Note 15:

Income Taxes

Income (loss) before income taxes for the years ended December 31, 2018, 2017 and 2016 consisted of the following.

	2018		2017			2016
U.S.	$	169.0	$	(145.8	)	$	(149.4	)
Non-U.S.		180.5		33.1			86.2
Income (loss) before income taxes	$	349.5	$	(112.7	)	$	(63.2	)

The following table details the components of the provision (benefit) for income taxes for the years ended December 31, 2018, 2017 and 2016.

	2018			2017			2016
Current:
U.S. federal	$	25.6		$	64.0		$	(6.6	)
U.S. state and local		1.5			3.0			1.3
Non-U.S.		47.8			49.8			57.8
Deferred:
U.S. federal		14.4			(217.5	)		(61.4	)
U.S. state and local		(0.7	)		-			(3.4	)
Non-U.S.		(8.5	)		(30.5	)		(19.6	)
Provision (benefit) for income taxes	$	80.1		$	(131.2	)	$	(31.9	)

The U.S. federal corporate statutory rate is reconciled to the Company’s effective income tax rate for the years ended December 31, 2018, 2017 and 2016 as follows.

	2018			2017			2016
U.S. federal corporate statutory rate		21.0	%		35.0	%		35.0	%
State and local taxes, less federal tax benefit		0.3			3.1			4.0
U.S. deferred change due to U.S. tax law change		4.3			79.5			-
Net effects of foreign tax rate differential		2.2			6.2			19.9
Sale of subsidiary		0.3			(4.6	)		(17.1	)
Repatriation cost		(0.5	)		3.8			4.4
U.S. transition tax toll charge net of FTC		(3.7	)		(56.2	)		-
Global Intangible Low-Tax Income ("GILTI")		3.4			-			-
ASC 740-30 (formerly APB 23)		(1.0	)		61.2			26.3
Valuation allowance changes		(1.2	)		(1.1	)		(15.9	)
Impairment of other intangible assets		-			-			(0.6	)
Uncertain tax positions		0.1			1.9			(7.0	)
Nondeductible equity compensation		(3.0	)		(9.2	)		-
Nondeductible foreign interest expense		1.7			(3.0	)		-
Other, net		(1.0	)		(0.3	)		1.5
Effective income tax rate		22.9	%		116.3	%		50.5	%

The principal items that gave rise to deferred income tax assets and liabilities as of December 31, 2018 and 2017 are as follows.

	2018			2017
Deferred Tax Assets:
Reserves and accruals	$	51.0		$	62.4
Postretirement benefits other than pensions		0.7			0.7
Postretirement benefits - pensions		16.9			15.6
Tax loss carryforwards		22.7			41.8
Foreign tax credit carryforwards		53.3			29.8
Other		8.4			19.4
Total deferred tax assets		153.0			169.7
Valuation allowance		(72.5	)		(47.9	)
Deferred Tax Liabilities:
LIFO inventory		(9.3	)		(9.3	)
Property, plant and equipment		(19.2	)		(21.0	)
Intangibles		(304.8	)		(322.2	)
Unremitted foreign earnings		(5.6	)		(9.3	)
Other		(5.8	)		3.5
Total deferred tax liabilities		(344.7	)		(358.3	)
Net deferred income tax liability	$	(264.2	)	$	(236.5	)

The Company believes that it is more likely than not that it will realize its deferred tax assets through the reduction of future taxable income, other than for the deferred tax assets reflected below. Tax attributes and related valuation allowances as of December 31, 2018 were as follows.

	Tax Benefit		Valuation Allowance			Carryforward Period Ends
Tax Attributes to be Carried Forward
U.S. federal net operating loss	$	0.1	$	-		Unlimited
U.S. federal net operating loss		2.2		(2.1	)		2029-2037
U.S. federal capital loss		6.8		(6.8	)		2021
U.S. federal tax credit		53.3		(53.3	)		2023-2037
U.S. state and local net operating losses		1.8		-			2018-2037
U.S. state and local tax credit		0.4		(0.1	)		2018-2037
Non U.S. net operating losses		7.8		(6.6	)	Unlimited
Non U.S. capital losses		0.5		(0.4	)	Unlimited
Non U.S. alternative minimum tax credit		0.1		-			2026
Other deferred tax assets		6.0		(3.2	)	Unlimited
Total tax carryforwards	$	79.0	$	(72.5	)

A reconciliation of the changes in the valuation allowance for deferred tax assets for the years ended December 31, 2018, 2017 and 2016 are as follows.

