Income Taxes (Tables)

12 Months Ended

Dec. 31, 2017

The following table summarizes the provision (benefit) for U.S. federal, state, and foreign taxes on income from continuing operations:



	Year Ended December 31,
	2017			2016			2015
	(in thousands)
Current:
Federal	$	7,679		$	20,490		$	5,033
State and local	3,841			2,708			1,633
Foreign	12,139			12,586			13,945
Total current	23,659			35,784			20,611

Deferred:
Federal	40,340			10,805			3,951
State and local	(1,144		)	1,160			(972		)
Foreign	3,480			(24,815		)	(41,893		)
Total deferred	42,676			(12,850		)	(38,914		)

Change in valuation allowance	7,991			26,640			40,402
Total provision for income taxes	$	74,326		$	49,574		$	22,099

Income Tax Rate Reconciliation [Table Text Block]

A reconciliation of income taxes at the U.S. federal statutory rate of 35% to the consolidated actual tax rate is as follows:



	Year Ended December 31,
	2017			2016			2015
	(in thousands)
Income (loss) before income taxes
Domestic	$	220,342		$	196,750		$	115,526
Foreign	(85,767		)	(112,123		)	(78,424		)
Total income before income taxes	$	134,575		$	84,627		$	37,102

Expected federal income tax provision	$	47,101		$	29,619		$	12,986
Change in valuation allowance	7,991			26,640			40,402
Stock-based compensation	(1,225		)	2,762			939
Foreign earnings	(22,045		)	(12,584		)	(33,364		)
Tax credits	(777		)	(7,471		)	(5,257		)
Uncertain tax positions, including interest and penalties	(7,637		)	3,817			4,274
Change in tax rates	41,125			67			312
State income tax provision (benefit), net of federal effect	4,986			2,806			(14		)
U.S. tax provision on foreign earnings	33			997			203
Domestic production activities deduction	(2,534		)	(2,424		)	(1,100		)
Local foreign taxes	2,324			2,914			1,450
Transaction costs	2,643			—			—
Other, net	2,341			2,431			1,268
Total provision for income taxes	$	74,326		$	49,574		$	22,099

Deferred Tax Assets and Liabilities [Table Text Block]

Deferred tax assets and liabilities consist of the following:



	At December 31,
	2017			2016
	(in thousands)
Deferred tax assets
Loss carryforwards⁽¹⁾	$	218,420		$	194,381
Tax credits⁽²⁾	58,616			53,323
Accrued expenses	23,752			36,336
Pension plan benefits expense	18,262			16,822
Warranty reserves	11,170			21,306
Depreciation and amortization	5,736			15,698
Equity compensation	5,352			6,924
Inventory valuation	2,554			3,086
Deferred revenue	2,431			4,896
Other deferred tax assets, net	16,606			13,621
Total deferred tax assets	362,899			366,393
Valuation allowance	(285,784		)	(249,560		)
Total deferred tax assets, net of valuation allowance	77,115			116,833

Deferred tax liabilities
Depreciation and amortization	(23,135		)	(19,995		)
Tax effect of accumulated translation	(303		)	(100		)
Other deferred tax liabilities, net	(5,231		)	(5,698		)
Total deferred tax liabilities	(28,669		)	(25,793		)
Net deferred tax assets	$	48,446		$	91,040

⁽¹⁾

For tax return purposes at December 31, 2017, we had U.S. federal loss carryforwards of $30.9 million which begin to expire in the year 2021. At December 31, 2017, we have net operating loss carryforwards in Luxembourg of $592.6 million, majority of which can be carried forward indefinitely, offset by a full valuation allowance. The remaining portion of the loss carryforwards are composed primarily of losses in various other state and foreign jurisdictions. The majority of these losses can be carried forward indefinitely. At December 31, 2017, there was a valuation allowance of $285.8 million primarily associated with foreign loss carryforwards and foreign tax credit carryforwards (discussed below).


⁽²⁾	For tax return purposes at December 31, 2017, we had: (1) U.S. general business credits of $3.7 million, which begin to expire in 2022; (2) U.S. alternative minimum tax credits of $3.3 million that can be carried forward indefinitely; (3) U.S. foreign tax credits of $49.3 million, which begin to expire in 2024; and (4) state tax credits of $10.7 million, which begin to expire in 2018.

