Income Taxes

Income from continuing operations before income tax expense consists of the following:



	Year Ended December 31,
	2015		2014		2013
	(In millions)
United States	$	44.0	$	53.1	$	48.4
Outside the United States	26.0		18.7		11.9
	$	70.0	$	71.8	$	60.3

Income taxes consisted of the following:



	Year Ended December 31,
	2015			2014			2013
	(In millions)
Current expense:
Federal	$	11.7		$	17.4		$	16.0
State	0.7			0.8			1.5
Foreign	6.0			6.2			4.2
	18.4			24.4			21.7
Deferred expense (benefit):
Federal	2.7			1.0			1.2
State	0.6			(0.8		)	(2.6		)
Foreign	(0.4		)	0.3			(0.9		)
	2.9			0.5			(2.3		)
Income tax expense	$	21.3		$	24.9		$	19.4

The reasons for the difference between income tax expense and the amount computed by applying the statutory federal income tax rate to income from continuing operations before income taxes for the years ended December 31, 2015, 2014 and 2013 are as follows:



	Year Ended December 31,
Rate Reconciliation	2015			2014			2013
	(In millions)
Tax at statutory rate	$	24.5		$	25.1		$	21.1
Effect of state income taxes, net	0.6			1.4			1.1
Effect of foreign operations	(1.6		)	(0.9		)	(0.2		)
Valuation allowance	(0.7		)	(1.1		)	(1.6		)
Non-deductible items	1.7			1.8			0.7
Manufacturer's deduction	(1.1		)	(1.4		)	(1.4		)
Other, net	(2.1		)	—			(0.3		)
Total	$	21.3		$	24.9		$	19.4

Significant components of the Company’s net deferred tax assets and liabilities are as follows:



	Year Ended December 31,
	2015			2014
	(In millions)
Deferred tax assets:
Postretirement benefit obligation	$	4.8		$	6.2
Inventory	12.0			13.7
Net operating loss and credit carryforwards	6.1			6.3
Warranty reserve	1.9			2.5
Accrued litigation	2.9			1.9
Compensation	6.0			6.0
Other	11.0			10.6
Total deferred tax assets	44.7			47.2
Deferred tax liabilities:
Depreciation and amortization	15.2			13.2
Pension	21.0			23.3
Goodwill	2.5			2.7
Intangible assets	16.8			14.5
Other	1.6			1.4
Total deferred tax liabilities	57.1			55.1
Net deferred tax liabilities prior to valuation allowances	(12.4		)	(7.9		)
Valuation allowances	(4.8		)	(7.1		)
Net deferred tax liability	$	(17.2	)	$	(15.0	)

At December 31, 2015, the Company has U.S., state and foreign net operating loss carryforwards for income tax purposes. The foreign net operating loss carryforward is $18.1 million, of which $4.6 million expires between 2016 and 2035 and the remainder has no expiration date. The Company has a tax benefit from a state net operating loss carryforward of $2.2 million that expires between 2016 and 2035. The Company also has a tax benefit from a non-consolidated U.S. net operating loss carryforward of $0.7 million that expires in 2035.

As of December 31, 2015 and 2014, the Company was not in a cumulative three-year loss position and it was determined that it was more likely than not that its U.S. deferred tax assets will be realized. As of December 31, 2014, the Company reversed a valuation allowance of $1.3 million against its state net operating loss carryforward. As of December 31, 2015 and 2014, the Company recorded valuation allowances of $4.2 million and $6.9 million, respectively, against certain foreign net deferred tax assets. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income (including reversals of deferred tax liabilities). The Company reviews all valuation allowances related to deferred tax assets and will reverse these valuation allowances, partially or totally, when appropriate under ASC 740.

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



	2015			2014			2013
	(In millions)
Unrecognized Tax Benefit — January 1,	$	6.5		$	5.9		$	6.1
Gross Increases — Tax Positions in Prior Period	0.3			0.8			0.4
Gross Decreases — Tax Positions in Prior Period	(0.1		)	(0.2		)	(0.6		)
Lapse of Statute of Limitations	(0.4		)	—			—
Unrecognized Tax Benefit — December 31,	$	6.3		$	6.5		$	5.9

The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate is $5.5 million at December 31, 2015 and $5.4 million at December 31, 2014. The Company recognizes accrued interest and penalties related to unrecognized tax benefits in income tax expense. During the year ended December 31, 2015 and 2014, the Company recognized approximately $0.2 million and $0.3 million, respectively, in net interest and penalties. The Company had approximately $1.9 million and $1.7 million for the payment of interest and penalties accrued at December 31, 2015 and 2014, respectively. It is reasonably possible that within the next twelve months the amount of gross unrecognized tax benefits could be reduced by approximately $3.0 million as a result of the revaluation of expiring uncertain tax positions arising from the closure of tax statutes.

The Company is subject to taxation in the U.S. and various state and foreign jurisdictions. The Company’s tax years for 2012 through 2015 remain open for examination by the Internal Revenue Service and 2011 through 2015 remain open for examination by various state and foreign taxing authorities.

Deferred taxes have not been provided on approximately $91.2 million of undistributed earnings of the Company’s foreign subsidiaries as it is the Company’s policy and intent to permanently reinvest such earnings. The Company has determined that it is not practicable to determine the unrecognized tax liability on such undistributed earnings.