Note 14 Income Taxes

The following is a reconciliation of our uncertain tax positions:

	Year Ended December 31,
	2014			2013			2012
	(In thousands)
Balance as of January 1	$	47,552		$	83,950		$	68,848
Additions based on tax positions related to the current year		167,107	(1)		145			922
Additions for tax positions of prior years		1,744			3,360			16,372	(3)
Reductions for tax positions for prior years		(4,473	)		(30,320	)(2)		(1,174	)
Settlements		(8,223	)		(9,583	)		(1,018	)

Balance as of December 31	$	203,707		$	47,552		$	83,950

(1)	Includes $166.0 million related to internal restructuring.
(2)	Includes $21.6 million related to settlements in Mexico, Canada and Algeria and $8.7 million due to the expiration of statutes.
(3)	Includes an uncertain tax position of $10.4 million related to a Mexico audit assessment.

If the reserves of $203.7 million are not realized, this would favorably impact the worldwide effective tax rate. As of December 31, 2014, 2013 and 2012, we had approximately $16.9 million, $20.6 million and $42.8 million, respectively, of interest and penalties related to uncertain tax positions. During 2014, 2013 and 2012, we accrued and recognized estimated interest and penalties related to uncertain tax positions of approximately $6.1 million, $5.2 million and $2.7 million, respectively. We include potential interest and penalties related to uncertain tax positions within our global operations in the income tax expense (benefit) line item in our consolidated statements of income (loss).

It is reasonably possible that our existing liabilities related to our reserve for uncertain tax positions may increase or decrease in the next twelve months primarily due to the completion of open audits or the expiration of statutes of limitation. However, we cannot reasonably estimate a range of changes in our existing liabilities due to various uncertainties, such as the unresolved nature of various audits.

We conduct business globally and, as a result, we file numerous income tax returns in the U.S. and non-U.S. jurisdictions. In the normal course of business we are subject to examination by taxing authorities throughout the world.

Income (loss) from continuing operations before income taxes consisted of the following:

	Year Ended December 31,
	2014			2013			2012
	(In thousands)
United States and Other Jurisdictions
United States	$	(598,121	)	$	(84,032	)	$	193,125
Other jurisdictions		(6,494	)		190,192			83,835

Income (loss) from continuing operations before income taxes	$	(604,615	)	$	106,160		$	276,960

Income tax expense (benefit) from continuing operations consisted of the following:

	Year Ended December 31,
	2014			2013			2012
	(In thousands)
Current:
U.S. federal	$	183,840		$	(16,934	)	$	25,802
Outside the U.S.		109,072			50,866			82,950
State		9,401			5,933			34,242

	$	302,313		$	39,865		$	142,994

Deferred:
U.S. federal	$	(211,119	)	$	(71,251	)	$	(79,193	)
Outside the U.S.		(9,127	)		(10,288	)		(9,484	)
State		(19,401	)		(13,507	)		(13,331	)

	$	(239,647	)	$	(95,046	)	$	(102,008	)

Income tax expense (benefit)	$	62,666		$	(55,181	)	$	40,986

A reconciliation of our statutory tax rate to our worldwide effective tax rate consists of the following:

	Year Ended December 31,
	2014			2013			2012
	(In thousands)
Income tax provision at statutory (Bermuda rate of 0%)	$	—		$	—		$	—
Taxes (benefit) on U.S. and other international earnings (losses) at greater than the Bermuda rate		(83,747	)		(33,277	)		(39,830	)
Increase (decrease) in valuation allowance		(9,934	)		25,592			33,730
Tax reserves and interest		166,347			(39,921	)		26,176
State income taxes (benefit)		(10,000	)		(7,575	)		20,910

Income tax expense (benefit)	$	62,666		$	(55,181	)	$	40,986

Effective tax rate		(10.4	)%		(52.0	)%		14.8	%

The change in our worldwide effective tax rate from 2013 to 2014 is primarily attributable to the tax effect related to impairments and internal restructuring. The change in geographic mix of pre-tax earnings also contributed to the change.

The change in our worldwide effective tax rate from 2012 to 2013 resulted mainly from the geographic mix of pre-tax earnings and settlements of tax disputes.

The components of our net deferred taxes consisted of the following:

	December 31,
	2014			2013
	(In thousands)
Deferred tax assets:
Net operating loss carryforwards	$	1,470,407		$	1,658,084
Equity compensation		35,296			32,219
Deferred revenue		23,116			35,689
Tax credit and other attribute carryforwards		116,833			109,294
Insurance loss reserves		6,235			4,645
Accrued Interest		227,572			224,959
Other		143,302			162,678

Subtotal		2,022,761			2,227,568
Valuation allowance		(1,537,507	)		(1,547,441	)

Deferred tax assets:	$	485,254		$	680,127

Deferred tax liabilities:
Depreciation and amortization for tax in excess of book expense	$	760,294		$	967,689
Variable interest investments		4,496			85,979
Other		17,953			17,890

Deferred tax liability	$	782,743		$	1,071,558

Net deferred tax assets (liabilities)	$	(297,489	)	$	(391,431	)

Balance Sheet Summary:
Net current deferred asset	$	118,230		$	121,316
Net noncurrent deferred asset(1)		30,961			6,491
Net current deferred liability(2)		(3,677	)		(3,077	)
Net noncurrent deferred liability		(443,003	)		(516,161	)

Net deferred asset (liability)	$	(297,489	)	$	(391,431	)

(1)	This amount is included in other long-term assets.
(2)	This amount is included in accrued liabilities.

For U.S. federal income tax purposes, we have net operating loss ("NOL") carryforwards of approximately $214.3 million that, if not utilized, will expire between 2019 and 2031. The NOL carryforwards for alternative minimum tax purposes are approximately $192.0 million. Additionally, we have NOL carryforwards in other jurisdictions of approximately $5.3 billion of which $380.7 million, if not utilized, will expire at various times from 2015 to 2034. We provide a valuation allowance against NOL carryforwards in various tax jurisdictions based on our consideration of existing temporary differences and expected future earning levels in those jurisdictions. We have recorded a deferred tax asset of approximately $1.43 billion as of December 31, 2014 relating to NOL carryforwards that have an indefinite life in several non-U.S. jurisdictions. A valuation allowance of approximately $1.43 billion has been recognized because we believe it is more likely than not that substantially all of the deferred tax asset will not be realized.

The NOL carryforwards by year of expiration consist of the following:

Year Ended December 31,	Total		U.S. Federal		Non-U.S.
	(In thousands)
2015	$	8,295	$	—	$	8,295
2016		27,847		—		27,847
2017		34,729		—		34,729
2018		48,559		—		48,559
2019		15,997		13,369		2,628
2020		15,115		—		15,115
2021		21,354		—		21,354
2022		1,282		—		1,282
2023		2,965		—		2,965
2024		7,583		—		7,583
2028		8		—		8
2030		99		—		99
2031		242,703		200,912		41,791
2032		75,257		—		75,257
2033		83,601		—		83,601
2034		9,610		—		9,610

Subtotal: expiring NOLs	$	595,004	$	214,281	$	380,723
Non-expiring NOLs		4,898,787		—		4,898,787

Total	$	5,493,791	$	214,281	$	5,279,510

In addition, for state income tax purposes, we have net operating loss carryforwards of approximately $313.0 million that, if not utilized, will expire at various times from 2015 to 2034.