Summary of Valuation Allowance [Table Text Block]

Changes in the valuation allowance for deferred tax assets are summarized as follows:



Description	Balance at Beginning of Period		Other Adjustments			Additions Charged to Costs and Expenses		Balance at End of Period, Noncurrent
	(in thousands)
Year ended December 31, 2017:
Deferred tax assets valuation allowance	$	249,560	$	28,233		$	7,991	$	285,784
Year ended December 31, 2016:
Deferred tax assets valuation allowance	$	235,339	$	(12,419	)	$	26,640	$	249,560
Year ended December 31, 2015:
Deferred tax assets valuation allowance	$	257,728	$	(62,791	)	$	40,402	$	235,339

Unrecognized Tax Benefits Related To Uncertain Tax Positions [Table Text Block]

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



	Total
	(in thousands)
Unrecognized tax benefits at January 1, 2015	$	28,146
Gross increase to positions in prior years	6,461
Gross decrease to positions in prior years	(2,512		)
Gross increases to current period tax positions	25,741
Audit settlements	—
Decrease related to lapsing of statute of limitations	(908		)
Effect of change in exchange rates	(2,048		)
Unrecognized tax benefits at December 31, 2015	$	54,880

Gross increase to positions in prior years	1,164
Gross decrease to positions in prior years	(612		)
Gross increases to current period tax positions	5,071
Audit settlements	(1,116		)
Decrease related to lapsing of statute of limitations	(860		)
Effect of change in exchange rates	(901		)
Unrecognized tax benefits at December 31, 2016	$	57,626

Gross increase to positions in prior years	3,367
Gross decrease to positions in prior years	(5,559		)
Gross increases to current period tax positions	6,453
Audit settlements	(5,169		)
Decrease related to lapsing of statute of limitations	(3,445		)
Effect of change in exchange rates	3,429
Unrecognized tax benefits at December 31, 2017	$	56,702



	At December 31,
	2017		2016		2015
	(in thousands)
The amount of unrecognized tax benefits that, if recognized, would affect our effective tax rate	$	55,312	$	56,411	$	53,602

If certain unrecognized tax benefits are recognized they would create additional deferred tax assets. These assets would require a full valuation in certain locations based upon present circumstances.

We classify interest expense and penalties related to unrecognized tax benefits and interest income on tax overpayments as components of income tax expense. The net interest and penalties expense recognized is as follows:



	Year Ended December 31,
	2017			2016		2015
	(in thousands)
Net interest and penalties expense (benefit)	$	(543	)	$	193	$	880



	At December 31,
	2017		2016
	(in thousands)
Accrued interest	$	2,706	$	2,473
Accrued penalties	2,426		2,329

At December 31, 2017, we are under examination by certain tax authorities for the 2010 to 2015 tax years. The material jurisdictions where we are subject to examination for the 2010 to 2015 tax years include, among others, the U.S., France, Germany, Italy, Brazil and the United Kingdom. During December 2017 we settled our tax audit with the Internal Revenue Service related to research and development tax credits for the 2011-2013 years. We believe we have appropriately accrued for the expected outcome of all tax matters and do not currently anticipate that the ultimate resolution of these examinations will have a material adverse effect on our financial condition, future results of operations, or cash flows.

Based upon the timing and outcome of examinations, litigation, the impact of legislative, regulatory, and judicial developments, and the impact of these items on the statute of limitations, it is reasonably possible that the related unrecognized tax benefits could change from those recognized within the next twelve months. However, at this time, an estimate of the range of reasonably possible adjustments to the balance of unrecognized tax benefits cannot be made.

We file income tax returns in the U.S. federal jurisdiction and various states and foreign jurisdictions. We are subject to income tax examination by tax authorities in our major tax jurisdictions as follows:



Tax Jurisdiction		Years Subject to Audit
U.S. federal		Subsequent to 2013
France		Subsequent to 2012
Germany		Subsequent to 2010
Brazil		Subsequent to 2011
United Kingdom		Subsequent to 2012
Italy		Subsequent to 2011