Income Taxes

12 Months Ended

Dec. 31, 2018

Income Tax Disclosure [Abstract]

Income Taxes

INCOME TAXES

Income tax expense (benefit)

Our consolidated income from continuing operations before income taxes was generated in the following jurisdictions (in thousands):

	Year Ended December 31,
	2018			2017			2016
U.S.	$	(53,517	)	$	(64,423	)	$	(766	)
Foreign	52,493			44,885			25,297
Consolidated	$	(1,024	)	$	(19,538	)	$	24,531

The following table summarizes income tax provision (benefit) from continuing operations by jurisdiction (in thousands):

	Year Ended December 31,
	2018			2017			2016
Current income tax provision:
Foreign	$	14,343		$	7,058		$	2,821
U.S. federal	—			—			—
U.S. state	650			383			—
	14,993			7,441			2,821
Deferred income tax provision (benefit):
Foreign	9,610			5,318			4,071
U.S. federal	(664		)	(15,379		)	5,142
U.S. state	(635		)	232			(766		)
	8,311			(9,829		)	8,447
Provision (benefit) for income taxes	$	23,304		$	(2,388	)	$	11,268

The following table reconciles income tax provision at the U.S. federal statutory rate to the consolidated provision (benefit) for income taxes (in thousands):

	Year Ended December 31,
	2018				2017			2016
Income from continuing operations before income taxes	$	(1,024	)		$	(19,538	)	$	24,531
U.S. federal statutory rate	21		%		35		%	35		%
Provision at statutory rate	(215		)		(6,838		)	8,586
State income taxes—net of federal benefit	13				401			(498		)
Effect of rates other than statutory	3,042				(3,842		)	(1,966		)
Effect of U.S. taxation on foreign branches	11,023				15,710			8,854
Noncontrolling interest	(508		)		—			(3,908		)
Foreign tax credit and offset to branch deferreds	1,447				45,245			(6,026		)
Effect of U.S. deduction of foreign tax	(3,012		)		(7,514		)	—
Impact of valuation allowance on deferred tax assets	—				(65,327		)	6,026
Foreign withholding taxes	10,187				858			18
Stock-based compensation	1,427				1,351			—
Effect of U.S. federal statutory rate reduction	—			—	17,638			—
Other, net	(100		)		(70		)	182
Provision (benefit) for income taxes	$	23,304			$	(2,388	)	$	11,268

For the years ended December 31, 2018, 2017 and 2016, the foreign subsidiaries are disregarded entities for U.S. federal income tax purposes. The foreign earnings are taxed in foreign jurisdictions as well as in the U.S. Foreign tax credits, subject to limitations, or foreign tax deductions are available to reduce U.S. taxes. The decision to deduct foreign taxes or claim the foreign tax credit is made with respect to each tax period.

Deferred tax positions

Deferred income taxes reflect the effects of temporary differences between the amounts of assets and liabilities recognized for financial reporting purposes and the amounts recognized for income tax purposes. Significant components of deferred tax assets and liabilities are as follows at December 31, 2018 and 2017 (in thousands):

December 31,
2018	2017

Deferred tax assets:
Net operating loss and other credit carryforwards	$	139,274		$	44,867
Compensation and benefits	5,480			7,156
Inventories	44			322
Intangible assets	—			16,714
Pension plan	813			1,760
Allowance for doubtful accounts	577			956
Deferred revenue	2,493			4,953
Foreign tax credit and offset to branch deferreds	55,272			56,719
Other	19,127			28,201
less: valuation allowance	(45,614		)	(45,682		)
Net deferred tax assets	177,466			115,966
Deferred tax liabilities:
Intangible assets	(12,849		)	(5,074		)
Prepaid expenses	—			(1,447		)
Property, plant and equipment	(189,529		)	(108,646		)
Equity investment in partnerships	(3,572		)	(24,315		)
Other	(2,010		)	(2,402		)
Total deferred tax liabilities	(207,960		)	(141,884		)
Net deferred tax liabilities	$	(30,494	)	$	(25,918	)

At December 31, 2018, we had a cumulative U.S. federal net operating loss of approximately $535.6 million that can be carried forward to apply against taxable income generated in future years. $350.4 million of this carryforward may be carried forward indefinitely and the remaining carryforward begins to expire in 2031. We had cumulative U.S. state net operating losses of approximately $371.0 million available for carryforward, which begin to expire in 2019. We had foreign net operating losses of $0.8 million available for carryforward, which begin to expire in 2025. We had foreign tax credits of approximately $44.6 million available for carryforward, which begin to expire in 2020. We had interest expense limitation of $31.8 million available for indefinite carryforward.

The valuation allowance decreased by $0.1 million during 2018. The change is primarily related to state net operating losses.

We have a valuation allowance on a small portion of our state net operating loss carryovers with shorter carryover periods, our foreign net operating loss carryovers and our foreign tax credit carryover. We have not released the valuation allowance on the foreign tax credits due to the foreign tax credit limitation and the relative subjectivity of forecasts of the relational magnitude of U.S. and foreign taxable income in future periods, as well as the shorter carryover period available for the credits. Deferred tax assets are reduced by a valuation allowance when a determination is made that it is more likely than not that some, or all, of the deferred tax assets will not be realized based on the weight of all available evidence. Evidence which is objectively verifiable carries a higher weight in the analysis. The ultimate realization of deferred tax assets is dependent upon the existence of sufficient taxable income of the appropriate character within the carryback and carryforward period available under the tax law. Sources of taxable income include future reversals of existing taxable temporary differences, future earnings and available tax planning strategies.

We have analyzed filing positions in all of the federal, state and foreign jurisdictions where we are required to file income tax returns and determined that no accruals related to uncertainty in tax positions are required. All income tax years of the Company ending after the emergence from bankruptcy remain open for examination in U.S. jurisdictions under general operation of the statute of limitations, including special provisions with regard to net operating loss carryovers. In foreign jurisdictions, all tax periods prior to the emergence from bankruptcy are closed. The statute of limitations has not been waived with respect to any foreign jurisdictions post emergence and tax periods are open for

examination in accordance with the general statutes of each foreign jurisdiction. Currently, there are no examinations in progress for our federal, state or foreign jurisdictions.