Income Taxes

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



	Year ended
	December 26, 2014		December 27, 2013		December 28, 2012
Current:
U.S. federal income tax	$	3.1	$	4.6	$	10.1
State	0.9		1.0		1.2
Non-U.S.	5.6		8.9		0.1
	9.6		14.5		11.4
Deferred:
U.S. federal income tax	3.1		0.8		3.0
State	0.4		0.1		0.3
Non-U.S.	1.2		1.8		(2.5		)
	4.7		2.7		0.8
	$	14.3	$	17.2	$	12.2

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



	Year ended
	December 26, 2014		December 27, 2013			December 28, 2012
U.S.	$	19.9	$	21.4		$	36.5
Non-U.S.	139.0		(38.1		)	120.7
	$	158.9	$	(16.7	)	$	157.2

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
	December 26, 2014			December 27, 2013			December 28, 2012
Income tax provision (benefit) computed at the U.S. statutory federal rate	$	55.6		$	(5.9	)	$	55.0
Effect of tax rates on non-U.S. operations	(50.8		)	(33.5		)	(77.5		)
Provision for (reversal of) uncertain tax positions	0.2			3.3			(7.0		)
Non-deductible interest	(0.1		)	23.6			22.4
Foreign exchange	(5.6		)	(6.6		)	(5.3		)
Non-deductible intercompany charges	0.4			0.2			3.4
Non-deductible differences	2.1			0.9			1.8
Non-taxable income/loss	(2.4		)	(1.0		)	0.3
Non-deductible expenses	—			0.5			4.3
Non-deductible goodwill impairment	—			16.3			—
Adjustment to deferred balances	(0.2		)	2.5			—
Other	(1.2		)	0.1			1.0
Other taxes in lieu of income	—			2.3			3.1
Change in deferred rate	(0.8		)	1.4			(2.6		)
Tax credits	(0.3		)	(2.0		)	—
Increase/(decrease) in valuation allowance ⁽¹⁾	17.4			15.1			13.3
Provision for income taxes	$	14.3		$	17.2		$	12.2

_____________

⁽¹⁾ The (decrease)/increase in valuation allowance includes effects of foreign exchange and adjustments to deferred tax balances which were 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 26,			December 27,
Deferred tax liabilities:		2014			2013
Current:
	Allowances and other accrued liabilities	$	(2.7	)	$	(1.3	)
	Inventories	(15.6		)	(14.4		)
	Total current deferred tax liabilities	(18.3		)	(15.7		)

Noncurrent:
	Property, plant and equipment	(64.7		)	(68.1		)
	Equity in earnings of unconsolidated companies	(0.2		)	(0.2		)
	Pension	(2.8		)	(3.6		)
	Other noncurrent deferred tax liabilities	(6.3		)	(7.3		)

	Total noncurrent deferred tax liabilities	(74.0		)	(79.2		)
Total current and noncurrent deferred tax liabilities		$	(92.3	)	$	(94.9	)

Deferred tax assets:
Current:
	Net operating loss carryforwards	$	6.4		$	3.1
	Allowances and other accrued assets	13.2			13.0
	Inventories	4.8			3.7
	Total current deferred tax assets	24.4			19.8
	Valuation allowance	(12.1		)	(9.0		)
Total net current deferred tax assets		12.3			10.8

Noncurrent:
	Pension liability	22.1			20.2
	Property, plant and equipment	2.4			4.0
	Post-retirement benefits other than pension	0.3			0.5
	Net operating loss carryforwards	158.8			162.9
	Capital loss carryover	3.5			3.1
	Other noncurrent assets	26.1			33.1
	Total noncurrent deferred tax assets	213.2			223.8
	Valuation allowance	(167.4		)	(171.4		)
Total net noncurrent deferred tax assets		45.8			52.4

Total deferred tax assets, net		$	58.1		$	63.2

Net deferred tax liabilities		$	(34.2	)	$	(31.7	)

During 2014 and 2013, the valuation allowance decreased by $0.9 million and decreased by $0.2 million, respectively. The decrease in 2014 relates primarily to valuation allowance on reductions in net operating loss carryforwards offset by the effect of a change in judgment about our ability to realize deferred tax assets in future years, due to our current and foreseeable operations . The decrease in 2013 includes the effect of a change in judgment about our ability to realize deferred tax assets in future years, due to our current and foreseeable operations.

10. Income Taxes (continued)

At December 26, 2014, the valuation allowance includes $1.9 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 26, 2014, we had approximately $590.7 million of federal and foreign tax operating loss carry-forwards expiring as follows (U.S. dollars in millions):



Expires:
2014	$	30.8
2015	32.3
2016	23.2
2017	29.8
2018 and beyond	3.2
No expiration	471.4
	$	590.7

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 26, 2014		December 27, 2013			December 28, 2012
Beginning balance	$	3.0	$	4.1		$	14.6
Gross decreases - tax position in prior period	—		(0.2		)	(1.2		)
Gross increases - current-period tax positions	0.5		1.4			0.5
Settlements	—		(2.3		)	(2.4		)
Lapse of statute of limitations	—		—			(7.6		)
Foreign exchange	—		—			0.2
Ending balance	$	3.5	$	3.0		$	4.1

As of December 26, 2014 and December 27, 2013, we had $3.0 million accrued for uncertain tax positions, that, if recognized would affect the effective income tax rate. Included in the $3.0 million is an uncertain tax position of 0.4 million that is expected to reverse in the next 12 months.

The tax years 2004-2014 remain subject to examination by taxing authorities throughout the world in major jurisdictions, such as Costa Rica, 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. The accrued interest and penalties is not significant for the year ended December 26, 2014. Accrued interest and penalties related to uncertain tax positions as of December 26, 2014 is $0.6 million and is included in other noncurrent liabilities.