INCOME TAXES

12 Months Ended

Dec. 31, 2019

The components of (loss) income before income taxes for the years ended December 31, 2019, 2018, and 2017 were as follows (amounts in millions):



	Year Ended December 31,
	2019			2018			2017
Domestic	$	(118.3	)	$	(243.6	)	$	(87.1	)
Foreign	15.6			(5.3		)	32.9
Total	$	(102.7	)	$	(248.9	)	$	(54.2	)

The components of the (benefit from) provision for income taxes for the years ended December 31, 2019, 2018, and 2017 were as follows (amounts in millions):



	Year Ended December 31,
	2019			2018			2017
Current:
Federal	$	0.7		$	—		$	(0.5	)
State	0.2			0.2			—
Foreign	19.4			1.4			7.3
Total current	20.3			1.6			6.8

Federal	0.7			(2.9		)	8.0
State	—			(0.6		)	0.4
Foreign	(17.8		)	(3.6		)	2.1
Total deferred	(17.1		)	(7.1		)	10.5
Income tax expense (benefit)	$	3.2		$	(5.5	)	$	17.3

The following is a reconciliation of the U.S. federal statutory income taxes to the amounts reported in the financial statements for the years ended December 31, 2019, 2018, and 2017 (amounts in millions):



	Year Ended December 31,
	2019					2018					2017
	Amount			Effective Rate		Amount			Effective Rate		Amount			Effective Rate
U.S. federal statutory income tax	$	(21.6	)	21.0	%	$	(52.3	)	21.0	%	$	(19.0	)	35.0	%
Permanent items	0.3			(0.3	)%	0.2			(0.1	)%	1.2			(2.2	)%
State taxes, net of federal benefit	(3.1		)	3.0	%	(10.1		)	4.1	%	(3.0		)	5.5	%
Foreign tax rate differential	2.7			(2.6	)%	(0.5		)	0.2	%	(9.3		)	17.2	%
Compensation related items	2.0			(1.9	)%	(3.3		)	1.3	%	(5.1		)	9.4	%
Change in valuation allowance	17.3			(16.8	)%	59.0			(23.7	)%	29.0			(53.5	)%
Unrecognized tax positions	—			—	%	6.2			(2.5	)%	2.8			(5.2	)%
Prior year true-ups	5.6			(5.4	)%	6.8			(2.7	)%	3.4			(6.3	)%
Tax Cuts and Jobs Act	—			—	%	(11.5		)	4.6	%	17.3			(31.9	)%
Total income tax provision (benefit)	$	3.2		(3.0	)%	$	(5.5	)	2.2	%	$	17.3		(32.0	)%

The components of the Company's deferred tax assets and liabilities as of December 31, 2019 and 2018 are as follows (amounts in millions):



	December 31,
	2019			2018
Deferred tax assets:
Tax loss and credit carryforwards	$	276.0		$	275.3
Business interest expense carryforward	62.9			30.9
Reserves and allowances	1.4			3.9
Share-based compensation	5.8			5.1
Other	—			—
Total deferred tax assets before valuation allowance	346.1			315.2
Less: Valuation allowance	(211.4		)	(162.9		)
Total deferred tax assets	134.7			152.3

Deferred tax liabilities:
Intangible assets and goodwill	(54.7		)	(66.4		)
Property and equipment	(216.5		)	(219.7		)
Other	—			(3.6		)
Total deferred tax liabilities	(271.2		)	(289.7		)
Net deferred tax liabilities ⁽¹⁾	$	(136.5	)	$	(137.4	)
(1) The 2019 and 2018 net deferred tax liability is reflected on the consolidated balance sheets as a deferred tax liability of $171.3 million and $176.2 million, respectively, partially offset by a deferred tax asset of $34.8 million and $38.8 million, respectively, included as a component of Other long-term assets on the consolidated balance sheets.

The Tax Act was enacted on December 22, 2017. Among other things, the Tax Act reduced the U.S. federal corporate tax rate from 35% to 21% and required companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred. The Company reasonably estimated the effects of the Tax Act and recorded provisional amounts in the fourth quarter of 2017 totaling $17.3 million. In 2018, the Company finalized the 2017 impact of the Tax Act, specifically the remeasurement of its U.S. Federal deferred tax assets and liabilities and the post-1986 earnings and profits transition tax, which resulted in a $11.5 million benefit.

In January 2018, the FASB released guidance on the accounting for tax on the global intangible low-taxed income (“GILTI”) provisions of the Tax Act. The GILTI provisions impose a tax on foreign income in excess of a deemed return on tangible assets of foreign corporations. The Company elected to treat any potential GILTI inclusions as a period cost.

As of December 31, 2019, the Company had $212.6 million of U.S. federal net operating loss ("NOL") carryforwards net of limitations under Section 382 and tax-effected state NOL carryforwards of approximately $8.6 million. The Company's U.S. federal NOL carryforwards generated in 2017 and prior, if not utilized to reduce taxable income in future years, will expire between 2021 and 2037.

As of December 31, 2019, the Company had foreign NOL carryforwards of $873.1 million, the majority of which have no expiration date.

Management assesses the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of the existing deferred tax assets. A significant piece of objective negative evidence identified during management’s evaluation was the cumulative loss incurred over the three-year period ended December 31, 2019. Such objective evidence limits the ability to consider other subjective evidence, such as the Company's forecasts of future taxable income and tax planning strategies. On the basis of this evaluation as of December 31, 2019 and 2018, the Company recognized a valuation allowance against its net U.S. deferred tax assets under the criteria of ASC 740 of $100.7 million and $73.3 million, respectively, and the Company recognized a valuation allowance against its net foreign deferred tax assets under the criteria of ASC 740 of $110.6 million and $89.6 million, respectively. The amount of U.S. deferred tax asset considered realizable has been recorded to recognize only the portion of the deferred tax asset that is more likely than not to be realized. The amount of the deferred tax asset considered realizable, however, could be adjusted if objective negative evidence in the form of cumulative losses is no longer present and additional weight is given to subjective evidence such as forecasted taxable income. The Company will continue to evaluate the need to record valuation allowances against deferred tax assets and will make adjustments in accordance with ASC 740.

As of December 31, 2019, the Company will continue to permanently reinvest undistributed earnings of its non-U.S. subsidiaries. If the Company were to repatriate indefinitely reinvested foreign funds, the Company would be required to accrue and pay any applicable withholding tax and U.S. state income tax liabilities and record foreign exchange rate impacts. Determination of the unrecorded deferred tax liability that would be incurred if such amounts were repatriated is not practicable due to multiple factors, including the complexity of non-U.S. tax laws and tax treaty interpretations and exchange rate fluctuations.

Accounting for Uncertainty in Income Taxes

The Company had unrecognized tax benefits of $6.2 million as of both December 31, 2019 and 2018. The unrecognized tax benefit was not material as of December 31, 2017. To the extent interest and penalties related to uncertain tax positions would be assessed on any underpayment of income tax, such accrued amounts are classified as a component of income tax expense. Changes in unrecognized tax benefits are set forth below (amounts in millions):



	2019		2018			2017
Balance, January 1	$	6.2	$	1.5		$	—
Changes for tax positions of prior years	—		—			2.8
Increases for tax positions related to the current year	—		6.2			—
Settlements and lapsing of statutes of limitations	—		(1.5		)	(1.3		)
Balance, December 31	$	6.2	$	6.2		$	1.5

In the normal course of business, the Company is subject to examination by tax authorities throughout the world. Tax years that remain subject to examination vary by legal entity but are generally open in the U.S. for tax years ending after 2015 and outside of the U.S for tax years ending after 2013.