Income Taxes

12 Months Ended

Dec. 31, 2014

Note 4 – Income Taxes

		Years Ended December 31,
(In millions)		2014	2013	2012

Income (loss) from continuing operations before income taxes
U.S.	$	(79.4)	(58.1)	(25.3)
Foreign		30.4	197.7	171.4
Income (loss) from continuing operations before income taxes	$	(49.0)	139.6	146.1

Provision (benefit) for income taxes from continuing operations
Current tax expense (benefit)
U.S. federal	$	(3.8)	0.5	(2.0)
State		(0.8)	1.5	(0.3)
Foreign		69.7	81.9	68.8
Current tax expense		65.1	83.9	66.5

Deferred tax expense (benefit)
U.S. federal		(7.6)	(20.6)	(29.9)
State		(1.9)	(1.9)	(1.4)
Foreign		(18.9)	(12.1)	(12.2)
Deferred tax benefit		(28.4)	(34.6)	(43.5)
Provision (benefit) for income taxes of continuing operations	$	36.7	49.3	23.0

		Years Ended December 31,
(In millions)		2014	2013	2012

Comprehensive provision (benefit) for income taxes allocable to
Continuing operations	$	36.7	49.3	23.0
Discontinued operations		0.4	7.4	3.1
Other comprehensive income (loss)		(43.0)	141.0	9.3
Equity		0.6	2.8	2.7
Comprehensive provision (benefit) for income taxes	$	(5.3)	200.5	38.1

Rate Reconciliation

The following table reconciles the difference between the actual tax rate on continuing operations and the statutory U.S. federal income tax rate of 35%.

		Years Ended December 31,
(In percentages)		2014		2013		2012

U.S. federal tax rate		35.0	%	35.0	%	35.0	%
Increases (reductions) in taxes due to:
	Venezuela devaluation	(86.4)		-		-
	Adjustments to valuation allowances	(16.9)		4.2		1.1
	Foreign income taxes	(0.7)		(6.7)		(1.8)
	Medicare subsidy for retirement plans	-		(1.1)		(15.6)
	French business tax	(9.1)		3.2		3.0
	Taxes on undistributed earnings of foreign affiliates	(3.7)		(0.1)		(2.4)
	State income taxes, net	5.2		(0.1)		(0.1)
	Change in judgment about uncertain tax positions in Mexico	-		-		(5.1)
	Other	1.7		0.9		1.6
Actual income tax rate on continuing operations		(74.9)	%	35.3	%	15.7	%

Components of Deferred Tax Assets and Liabilities

			December 31,
(In millions)			2014	2013

Deferred tax assets
Pension liabilities		$	74.2	70.0
Retirement benefits other than pensions			77.8	60.7
Workers’ compensation and other claims			42.4	35.1
Property and equipment, net			4.1	-
Other assets and liabilities			135.2	138.6
Net operating loss carryforwards			47.4	26.8
Alternative minimum and other tax credits^(a)			46.7	44.7
Subtotal			427.8	375.9
Valuation allowances			(40.1)	(32.4)
Total deferred tax assets			387.7	343.5

Deferred tax liabilities
Property and equipment, net			-	9.9
Other assets and miscellaneous			38.9	31.0
Deferred tax liabilities			38.9	40.9
Net deferred tax asset		$	348.8	302.6

Included in:
	Current assets	$	71.9	72.0
	Noncurrent assets		289.5	251.7
	Current liabilities, included in accrued liabilities		(1.8)	(3.1)
	Noncurrent liabilities		(10.8)	(18.0)
Net deferred tax asset		$	348.8	302.6

(a) U.S. alternative minimum tax credits of $34.4 million have an unlimited carryforward period, U.S. foreign tax credits of $10.4 million with a 10 year carryforward and the remaining credits of $1.9 million have various carryforward periods. The U.S. foreign tax credits have a valuation allowance.

