Income Taxes (Tables)

12 Months Ended

Dec. 31, 2018

Schedule of Effective Income Tax Rate Reconciliation [Table Text Block]

At December 31, 2018, we had approximately $781 million of net operating and other loss carryforwards that were generated in various worldwide jurisdictions. We have no U.S. net operating losses available to reduce future payments of U.S. federal income taxes. The carryforwards include $711 million that do not expire and $70 million that will expire from 2019 through 2028. We have recorded a total valuation allowance of $203 million on foreign operating losses and tax credit carryforwards as well as other deferred tax assets as our management believes that it is more likely than not that these deferred tax assets will not be realized.

A reconciliation of our beginning and ending amounts of valuation allowances is as follows:



	Year Ended December 31,
(in thousands)	2018			2017			2016
Balance at beginning of year	$	(206,586	)	$	(4,200	)	$	—
Increase due principally to foreign net operating losses	(38,415		)	(146,360		)	(4,200		)
Increase due to tax credit carryforwards generated in foreign operations	(14,065		)	(56,026		)	—
Reduction due to utilization of foreign tax credits generated in prior year	56,026			—			—
Balance at end of year	$	(203,040	)	$	(206,586	)	$	(4,200	)

The utilization of the foreign tax credits generated in the prior year was as a result of the mandatory repatriation requirements of the Tax Act.

Reconciliations between the actual provision for income taxes (benefit) on continuing operations and that computed by applying the U.S. statutory rate of 21% for 2018 and 35% for 2017 and 2016 to income before income taxes were as follows:



	Year Ended December 31,
(in thousands)	2018			2017			2016
Income tax provision (benefit) at the U.S. statutory rate	$	(39,025	)	$	(6,245	)	$	15,171
Tax Act - earnings subject to tax-free repatriation	—			(222,019		)	—
Tax Act - net mandatory repatriation tax	8,790			—			—
Tax Act - remeasure of net U.S. deferred tax liabilities	—			(23,124		)	—
Valuation allowances	38,415			89,217			4,200
Foreign tax rate differential	475			(21,163		)	(1,766		)
Stock compensation	2,135			3,112			—
Uncertain tax positions	12,644			(836		)	680
Other items, net	3,060			(3,184		)	475
Total provision (benefit) for income taxes	$	26,494		$	(184,242	)	$	18,760

Schedule of Components of Income Tax Expense (Benefit)

In December 2017, the United States enacted the Tax Act, which included a number of changes to existing U.S. tax laws that have an impact on our income tax provision, most notably a reduction of the U.S. corporate income tax rate from 35% to 21% for tax years beginning after December 31, 2017, and the creation of a quasi-territorial tax system with a one‑time mandatory transition tax on applicable previously deferred earnings of foreign subsidiaries. The Tax Act also makes prospective changes beginning in 2018, including a base erosion and anti‑abuse tax ("BEAT"), a global intangible low‑taxed income ("GILTI") tax, additional limitations on the deductibility of interest expense and repeal of the domestic manufacturing deduction. In the period ended December 31, 2017, we recorded a provisional net tax benefit associated with the Tax Act and related matters of $189 million.

The provisional amounts recorded in 2017 related to the transition tax, remeasurement of deferred taxes, our reassessment of permanently reinvested earnings, valuation allowances, and actions taken in anticipation of the Tax Act were finalized and a net expense of $23 million was recorded during 2018. Although we have completed our accounting on the effect of the Tax Act in our financial statements, regulatory guidance continues to be issued by the tax authorities. Any changes in the interpretation of the Tax Act as a result of such future regulatory guidance, which could materially affect our tax obligations and effective tax rate, will be recorded in the period that current or future proposed regulations become law.

