Income Taxes

(Loss) income before income taxes and equity in earnings of joint venture generated by the Company’s U.S. and non-U.S. operations were as follows:



	2014			2013			2012
U.S.	$	(112,904	)	$	(55,611	)	$	(28,398	)
Non-U.S.	(30,841		)	(5,133		)	12,856

The Company’s income tax (benefit) expense is comprised of the following:



	2014			2013			2012
Federal
current	$	—		$	(260	)	$	(842	)
deferred	(6,773		)	(16,913		)	(1,542		)
State
current	361			1,312			629
deferred	(948		)	(2,949		)	401
Foreign
current	(1,898		)	3,242			2,927
deferred	7,905			(4,227		)	(143		)
	$	(1,353	)	$	(19,795	)	$	1,430

The reconciliation between the Company’s effective tax rate on income or loss and the U.S. federal income tax rate of 35% is as follows:



	2014			2013			2012
Federal income tax at statutory rates	$	(50,310	)	$	(21,260	)	$	(5,439	)
State income taxes, net of federal income tax benefits	(2,117		)	(1,757		)	22
Permanent items:
Dividends received deductions	—			(766		)	(766		)
Convertible debt mark-to-market - non-deductible	—			—			6,206
Goodwill impairment	10,454			—			—
Other permanent differences	285			(124		)	480
Federal and state income tax on joint venture	2,912			2,670			2,766
Rate differential on foreign income	11,512			812			(1,680		)
Valuation allowance	24,572			—			—
Unrecognized tax benefits	—			—			(557		)
Audit settlements	99			—			218
Other	1,240			630			180
Income tax (benefit) expense	$	(1,353	)	$	(19,795	)	$	1,430
Effective income tax expense rate	0.9		%	32.6		%	(9.2		)%

Significant components of the Company’s deferred tax assets and liabilities are as follows as of December 31, 2014 and 2013:



	2014			2013
Deferred tax assets:
Pension and postretirement benefits	$	4,714		$	2,526
Deferred compensation	2,109			1,768
Restructuring related and other reserves	943			1,055
Alternative minimum tax and net operating loss carryforward	40,787			24,072
Inventory	5,218			—
Other, net	1,833			69
Deferred tax assets before valuation allowance	55,604			29,490
Valuation allowance	(33,021		)	—
Total deferred tax assets	$	22,583		$	29,490
Deferred tax liabilities:
Depreciation	$	9,857		$	8,026
Inventory	—			319
Pension	—			5,954
Intangible assets and goodwill	9,129			13,288
Convertible debt discount	5,644			6,833
Other, net	5,628			2,561
Total deferred tax liabilities	30,258			36,981
Net deferred tax liabilities	$	7,675		$	7,491

As of December 31, 2014, the Company has federal, state and foreign net operating losses ("NOLs") as follows:



	Amount		Expiration Period
Federal	$	81,328	2031 to 2034
State	84,596		2015 to 2034
Foreign	19,892		(a)

(a) Foreign NOLs of $1,719 expire in 2014 to 2018 and $18,173 do not expire.

The Company evaluates the recoverability of its deferred tax assets by assessing the adequacy of future taxable income from all sources, including the reversal of deferred tax liabilities, forecasted operating earnings and tax planning strategies. Valuation allowances are recorded against deferred tax assets when it is more likely than not that the amounts will not be realized.

The Company continued to generate losses at a number of its foreign subsidiaries in 2014. The larger than expected 2014 losses, when combined with prior losses, indicated that it was more likely than not that deferred tax assets of these foreign subsidiaries would not be realized. During 2014, a valuation allowance of $2,740 was recorded against all the pre-2014 deferred tax assets of these foreign subsidiaries. The deferred tax assets of these foreign subsidiaries are comprised primarily of net operating loss carry forwards. Additionally, losses generated by these foreign subsidiaries during the year ended December 31, 2014 were not benefited nor are future losses expected to be benefited until these subsidiaries return to profitability and evidence suggests that it is more likely than not that the deferred tax assets will be realized. The impact on the income tax provision of not benefiting the losses was approximately $2,148 for the year ended December 31, 2014.

In the U.S., the Company was in a net deferred tax asset position as of December 31, 2014, prior to the consideration of valuation allowances. The Company continued to generate losses in the U.S. These losses, combined with prior losses, indicated that it was more likely than not that the U.S. deferred tax assets would not be realized. Therefore, the Company recorded a valuation allowance and did not provide a tax benefit on a portion of the losses generated by the U.S. during the year ended December 31, 2014. The impact on the income tax provision of not benefiting the losses was approximately $28,133 for the year ended December 31, 2014. Continued operating losses in future periods and changes to the sources of income identified to utilize the U.S. deferred tax assets that differ significantly from current estimates may result in additional benefits not being recognized and a valuation allowance being recorded against some or all of the remaining U.S. deferred tax assets. The Company did not record valuation allowances against its U.S. deferred tax assets for the year ended December 31, 2013 as the U.S. had sufficient deferred tax liabilities to cover net operating losses.

The valuation allowances in the U.S. and at certain foreign subsidiaries will not be reversed until the Company returns to profitability and determines that it is more likely than not that its deferred tax assets will be realized.

Valuation allowances for the Company’s U.S. and non-U.S. operations were as follows December 31, 2014 and 2013:



	2014		2013		2012
U.S.
Balance, beginning of year	$	—	$	—	$	—
Provision charged to expense	19,684		—		—
Provision charged to accumulated other comprehensive loss	8,449		—		—
Balance, end of year	$	28,133	$	—	$	—
Non-U.S.
Balance, beginning of year	$	—	$	—	$	—
Provision charged to expense	4,888		—		—
Balance, end of year	$	4,888	$	—	$	—

Unrecognized tax benefits of $0, $105 and $105 would impact the effective tax rate if recognized as of December 31, 2014, 2013 and 2012, respectively. The accrued interest and penalties related to unrecognized tax benefits were insignificant at December 31, 2014 and 2013. The interest and penalties recorded by the Company were insignificant for the years ended December 31, 2014, 2013 and 2012.

During 2014, 2013 and 2012, statutes expired on certain unrecognized tax benefits of the Company. The reversal of the reserve of these unrecognized tax benefits was recorded as a component of overall income tax benefit for the years ended December 31, 2014, 2013 and 2012, respectively.

The Company or its subsidiaries files income tax returns in the United States federal jurisdiction, 33 states, and 7 foreign jurisdictions.

The following tax years remain open to examination by the major taxing jurisdictions to which the Company is subject:



U.S. Federal	2011 to 2014
U.S. States	2010 to 2014
Foreign	2008 to 2014

A 2011 and 2012 income tax audit of the Company's Canadian subsidiary was in process as of December 31, 2014. In February 2015, this audit was closed with no adjustment. During the second quarter of 2012, audits of the Company’s 2008 and 2009 U.S. federal income tax returns were concluded with no significant assessment. Changes to the Company's gross unrecognized tax benefits within the next twelve months, due to the potential for resolution of the examination or expiration of statutes of limitations, are immaterial.

The Company received its 2013 federal income tax refund of $1,500 during October 2014, its 2012 federal income tax refund of $2,590 during October 2013 and its 2010 federal income tax refund of $2,025 during February 2012.