Income Taxes

The provision for (benefit from) income taxes consisted of the following (U.S. dollars in millions):



	Year ended
	December 27, 2013		December 28, 2012			December 30, 2011
Current:
U.S. federal income tax	$	4.6	$	10.1		$	3.6
State	1.0		1.2			0.7
Non-U.S.	8.9		0.1			12.4
	14.5		11.4			16.7
Deferred:
U.S. federal income tax	0.8		3.0			2.5
State	0.1		0.3			0.2
Non-U.S.	1.8		(2.5		)	(13.7		)
	2.7		0.8			(11.0		)
	$	17.2	$	12.2		$	5.7

Income before income taxes consisted of the following (U.S. dollars in millions):



	Year ended
	December 27, 2013			December 28, 2012		December 30, 2011
U.S.	$	21.4		$	36.5	$	17.2
Non-U.S.	(38.1		)	120.7		83.3
	$	(16.7	)	$	157.2	$	100.5

10. Income Taxes (continued)

The differences between the reported provision for (benefit from) income taxes and income taxes computed at the U.S. statutory federal income tax rate are explained in the following reconciliation (U.S. dollars in millions):



	Year ended ⁽¹⁾
	December 27, 2013			December 28, 2012			December 30, 2011
Income tax provision (benefit) computed at the U.S. statutory federal rate	$	(5.9	)	$	55.0		$	35.2
Effect of tax rates on non-U.S. operations	(33.5		)	(77.5		)	(75.0		)
Provision for (reversal of) uncertain tax positions	3.3			(7.0		)	4.7
Non-deductible interest	23.6			22.4			31.4
Foreign exchange	(6.6		)	(5.3		)	(2.2		)
Non-deductible intercompany charges	0.2			3.4			(0.5		)
Non-deductible differences	0.9			1.8			4.0
Non-taxable income/loss	(1.0		)	0.3			(0.9		)
Non-deductible expenses	0.5			4.3			8.8
Non-deductible goodwill impairment	16.3			—			—
Adjustment to deferred balances	2.5			—			—
Other	0.1			1.0			1.6
Other taxes in lieu of income	2.3			3.1			0.1
Change in deferred rate	1.4			(2.6		)	0.4
Tax credits	(2.0		)	—			(0.5		)
Increase/(decrease) in valuation allowance ⁽²⁾	15.1			13.3			(1.4		)
Provision for income taxes	$	17.2		$	12.2		$	5.7

_____________

⁽¹⁾ Certain amounts in prior years have been reclassified to conform to current year presentation.

⁽²⁾ The increase/(decrease) in valuation allowance includes effects of foreign exchange and adjustments to deferred tax balances which were already fully offset by valuation allowance.

10. Income Taxes (continued)

Deferred income tax assets and liabilities consisted of the following (U.S. dollars in millions):



		December 27,			December 28,
Deferred tax liabilities:		2013			2012
Current:
	Allowances and other accrued liabilities	$	(1.3	)	$	(1.4	)
	Inventories	(14.4		)	(14.5		)
	Total current tax liabilities	(15.7		)	(15.9		)

Noncurrent:
	Property, plant and equipment	(68.1		)	(69.8		)
	Equity in earnings of unconsolidated companies	(0.2		)	(0.2		)
	Pension	(3.6		)	(2.4		)
	Other noncurrent liabilities	(7.3		)	(5.3		)

	Total noncurrent deferred tax liabilities	(79.2		)	(77.7		)
Total current and noncurrent deferred tax liabilities		$	(94.9	)	$	(93.6	)

Deferred tax assets:
Current:
	Net operating loss carryforwards	$	3.1		$	4.3
	Allowances and other accrued assets	13.0			13.0
	Inventories	3.7			5.0
	Total current deferred tax assets	19.8			22.3
	Valuation allowance	(9.0		)	(10.5		)
Total net current deferred tax assets		10.8			11.8

Noncurrent:
	Pension liability	20.2			22.5
	Property, plant and equipment	4.0			4.1
	Post-retirement benefits other than pension	0.5			0.8
	Net operating loss carryforwards	162.9			168.7
	Capital loss carryover	3.1			2.9
	Other noncurrent assets	33.1			27.6
	Total noncurrent deferred tax assets	223.8			226.6
	Valuation allowance	(171.4		)	(170.1		)
Total net noncurrent deferred tax assets		52.4			56.5

Total deferred tax assets, net		$	63.2		$	68.3

Net deferred tax liabilities		$	(31.7	)	$	(25.3	)

During 2013 and 2012, the valuation allowance decreased by $0.2 million and increased by $6.3 million, respectively. The decrease in 2013 includes the effects of a change in judgement about our ability to realize deferred tax assets in future years, due to our current and foreseeable operations. The increase in 2012 related to valuation allowances on deferred tax assets in tax jurisdictions where it was deemed more likely than not that future taxable income would not be sufficient to realize the related income tax benefits.

10. Income Taxes (continued)

At December 27, 2013, the valuation allowance includes $0.1 million for which subsequently recognized tax benefits will be recognized directly in contributed capital.

Except for earnings that are currently distributed, no additional provision has been made for U.S. or non-U.S. income taxes on the undistributed earnings of subsidiaries as such earnings are expected to be permanently reinvested. A liability could arise if amounts are distributed by such subsidiaries or if such subsidiaries are ultimately disposed. It is not practicable to estimate the additional income taxes related to permanently reinvested earnings or the basis differences related to investments in subsidiaries.

At December 27, 2013, we had approximately $615.2 million of federal and foreign tax operating loss carry-forwards expiring as follows (U.S. dollars in millions):



Expires:
2013	$	33.8
2014	44.9
2015	38.0
2016	14.5
2017 and beyond	31.1
No expiration	452.9
	$	615.2

At December 27, 2013, we had state tax operating loss carry-forwards ranging up to $5.3 million, which have various expiration dates within the years 2013-2027.

A reconciliation of the beginning and ending amount of uncertain tax positions excluding interest and penalties is as follows (U.S. dollars in millions):



	December 27, 2013			December 28, 2012			December 30, 2011
Beginning balance	$	4.1		$	14.6		$	14.2
Gross decreases - tax position in prior period	(0.2		)	(1.2		)	—
Gross increases - current-period tax positions	1.4			0.5			5.3
Settlements	(2.3		)	(2.4		)	(3.4		)
Lapse of statute of limitations	—			(7.6		)	(0.6		)
Foreign exchange	—			0.2			(0.9		)
Ending balance	$	3.0		$	4.1		$	14.6

As of December 27, 2013, we had $3.0 million accrued for uncertain tax positions, that, if recognized would affect the effective income tax rate.

The tax years 2004-2013 remain subject to examination by taxing authorities throughout the world in major jurisdictions, such as Costa Rica, Netherlands, Curacao, Luxembourg, Switzerland and the United States.

We classify interest and penalties on uncertain tax positions as a component of income tax expense in the Consolidated Statements of Income. We recognized a benefit related to interest and penalties of $0.2 million for the year ended December 27, 2013. Accrued interest and penalties related to uncertain tax positions as of December 27, 2013 is $0.4 million and is included in other noncurrent liabilities.