net deferred tax assets	$	163.0		$	236.7

Deferred tax liabilities:
Accelerated depreciation	$	(45.8	)	$	(68.2	)
Other intangible assets		(20.0	)		(36.0	)
Inventories		(7.3	)		(7.6	)
Other		(14.0	)		(23.1	)
Total deferred tax liabilities		(87.1	)		(134.9	)

Net deferred tax assets	$	75.9		$	101.8

Transactions Affecting Valuation Allowance On Deferred Tax Assets

Transactions affecting the valuation allowances on deferred tax assets during the years ended December 31, 2017, 2016 and 2015 were as follows:

	2017			2016			2015
Balance, beginning of year	$	154.1		$	130.8		$	144.3
Current year expense-net		84.5			35.2			11.8
Write-offs		(6.8	)		(1.0	)		(15.0	)
Foreign exchange and other		6.5			(10.9	)		(10.3	)
Balance, end of year		238.3		$	154.1		$	130.8

Unrecognized Tax Benefits

Changes in the Company’s unrecognized tax benefits at December 31, 2017, 2016 and 2015 were as follows:

	2017			2016			2015
Balance at beginning of year	$	41.9		$	51.0		$	58.5
Additions for tax positions of the current year		0.2			0.6			1.1
Reductions for tax positions of prior years		(9.0	)		(1.5	)		(5.4	)
Settlements during the year		(0.1	)		(1.8	)		(0.3	)
Lapses of applicable statutes of limitations		(2.1	)		(6.4	)		(2.9	)
Balance at end of year	$	30.9		$	41.9		$	51.0