Valuation Allowances

Valuation allowances relate to deferred tax assets in various federal, state and non-U.S. jurisdictions. Based on our historical and expected future taxable earnings, and a consideration of available tax-planning strategies, we believe it is more likely than not that we will realize the benefit of the existing deferred tax assets, net of valuation allowances, at December 31, 2014.

				Years Ended December 31,
(In millions)				2014	2013	2012

Valuation allowances:
	Beginning of year		$	32.4	47.4	43.9
	Expiring tax credits			(0.5)	(1.8)	(0.8)
	Acquisitions and dispositions			(1.0)	(32.7)	(0.9)
	Changes in judgment about deferred tax assets^(a)			1.9	(0.2)	(1.0)
	Other changes in deferred tax assets, charged to:
		Income from continuing operations		6.3	6.1	3.0
		Income from discontinued operations		3.3	12.6	2.3
		Other comprehensive income (loss)		0.6	-	0.1
	Foreign currency exchange effects			(2.9)	1.0	0.8
	End of year		$	40.1	32.4	47.4

(a) Changes in judgment about valuation allowances are based on a recognition threshold of “more-likely-than-not.” Amounts are based on beginning-of-year balances of deferred tax assets that could potentially be realized in future years. Amounts are recognized in income from continuing operations

Undistributed Foreign Earnings

As of December 31, 2014, we have not recorded U.S. federal deferred income taxes on approximately $78 million of undistributed earnings of foreign subsidiaries and equity affiliates. We expect that these earnings will be permanently reinvested in operations outside the U.S. It is not practical to determine the income tax liability that might be incurred if all such income was remitted to the U.S. due to the inherent complexities associated with any hypothetical calculation, which would be dependent upon the exact form of repatriation.

Net Operating Losses

The gross amount of the net operating loss carryforwards as of December 31, 2014, was $341.2 million. The tax benefit of net operating loss carryforwards, before valuation allowances, as of December 31, 2014, was $47.4 million, and expires as follows:

(In millions)			Federal	State	Foreign	Total

Years of expiration
	2015-2019	$	-	0.2	4.1	4.3
	2020-2024		-	0.4	10.3	10.7
	2025 and thereafter		12.3	11.9	2.3	26.5
	No expiration		-	-	5.9	5.9
		$	12.3	12.5	22.6	47.4

Uncertain Tax Positions

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

			Years Ended December 31,
(In millions)			2014	2013	2012

Uncertain tax positions:
	Beginning of year	$	10.8	11.8	17.2
	Increases related to prior-year tax positions		0.4	0.1	1.4
	Decreases related to prior-year tax positions		-	-	(6.9)
	Increases related to current-year tax positions		1.1	2.3	1.6
	Settlements		-	(0.7)	(0.7)
	Effect of the expiration of statutes of limitation		(1.3)	(3.4)	(1.2)
	Decrease related to dispositions		(1.0)	-	-
	Foreign currency exchange effects		(2.8)	0.7	0.4
	End of year	$	7.2	10.8	11.8

Included in the balance of unrecognized tax benefits at December 31, 2014, are potential benefits of approximately $6.3 million that, if recognized, will reduce the effective tax rate on income from continuing operations.

We recognize accrued interest and penalties related to unrecognized tax benefits in provision (benefit) for income taxes. We reverse interest and penalties accruals when a statute of limitation lapses or when we otherwise conclude the amounts should not be accrued. Net reversals included in provision (benefit) for income taxes were $0.6 million in 2014, $1.1 million in 2013, and $2.1 million in 2012. We had accrued penalties and interest of $1.3 million at December 31, 2014, and $2.1 million at December 31, 2013.

We file income tax returns in the U.S. federal and various state and foreign jurisdictions. With a few exceptions, as of December 31, 2014, we were no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years before 2011. Additionally, due to statute of limitations expirations and audit settlements, it is reasonably possible that approximately $0.7 million of currently remaining unrecognized tax positions may be recognized by the end of 2015.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

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