Income Taxes

The Company’s provision for income taxes consists of the following:



	Year Ended December 31,
	2015			2014			2013
	(in millions)
Current:
United States	$	(0.5	)	$	(0.3	)	$	(0.4	)
State and local	0.3			0.4			0.2
Foreign	25.9			22.3			15.6
Total current	25.7			22.4			15.4
Deferred:
United States	(4.6		)	0.1			0.2
State and local	(0.2		)	(0.2		)	(0.8		)
Foreign	(0.5		)	(0.3		)	(5.9		)
Total deferred	(5.3		)	(0.4		)	(6.5		)
Total income tax expense	$	20.4		$	22.0		$	8.9

The following sets forth the amount of (loss) earnings before income taxes:



	Year Ended December 31,
	2015			2014			2013
	(in millions)
(Loss) earnings before income taxes:
United States	$	(60.3	)	$	(38.5	)	$	(36.2	)
Rest of the world	41.9			45.6			20.4
	$	(18.4	)	$	7.1		$	(15.8	)

The Company’s effective income tax rate differs from the amount calculated using the statutory U.S. federal income tax rate, principally due to the following:



	Year Ended December 31,
	2015			2014			2013
	(in millions)
Income tax (benefit) expense computed at U.S. federal statutory rate	$	(6.4	)	$	2.5		$	(5.5	)
Foreign withholding tax	4.2			7.0			3.7
State and local income taxes, net of federal benefit	0.1			0.2			(0.6		)
Foreign tax differential	(1.0		)	(3.1		)	(2.3		)
Change in tax rates	0.3			—			(3.2		)
Change in valuation allowances	15.7			6.6			7.8
Uncertain tax positions	6.5			0.4			0.3
Reduction in valuation allowances for business combination	(4.0		)	—			—
Dividend elimination and subpart F	2.4			8.7			6.7
Acquisition expenditures capitalized for tax	—			—			1.3
Other permanent differences	2.4			2.6			1.2
Tax credits	(2.3		)	(1.7		)	(1.2		)
Adjust deferred taxes	(1.4		)	(0.5		)	0.6
Share-based compensation	3.0			0.3			0.4
Other	0.9			(1.0		)	(0.3		)
Income tax expense	$	20.4		$	22.0		$	8.9

The Company’s effective tax rate can vary significantly from the federal statutory rate primarily due to the level and mix of income among domestic and foreign jurisdictions and the creation and release of valuation allowances. In addition, the 2013 effective tax rate varied from the federal statutory rate due to a benefit of $3.2 million related to a three-year reduced statutory tax rate at one of the Company’s non-U.S. subsidiaries. The reduction in the statutory rate is effective through December 31, 2015 and is expected to be renewed for a successive three-year period, although there can be no guarantees that the tax authority will accept the Company’s application.

Significant components of net deferred tax assets and liabilities are as follows:



	December 31,
	2015			2014
	(in millions)
Deferred tax assets:
Net operating loss and other deferred carryforwards	$	81.3		$	73.6
Tax credit carryforwards	17.2			19.5
Inventories	6.7			8.6
Employee benefits	14.3			10.9
Accrued liabilities and other	7.7			6.3
Total deferred tax assets	127.2			118.9
Less valuation allowances	(70.0		)	(65.3		)
Deferred tax assets, net of valuation allowances	57.2			53.6
Deferred tax liabilities:
Goodwill and other intangible assets	88.3			98.7
Property and equipment	11.4			9.3
Undistributed non-U.S. earnings	20.8			14.2
Total deferred tax liabilities	120.5			122.2
Net deferred tax liabilities	$	(63.3	)	$	(68.6	)

Deferred income taxes reflect the net effects of temporary differences between the carrying values of assets and liabilities and the tax basis of the assets and liabilities. Net deferred tax assets are recorded in other noncurrent assets and net deferred income tax liabilities are recorded in other noncurrent accrued liabilities in the Consolidated Balance Sheets.

