INCOME TAXES

Components of income (loss) before income taxes—Domestic and foreign components of income (loss) before income taxes were as follows:



	Year Ended December 31,
(In millions)	2015			2014		2013
Domestic	$	(67.7	)	$	353.2	$	150.7
Foreign	568.6			707.7		563.3
Income before income taxes attributable to FMC Technologies, Inc.	$	500.9		$	1,060.9	$	714.0

Provision for income tax—The provision for income taxes consisted of:



	Year Ended December 31,
(In millions)	2015			2014			2013
Current:
Federal	$	15.9		$	139.6		$	77.8
State	(2.7		)	11.7			5.6
Foreign	82.5			227.8			149.6
Total current	95.7			379.1			233.0
Deferred:
Increase in the valuation allowance for deferred tax assets	27.7			34.1			0.5
Decrease of deferred tax liability for change in tax rates	(3.9		)	(2.3		)	(4.3		)
Other deferred tax (benefit) expense	(11.7		)	(49.9		)	(16.6		)
Total deferred	12.1			(18.1		)	(20.4		)
Provision for income taxes	$	107.8		$	361.0		$	212.6

Deferred tax assets and liabilities—Significant components of deferred tax assets and liabilities were as follows:



	December 31,
(In millions)	2015			2014
Deferred tax assets attributable to:
Accrued expenses	$	55.0		$	58.0
Non-deductible interest	43.8			29.2
Foreign tax credit carryforwards	29.3			29.3
Accrued pension and other post-retirement benefits	88.8			91.8
Stock-based compensation	34.4			28.9
Net operating loss carryforwards	44.7			48.7
Inventories	43.0			31.7
Norwegian correction tax	—			50.4
Research and development credit	4.7			—
Foreign exchange	4.1			40.2
Deferred tax assets	347.8			408.2
Valuation allowance	(58.3		)	(38.9		)
Deferred tax assets, net of valuation allowance	289.5			369.3
Deferred tax liabilities attributable to:
Revenue in excess of billings on contracts accounted for under the percentage of completion method	87.8			105.2
U.S. tax on foreign subsidiaries’ undistributed earnings not indefinitely reinvested	0.2			52.5
Property, plant and equipment, goodwill and other assets	116.4			142.8
Deferred tax liabilities	204.4			300.5
Net deferred tax assets (liabilities)	$	85.1		$	68.8

At December 31, 2015 and 2014, the carrying amount of net deferred tax assets and the related valuation allowance included the impact of foreign currency translation adjustments.

Non-deductible interest. At December 31, 2015, deferred tax assets include tax benefits of $43.8 million related to certain intercompany interest costs which are not currently deductible, but which may be deductible in future periods. If not utilized, these costs will become permanently nondeductible beginning in 2025. Management believes that it is more likely than not that we will not be able to deduct these costs before expiration of the carry forward period; therefore, we have established a valuation allowance against the related deferred tax assets.

Foreign tax credit carryforwards. At December 31, 2015, deferred tax assets included U.S. foreign tax credit carryforwards of $29.3 million, which, if not utilized, will begin to expire in 2022. Realization of these deferred tax assets is dependent on the generation of sufficient U.S. taxable income prior to the above date. Based on long-term forecasts of operating results, management believes that it is more likely than not that domestic earnings over the forecast period will result in sufficient U.S. taxable income to fully realize these deferred tax assets. In its analysis, management has considered the effect of foreign deemed dividends and other expected adjustments to domestic earnings that are required in determining U.S. taxable income. Foreign earnings taxable to us as dividends, including deemed dividends for U.S. tax purposes, were $190.2 million, $186.6 million and $196.2 million, in 2015, 2014 and 2013, respectively.

Net operating loss carryforwards. At December 31, 2015, deferred tax assets included tax benefits related to net operating loss carryforwards attributable to foreign entities. If not utilized, these net operating loss carryforwards will begin to expire in 2018. Management believes it is more likely than not that we will not be able to utilize certain of these operating loss carryforwards before expiration; therefore, we have established a valuation allowance against the related deferred tax assets.

