Income Taxes (Tables)

12 Months Ended

Dec. 31, 2017

Earnings (loss) from continuing operations before income taxes

Following is a summary of earnings before income taxes for United States and foreign operations:



	2017		2016	2015
United States	$	754,562	627,567	324,210
Foreign	563,295		613,558	424,651
Earnings before income taxes	$	1,317,857	1,241,125	748,861

Income tax expense (benefit)

Income tax expense (benefit) for the years ended December 31, 2017, 2016 and 2015 consists of the following:



	2017			2016		2015
Current income taxes:
U.S. federal	$	327,697		247,917		117,602
State and local	17,811			31,939		11,175
Foreign	73,248			61,712		31,981
Total current	418,756			341,568		160,758
Deferred income taxes:
U.S. federal	(17,419		)	(16,167	)	4,165
State and local	(3,046		)	(22,115	)	(3,983	)
Foreign	(55,126		)	4,273		(29,065	)
Total deferred	(75,591		)	(34,009	)	(28,883	)
Total	$	343,165		307,559		131,875

Reconciliation of income tax expense (benefit)

Income tax expense (benefit) attributable to earnings before income taxes differs from the amounts computed by applying the U.S. statutory federal income tax rate to earnings before income taxes as follows:



	2017			2016		2015
Income taxes at statutory rate	$	461,250		434,394		262,102
State and local income taxes, net of federal income tax benefit	10,133			6,298		4,951
Foreign income taxes^(a)	(113,520		)	(111,217	)	(95,198	)
Change in valuation allowance	10,008			(21,106	)	(14,237	)
2017 revaluation of deferred tax assets and liabilities ^(b)	(150,546		)	—		—
Deemed Repatriation Transition Tax	105,165			—		—
Tax contingencies and audit settlements, net	23,097			2,496		(23,032	)
Other, net	(2,422		)	(3,306	)	(2,711	)
	$	343,165		307,559		131,875

(a) Foreign income taxes includes statutory rate differences, financing arrangements, withholding taxes, local income taxes, notional deductions, and other miscellaneous items.

(b) 2017 revaluation of deferred tax assets and liabilities includes $106,107 related to TCJA and $44,439 related to Belgium tax reform.

Deferred tax assets and deferred tax liabilities

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities as of December 31, 2017 and 2016 are presented below:



	2017			2016
Deferred tax assets:
Accounts receivable	$	18,481		23,521
Inventories	41,169			48,673
Employee benefits	42,191			76,143
Accrued expenses and other	52,635			72,258
Deductible state tax and interest benefit	2,087			5,186
Intangibles	22,119			12,874
Federal, foreign and state net operating losses and credits	530,978			456,130
Gross deferred tax assets	709,660			694,785
Valuation allowance	(362,963		)	(289,078	)
Net deferred tax assets	346,697			405,707
Deferred tax liabilities:
Inventories	(14,423		)	(13,099	)
Plant and equipment	(397,668		)	(426,087	)
Intangibles	(170,817		)	(243,339	)
Other liabilities	(31,702		)	(50,041	)
Gross deferred tax liabilities	(614,610		)	(732,566	)
Net deferred tax liability	$	(267,913	)	(326,859	)

Reconciliation of unrecognized tax benefits

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



	2017			2016
Balance as of January 1	$	46,434		51,037
Additions based on tax positions related to the current year	28,663			2,221
Additions for tax positions of acquired companies	1,776			—
Additions for tax positions of prior years	876			6,412
Reductions resulting from the lapse of the statute of limitations	(14,502		)	(6,294	)
Settlements with taxing authorities	(655		)	(6,555	)
Effects of foreign currency translation	3,039			(387	)
Balance as of December 31	$	65,631		46,434