At December 31, 2015, the Company had non-U.S. net operating loss carryforwards, principally in The Netherlands, Germany, Italy and Belgium, totaling $148.5 million, $0.3 million of which are scheduled to expire in 2016. Non-U.S. net operating losses of $19.9 million will expire between 2017 and 2034. The remaining $128.3 million of non-U.S. net operating losses existing at December 31, 2015 have an indefinite carryforward period.

The Predecessor’s August 21, 2009 purchase of certain assets and assumption of certain liabilities of MI 2009 Inc., formerly Milacron Inc., in a bankruptcy 363 Sale qualified as a tax free reorganization under Internal Revenue Code ("IRC") Section 368(a)(1)(G). Reorganization under this section of the IRC provides for the continuation of most tax attributes for the benefit of the Company, including tax basis in assets and liabilities and net operating loss carryforwards after certain adjustments. The Chapter 7 liquidation was finalized in January 2013 and the final determination of the carryover attributes was complete at December 31, 2013.

At December 31, 2015, the Company had estimated U.S. net operating loss carryforwards totaling $102.5 million, which are scheduled to expire beginning in 2029. As of December 31, 2015, the Company has determined that multiple ownership changes have occurred. The Company has not completed a formal study to determine whether there are IRC Section 382 ("Section 382") limitations as a result of the Company's IPO, however, if a Section 382 ownership change occurred as a result of the Company's IPO, the Company has estimated there would be no material impact to the Company's Consolidated Financial Statements.

At December 31, 2015, as a result of an updated analysis of future cash needs in the U.S. and opportunities for investment outside the U.S., the Company asserts that all foreign earnings will be indefinitely reinvested with the exception of certain foreign investments in which earnings and cash generation are in excess of local needs. The Company will continue to monitor its assertion related to investment of foreign earnings. As of December 31, 2015, the Company has provided $20.8 million of deferred tax liabilities for planned repatriations of foreign earnings. The Company intends to indefinitely reinvest approximately $83.9 million and $93.2 million of foreign earnings at December 31, 2015 and 2014, respectively. It is not practicable to estimate the amount of worldwide tax that might be payable if these earnings were ever remitted due to changes in the mix of earnings by country and changes in the Company’s capital structure over time.

Effective January 1, 2014, the Internal Revenue Service issued final regulations under IRC Sections 162 and 263 regarding tangible property. These regulations impact the timing and amount of tax deductions for materials and supplies and capital assets. The impact of the regulations to the Company is not material to the Consolidated Financial Statements.

The Company recorded a liability of $18.1 million and $1.0 million for uncertain tax positions as of December 31, 2015 and 2014, respectively, of which, $1.2 million and $1.0 million would impact the effective tax rate, net of valuation allowance, respectively. From a combination of statute expirations and audit settlements in the next twelve months, the Company expects a decrease in the amount of unrecognized tax benefits of up to $16.0 million. For the remaining balance as of December 31, 2015, it is reasonably possible there could be material changes to the amount of uncertain tax positions due to activities of the taxing authorities, settlement of audit issues and reassessment of existing uncertain tax positions. However, the Company is not able to estimate the impact of these items at this time.

The Company’s policy is to recognize interest and penalties associated with unrecognized tax benefits within income tax expense within the Consolidated Statements of Operations. The Company has not recognized a liability for interest and penalties as of December 31, 2015 and 2014.

The reconciliation of the beginning and ending total amounts of unrecognized tax benefits (exclusive of interest and penalties) is as follows:



	Year Ended December 31,
	2015			2014			2013
	(in millions)
Balance as of beginning of year	$	1.0		$	0.6		$	0.3
Additions for tax positions of prior years	11.4			0.1			0.3
Additions for tax positions of current year	6.7			0.5			—
Reductions due to lapse of statutes and settlements	(1.0		)	(0.2		)	—
Balance as of the end of year	$	18.1		$	1.0		$	0.6

The following tax years remain subject to examinations by major tax jurisdictions:



		Tax Years
Tax Jurisdiction:
United States		2012 - current
Germany		2010 - current
China		2012 - current
Netherlands		2010 - current
Canada		2013 - current
India		2014 - current