Unrecognized tax benefits—The following table presents a summary of changes in our unrecognized tax benefits and associated interest and penalties:



(In millions)	Federal, State and Foreign Tax			Accrued Interest and Penalties			Total Gross Unrecognized Income Tax Benefits
Balance at December 31, 2012	$	30.5		$	6.4		$	36.9
Additions for tax positions related to prior years	3.1			0.4			3.5
Additions for tax positions related to current year	3.5			0.3			3.8
Balance at December 31, 2013	$	37.1		$	7.1		$	44.2
Additions for tax positions related to prior years	0.6			0.4			1.0
Reductions for tax positions due to settlements	(1.4		)	(0.3		)	(1.7		)
Balance at December 31, 2014	$	36.3		$	7.2		$	43.5
Additions for tax positions related to prior years	7.3			1.3			8.6
Additions for tax positions related to current year	6.1			—			6.1
Reductions for tax positions due to settlements	(40.4		)	(7.8		)	(48.2		)
Balance at December 31, 2015	$	9.3		$	0.7		$	10.0

At December 31, 2015, 2014 and 2013, there were $9.3 million, $43.1 million and $41.7 million, respectively, of unrecognized tax benefits that if recognized would affect the annual effective tax rate.

It is reasonably possible that within twelve months unrecognized tax benefits related to certain tax reporting positions taken in prior periods could decrease by up to $9.7 million, due to either the expiration of the statute of limitations in certain jurisdictions or the resolution of current income tax examinations, or both.

In 2015, IRS examinations of our U.S. federal income tax returns for our 2010 and 2011 tax years as well as protests filed with the IRS Appeals Office with respect to proposed adjustments related to our 2007 through 2009 tax years were resolved.

The following tax years and thereafter remain subject to examination: 2010 for Angola, 2006 for Norway, 2007 for Nigeria, 2010 for Brazil and 2012 for the United States.

Effective income tax rate reconciliation—The effective income tax rate was different from the statutory U.S. federal income tax rate due to the following:



	Year Ended December 31,
	2015		2014		2013
Statutory U.S. federal income tax rate	35	%	35	%	35	%
Net difference resulting from:
Foreign earnings subject to different tax rates:
Singapore	(8	)	(1	)	2
Malaysia	(4	)	(1	)	(3	)
Luxembourg	(4	)	(4	)	(6	)
Other	(7	)	(2	)	(6	)
Foreign earnings subject to U.S. tax	3		2		2
Non-deductible Multi Phase Meters earn-out adjustments	—		—		1
Settlement of foreign audits	—		—		1
Foreign withholding taxes	3		2		3
Change in valuation allowance	6		3		—
Other	(2	)	—		1
Effective income tax rate	22	%	34	%	30	%

Undistributed earnings of foreign subsidiaries. We have provided U.S. income taxes on $1,532.2 million of cumulative undistributed earnings of certain foreign subsidiaries where we have determined that the foreign subsidiaries’ earnings are not indefinitely reinvested. No provision for U.S. income taxes has been recorded on earnings of foreign subsidiaries that are indefinitely reinvested. The cumulative balance of foreign earnings with respect to which no provision for U.S. income taxes has been recorded was $1,948.5 million at December 31, 2015. The amount of applicable U.S. income taxes that would be incurred if these earnings were repatriated is approximately $717.2 million.

Income tax holidays. We benefit from income tax holidays in Singapore and Malaysia which will expire after 2018 for Singapore and 2017 and 2020 for Malaysia. For the years ended December 31, 2015 and 2014, these tax holidays reduced our provision for income taxes by $29.3 million, or $0.13 per share on a diluted basis, and $1.3 million, or $0.01 per share on a diluted basis, respectively.