Note 8 - Income Taxes

Income before income taxes and the provision for income taxes, for the three years ended December 31, 2014, were as follows:

(In millions)	2014		2013		2012
Income before income taxes:
U.S.	$	163.8	$	149.8	$	137.4
International		133.5		112.8		100.3
Total income before income taxes	$	297.3	$	262.6	$	237.7
Provision for income taxes:
Current:
U.S.	$	21.5	$	30.5	$	36.9
International		28.1		29.2		20.7
Current provision for income taxes		49.6		59.7		57.6
Deferred:
U.S.		34.4		13.1		10.4
International		5.3		3.2		6.1
Deferred provision for income taxes		39.7		16.3		16.5
Total provision for income taxes	$	89.3	$	76.0	$	74.1

A reconciliation of the provision for income taxes at the U.S. federal statutory income tax rate of 35% to the effective income tax rate, for the three years ended December 31, 2014, is as follows:

(In millions)	2014			2013			2012
Provision for taxes at U.S. federal statutory rate	$	104.1		$	91.9		$	83.2
State and local taxes, net of federal benefit		1.9			2.0			2.2
Foreign effective rate differential		(15.9	)		(12.5	)		(10.3	)
Research and Development tax credits		(1.5	)		(2.8	)		(0.7	)
Other		0.7			(2.6	)		0.5
Tax Settlement		—			—			0.2
Change in valuation allowance		—			—			(1.0	)
Total provision for income taxes	$	89.3		$	76.0		$	74.1

As of December 31, 2014 and 2013, we did not have a U.S. income tax provision for undistributed earnings of international subsidiaries. We do not currently have any specific plans to repatriate funds from our international subsidiaries; however we may do so in the future if a dividend can be remitted with no material tax impact. As of December 31, 2014, we have approximately $355 million of unremitted foreign earnings that we intend to keep indefinitely reinvested. Estimating the tax liability that would result if these earnings were repatriated is not practicable at this time.

Deferred Income Taxes

Deferred income taxes result from tax attributes including foreign tax credits, net operating loss carryforwards and temporary differences between the recognition of items for income tax purposes and financial reporting purposes. Principal components of deferred income taxes as of December 31, 2014 and 2013 are:

(In millions)	2014			2013
Assets
Net operating loss carryforwards	$	60.5		$	63.6
Unfunded pension liability and other postretirement obligations		6.7			16.0
Advanced payments from foreign affiliates		61.5			28.9
Tax credit carryforwards		3.5			11.2
Stock based compensation		16.0			14.4
Other comprehensive income		9.1			6.0
Reserves and other		24.6			18.9
Subtotal		181.9			159.0
Valuation allowance		(60.5	)		(62.3	)
Total assets	$	121.4		$	96.7
Liabilities
Accelerated depreciation		(108.6	)		(63.4	)
Accelerated amortization		(10.6	)		(9.2	)
Other		(0.6	)		(0.8	)
Total liabilities	$	(119.8	)	$	(73.4	)
Net deferred tax assets	$	1.6		$	23.3

Deferred tax assets and deferred tax liabilities as presented in the consolidated balance sheets as of December 31, 2014 and 2013 are as follows and are recorded in prepaid expenses and other current assets, deferred tax assets, other accrued liabilities and other non-current liabilities in the consolidated balance sheets:

(In millions)	2014			2013
Current deferred tax assets, net	$	71.7		$	63.3
Current deferred tax liability, net		—			(1.4	)
Long-term deferred tax assets, net		8.5			10.3
Long-term deferred tax liability, net		(78.6	)		(48.9	)
Net deferred tax assets	$	1.6		$	23.3

In accordance with ASU No. 2013-11, Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists, which requires an unrecognized tax benefit to be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward on a jurisdictional basis, the Company’s long term deferred tax assets were reduced by $6.9 million and $21.4 million in 2014 and 2013, respectively.

