INCOME TAXES

The domestic and foreign components of (loss) income before provision for income taxes were as follows:



(In millions)	2014			2013		2012
Domestic	$	(103.4	)	$	98.7	$	229.1
Foreign	494.8			230.0		314.0
Total	$	391.4		$	328.7	$	543.1

The 2014 domestic pre-tax loss includes an actuarial loss of $138.9 million, recorded in the fourth quarter, related to the Company’s United States retirement plans.

Taxes paid were $102.9 million, $45.8 million and $55.5 million in 2014, 2013 and 2012.

The (benefit) provision for income taxes attributable to income consisted of the following:



(In millions)	2014			2013			2012
Federal:
Current	$	(35.4	)	$	117.0		$	18.8
Deferred	(54.8		)	(29.3		)	35.8
State and local:
Current	3.4			5.8			4.7
Deferred	(4.3		)	(5.2		)	6.3
Foreign:
Current	15.5			124.7			35.8
Deferred	28.1			(27.7		)	7.9
Total	$	(47.5	)	$	185.3		$	109.3

The Company’s (benefit) provision for income taxes for the years 2014, 2013 and 2012 was different from the amount computed by applying the statutory United States federal income tax rates to the underlying income as follows:



	2014		2013		2012
Statutory federal tax rate	35.0	%	35.0	%	35.0	%
State and local income taxes, net of federal income tax benefit	(1.1	)%	(3.0	)%	1.2	%
Effects of international jurisdictions, including foreign tax credits	(23.3	)%	(23.9	)%	(14.3	)%
Nondeductible professional fees in connection with acquisitions	—	%	—	%	1.0	%
Change in estimates for uncertain tax positions	(24.0	)%	44.3	%	0.7	%
Previously unrecognized tax credits	—	%	—	%	(1.0	)%
Change in valuation allowance	1.1	%	5.8	%	(1.6	)%
Other, net	0.2	%	(1.8	)%	(0.9	)%
Effective tax rate	(12.1	)%	56.4	%	20.1	%

Changes in estimates of uncertain tax positions in 2014 principally include the effect of both favorable resolutions of positions in international jurisdictions and statute of limitation expirations.

In 2013, the Company recorded $145.5 million of tax expense, which increased the 2013 effective tax rate by 44.3% and is displayed in the above table as change in estimates for uncertain tax positions. The majority of this expense related to an increase to the Company’s previously established liability for an uncertain tax position related to European and United States transfer pricing arrangements. On May 14, 2014, the Company resolved for $179.0 million this uncertain tax position, for which it had previously recorded a liability of approximately $185.0 million. The liability will be settled over three years. Accordingly, in the second quarter of 2014, the Company recognized a tax benefit of approximately $6.0 million and recorded a reduction of approximately $185.0 million in its liability for uncertain tax positions.

Effects of international jurisdictions, including foreign tax credits, reflected in the above table for 2014, 2013 and 2012 include not only those taxes at statutory income tax rates but also taxes at special rates levied on income from certain jurisdictional activities. The Company expects to benefit from these special rates until 2024.

The components of deferred income tax assets and liabilities were as follows:



(In millions)	2014			2013
Gross deferred tax assets
Tax loss and credit carryforwards	$	261.1		$	282.9
Employee compensation and benefits	140.7			82.4
Inventories	22.3			18.0
Accounts receivable	33.2			26.7
Accrued expenses	31.4			38.1
Other, net	26.0			40.2
Subtotal	514.7			488.3
Valuation allowances	(45.6		)	(43.6		)
Total gross deferred tax assets, net of valuation allowances	$	469.1		$	444.7
Gross deferred tax liabilities
Intangibles	$	(1,279.9	)	$	(1,197.1	)
Property, plant and equipment	(71.5		)	(75.1		)
Total gross deferred tax liabilities	$	(1,351.4	)	$	(1,272.2	)
Net deferred tax liability	$	(882.3	)	$	(827.5	)

At the end of 2014, the Company had on a tax effected basis approximately $261.1 million of net operating loss and tax credit carryforwards available to offset future taxable income in various jurisdictions. This includes net operating loss carryforwards of approximately $21.2 million for various state and local jurisdictions and $52.5 million for various foreign jurisdictions. The Company also had federal and state tax credit and other carryforwards of $187.4 million. The carryforwards expire principally between 2016 and 2034.

The Company does not provide for deferred taxes on the excess of financial reporting over tax basis on its investments in all of its foreign subsidiaries that are essentially permanent in duration. The earnings that are permanently reinvested were $1.8 billion as of February 1, 2015. It is not practicable to estimate the amount of tax that might be payable if these earnings were repatriated due to the complexities associated with the hypothetical calculation.

Uncertain tax positions activity for each of the last three years was as follows:



(In millions)	2014			2013			2012
Balance at beginning of year	$	485.7		$	197.9		$	184.0
Increase due to assumed Warnaco positions	—			142.8			—
Increases related to prior year tax positions	16.8			123.4			3.8
Decreases related to prior year tax positions	(239.3		)	(3.2		)	(2.7		)
Increases related to current year tax positions	38.2			64.1			22.1
Lapses in statute of limitations	(36.3		)	(38.3		)	(10.9		)
Effects of foreign currency translation	(20.6		)	(1.0		)	1.6
Balance at end of year	$	244.5		$	485.7		$	197.9

The entire amount of uncertain tax positions as of February 1, 2015, if recognized, would reduce the future effective tax rate under current accounting provisions.

Interest and penalties related to uncertain tax positions are recorded in the Company’s income tax provision. Interest and penalties recognized in the Company’s Consolidated Income Statements for the years 2014, 2013 and 2012 totaled a benefit of $(25.9) million, an expense of $15.3 million and an expense of $3.4 million, respectively. Interest and penalties accrued in the Company’s Consolidated Balance Sheets as of February 1, 2015, February 2, 2014 and February 3, 2013 totaled $28.6 million, $67.9 million and $14.0 million, respectively. The Company records its liabilities for uncertain tax positions principally in accrued expenses and other liabilities on the Company’s Consolidated Balance Sheets based on the anticipated timing of relieving such liabilities.

The Company files income tax returns in the United States and in various foreign, state and local jurisdictions. With few exceptions, examinations have been completed by tax authorities or the statute of limitations has expired for United States federal, foreign, state and local income tax returns filed by the Company for years through 2005. It is reasonably possible that a reduction of uncertain tax positions in a range of $40.0 million to $50.0 million may occur within 12 months of February 1, 2015.