Our provisions (benefit) for income taxes and our cash taxes paid are as follows:



	Year Ended December 31,
(in thousands)	2018			2017			2016
Current:
Domestic	$	(1,564	)	$	13,390		$	(6,899	)
Foreign	16,146			37,381			25,561
Total current	14,582			50,771			18,662
Deferred:
Domestic	(22,905		)	(213,200		)	(8,617		)
Foreign	34,817			(21,813		)	8,715
Total deferred	11,912			(235,013		)	98
Total provision (benefit) for income taxes	$	26,494		$	(184,242	)	$	18,760
Cash taxes paid	$	29,737		$	43,347		$	75,819

Schedule of Income before Income Tax, Domestic and Foreign

The components of income (loss) before income taxes are as follows:



	Year Ended December 31,
(in thousands)	2018			2017			2016
Domestic	$	(132,138	)	$	(93,053	)	$	(180,132	)
Foreign	(53,695		)	75,209			223,478
Income (loss) before income taxes	$	(185,833	)	$	(17,844	)	$	43,346

Schedule of Deferred Tax Assets and Liabilities

As of December 31, 2018 and 2017, our worldwide deferred tax assets, liabilities and net deferred tax liabilities were as follows:



	December 31,
(in thousands)	2018			2017
Deferred tax assets:
Deferred compensation	$	13,684		$	22,325
Deferred income	2,381			2,015
Accrued expenses	13,683			11,652
Net operating loss and other carryforwards	189,644			222,065
Other	4,601			2,203
Gross deferred tax assets	223,993			260,260
Valuation allowances	(203,040		)	(206,586		)
Total deferred tax assets	$	20,953		$	53,674
Deferred tax liabilities:
Property and equipment	$	36,850		$	65,366
Basis difference in equity investments	2,346			5,715
Total deferred tax liabilities	$	39,196		$	71,081
Net deferred income tax liability	$	18,243		$	17,407

Our net deferred tax liability is reflected within our balance sheet as follows:



	December 31,
(in thousands)	2018		2017
Deferred tax liabilities	$	18,243	$	42,040
Long-term deferred tax assets	—		(24,633		)
Net deferred income tax liability	$	18,243	$	17,407

Schedule of Unrecognized Tax Benefits Roll Forward

e recognize the benefit for a tax position if the benefit is more likely than not to be sustainable upon audit by the applicable taxing authority. If this threshold is met, the tax benefit is then measured and recognized at the largest amount that we believe is greater than 50% likely of being realized upon ultimate settlement.

We account for any applicable interest and penalties on uncertain tax positions as a component of our provision for income taxes on our financial statements. We increased/(decreased) income tax expense by $1.7 million and $0.6 million in 2018 and 2017, respectively, for penalties and interest on uncertain tax positions, which brought our total liabilities for penalties and interest on uncertain tax positions to $4.3 million and $2.6 million on our balance sheets at December 31, 2018 and 2017, respectively. All additions or reductions to those liabilities would affect our effective income tax rate in the periods of change.

A reconciliation of the beginning and ending amount of gross uncertain tax positions, not including associated foreign tax credits and penalties and interest, is as follows:



	Year Ended December 31,
(in thousands)	2018			2017			2016
Balance at beginning of year	$	5,339		$	6,330		$	5,245
Additions based on tax positions related to the current year	445			1,213			1,999
Reductions for expiration of statutes of limitations	(260		)	(650		)	(1,028		)
Additions (reductions) based on tax positions related to prior years	10,540			314			114
Reductions based on tax positions related to prior years	—			(962		)	—
Settlements	(1,093		)	(906		)	—
Balance at end of year	$	14,971		$	5,339		$	6,330

We believe approximately $8.3 million of gross uncertain tax positions will be resolved within the next 12 months. Including associated foreign tax credits and penalties and interest, we have accrued a net total of $18 million and $5.6 million in the caption "other long-term liabilities" on our balance sheet at December 31, 2018 and 2017, respectively, for uncertain tax positions.

Summary of Income Tax Examinations

Our tax returns are subject to audit by taxing authorities in multiple jurisdictions. These audits often take years to complete and settle. The following lists the earliest tax years open to examination by tax authorities where we have significant operations:



Jurisdiction		Periods
United States		2014
United Kingdom		2015
Norway		2007
Angola		2013
Brazil		2012
Australia		2013