The deferred tax assets for the respective periods were assessed for recoverability and, where applicable, a valuation allowance was recorded to reduce the total deferred tax asset to an amount that will, more likely than not, be realized in the future. The net change in the total valuation allowance for the years ended December 31, 2014 and 2013 was a decrease of $1.8 million and an increase $12.9 million, respectively. The valuation allowance as of December 31, 2014 and 2013 relates primarily to net operating loss carryforwards of our foreign subsidiaries for which we have determined, based upon historical results and projected future book and taxable income levels, that a valuation allowance should continue to be maintained.

Although realization is not assured, we have concluded that it is more-likely-than-not that the deferred tax assets, for which a valuation allowance was determined to be unnecessary, will be realized in the ordinary course of operations based on the available positive and negative evidence, including scheduling of deferred tax liabilities and projected income from operating activities. The amount of the net deferred tax assets considered realizable, however, could be reduced in the near term if actual future income or income tax rates are lower than estimated, or if there are differences in the timing or amount of future reversals of existing taxable or deductible temporary differences.

Net Operating Loss & Tax Credit Carryforwards

At December 31, 2014, we had tax credit carryforwards for U.S. tax purposes of $9.5 million available to offset future income taxes. These credits will begin to expire if not utilized in 2015.

We also had net operating loss carryforwards for foreign income tax purposes of $211.6 million, for which there are valuation allowances of $207.9 million as of December 31, 2014. Our foreign net operating losses can be carried forward without limitation in Belgium, Luxembourg and the U.K. The carryforward period in Spain and China is limited to 18 and 5 years, respectively. We have a full valuation allowance against certain foreign net operating losses for which the Company believes it is not more likely than not that the net operating losses will be utilized.

Uncertain Tax Positions

Our unrecognized tax benefits at December 31, 2014, relate to various Foreign and U.S. jurisdictions.

The following table summarizes the activity related to our unrecognized tax benefits:

	Unrecognized Tax Benefits
(In millions)	2014			2013			2012
Balance as of January 1,	$	42.7		$	32.6		$	12.5
Additions based on tax positions related to the current year		3.2			5.2			1.7
(Reductions) additions for tax positions of prior years		(0.4	)		5.7			19.0
Expiration of the statute of limitations for the assessment of taxes		(0.4	)		(1.3	)		(0.8	)
Other, including currency translation		(2.0	)		0.5			0.2
Balance as of December 31,	$	43.1		$	42.7		$	32.6

Included in the unrecognized tax benefits of $43.1 million at December 31, 2014 was $39.4 million of tax benefits that, if recognized, would impact our annual effective tax rate. In addition, we recognize interest accrued related to unrecognized tax benefits as a component of interest expense and penalties as a component of income tax expense in the consolidated statements of operations. The Company recognized $1.5 million, $0.7 million, $0.1 million of interest expense and penalties related to the above unrecognized tax benefits in 2014, 2013 and 2012, respectively. The Company had accrued interest of approximately $2.7 million and $1.6 million as of December 31, 2014 and 2013, respectively. During 2014 we reversed $0.1 million of interest related to unrecognized tax benefits.

We are subject to taxation in the U.S. and various states and foreign jurisdictions. The U.S. tax returns have been audited through 2007. Foreign and U.S. state jurisdictions have statutes of limitations generally ranging from 3 to 5 years. Years still open to examination by U.S. and foreign tax authorities in major jurisdictions include Austria (2012 onward), Belgium (2012 onward), France (2011 onward), Spain (2004 onward), U.K. (2013 onward) and U.S (2011 onward). We are currently under examination in the U.S. and certain foreign jurisdictions.

As of December 31, 2014, we had uncertain tax positions for which it is reasonably possible that amounts of unrecognized tax benefits could significantly change over the next year. These uncertain tax positions relate to our tax returns from 2004 onward, some of which are currently under examination by certain U.S. and European tax authorities. Within the next twelve months, the Company believes it is reasonably possible that the total amount of unrecognized tax benefit associated with uncertain positions may be reduced. The Company believes it is reasonably possible that the total amount of unrecognized tax benefits disclosed as of December 31, 2014 may decrease approximately $8 to $14 million in the fiscal year ending December 31, 2015. Such possible decrease relates primarily to audit settlements and the expiration of statutes of limitation.