	2018			2017			2016
Valuation allowance for deferred tax assets at beginning of the period	$	47.9		$	33.6		$	23.8
Revaluation and change due to U.S. Tax Reform		23.4			10.7			-
Charged to tax expense		(4.2	)		3.1			12.5
Charged to other accounts		(1.3	)		1.6			(0.1	)
Deductions⁽¹⁾		6.7			(1.1	)		(2.6	)
Valuation allowance for deferred tax assets at end of the period	$	72.5		$	47.9		$	33.6

⁽¹⁾

Deductions relate to the realization of net operating losses or the removal of deferred tax assets.

Total unrecognized tax benefits were $11.5 million, $12.6 million and $6.8 million for the years ended December 31, 2018, 2017 and 2016, respectively. The net decrease in this balance primarily relates to $0.5 million in lapse of statute of limitations and $0.6 million in changes due to currency fluctuations. Included in total unrecognized benefits as of December 31, 2018 is $11.5 million of unrecognized tax benefits that would affect the Company's effective tax rate if recognized, of which $0.7 million would be offset by a reduction of a corresponding deferred tax asset. The balance of total unrecognized tax benefits is not expected to significantly increase or decrease within the next twelve months. Below is a tabular reconciliation of the changes in total unrecognized tax benefits during the years ended December 31, 2018, 2017 and 2016.

	2018			2017			2016
Beginning balance	$	12.6		$	6.8		$	4.8
Gross increases for tax positions of prior years		-			11.2			3.1
Gross decreases for tax positions of prior years		-			-			-
Gross increases for tax positions of current year		-			0.6			-
Settlements		-			(6.2	)		(0.4	)
Lapse of statute of limitations		(0.5	)		(0.3	)		(0.7	)
Changes due to currency fluctuations		(0.6	)		0.5			-
Ending balance	$	11.5		$	12.6		$	6.8

The Company includes interest expense and penalties related to unrecognized tax benefits as part of the provision for income taxes. The Company's income tax liabilities as of December 31, 2018 and 2017 include accrued interest and penalties of $0.9 million and $0.8 million, respectively.

The statutes of limitations for U.S. Federal tax returns are open for the 2015 and 2017 tax years, and state returns are open beginning with the 2013 tax year. During 2018, the Company started and closed the 2014 and 2016 tax year IRS audits. No current U.S. federal audits are active as of December 31, 2018.

The Company is subject to income tax in approximately 35 jurisdictions outside the U.S. The statute of limitations varies by jurisdiction with 2005 being the oldest year still open. The Company's significant operations outside the U.S. are located in the United Kingdom and Germany. In the United Kingdom, tax years prior to 2012 are closed. However, the Company is currently under audit in the United Kingdom, which had originally included years 2012 to 2014, but was expanded to 2015 in December of 2017. The audit has not been completed as of the date of these financial statements. In Germany, generally, the tax years 2011 and beyond remain open to examination. The Company also commenced a general tax audit for the tax years 2011 to 2014 for Germany during 2018.

The Company recorded a deferred tax liability of approximately $114.0 million as of the KKR Transaction for the anticipated repatriation of a limited amount of unremitted foreign earnings generated prior to the KKR Transaction. These accumulated earnings of non-U.S. subsidiaries amounting to approximately $287.0 million are expected to supplement the Company’s projected U.S. operating cash flow in meeting the Company’s debt service requirements along with other U.S. cash flow needs during the term of its credit agreement. This deferred tax liability was adjusted to $94.1 million as of December 31, 2014, $94.6 million as of December 31, 2015, $77.3 million as of December 31, 2016 and $9.3 million as of December 31, 2017, based upon the estimated need to repatriate accumulated earnings of approximately $200.0 million. Due to the Tax Act, effective the fourth quarter of 2018, the Company decided to reverse its ASC 740-30 (formerly APB 23) position, and no longer asserts indefinite reinvestment for any historical non-U.S. earnings, or future non-U.S. earnings. The Company adjusted its ASC 740-30 deferred foreign tax liability to cover all estimated withholding, state income tax, and foreign income tax associated with repatriating all non-U.S. earnings as of December 31, 2018 back to the U.S. As a result, the recorded deferred tax liability of $5.6 million as of December 31, 2018 relates mainly to withholding tax.