Income Taxes (Tables)

12 Months Ended

Dec. 31, 2018

Components of Income (Loss) before Income Taxes, Domestic and Foreign

The provisions for income taxes were calculated based on the following components of income (loss) before income taxes:



Year ended December 31, (dollars in thousands)	2018			2017
United States	$	(12,682	)	$	(65,224	)
Non-U.S.	14,979			(12,346		)
Total income (loss) before income taxes	$	2,297		$	(77,570	)

Current and Deferred Provisions (Benefit) for Income Taxes

The current and deferred provisions (benefit) for income taxes were:



Year ended December 31, (dollars in thousands)	2018			2017
Current:
U.S. federal	$	1,945		$	(183	)
Non-U.S.	6,780			4,517
U.S. state and local	694			834
Total current income tax provision	9,419			5,168

Deferred:
U.S. federal	687			9,950
Non-U.S.	310			1,190
U.S. state and local	(163		)	(510		)
Total deferred income tax provision	834			10,630

Total:
U.S. federal	2,632			9,767
Non-U.S.	7,090			5,707
U.S. state and local	531			324
Total income tax provision	$	10,253		$	15,798

Reconciliation of Statutory to Effective Income Tax Rate

Reconciliation from the statutory U.S. federal income tax rate to the consolidated effective income tax rate was as follows:



Year ended December 31,	2018			2017
Statutory U.S. federal income tax rate	21.0		%	35.0		%
Increase (decrease) in rate due to:
Non-U.S. income tax differential	19.9			1.2
U.S. state and local income taxes, net of related U.S. federal income taxes	22.6			0.1
U.S. federal credits	(9.8	)		0.3
Permanent adjustments	27.7			0.6
Foreign withholding taxes	75.9			(2.0	)
Valuation allowances	143.5			(4.4	)
Unrecognized tax benefits	48.4			(3.9	)
Impact of foreign exchange	71.6			(1.6	)
Impact of legislative changes	—			(8.7	)
Goodwill impairment	—			(36.0	)
Other	25.6			(1.0	)
Consolidated effective income tax rate	446.4		%	(20.4	)	%

Components of Deferred Income Tax Assets and Liabilities

The significant components of our deferred income tax assets and liabilities are as follows:



December 31, (dollars in thousands)	2018				2017
Deferred income tax assets:
Pension	$	9,722			$	8,108
Non-pension post-retirement benefits	11,712				13,385
Other accrued liabilities	16,477				13,213
Receivables	1,994				2,118
Net operating loss and charitable contribution carryforwards	14,143			(a)	16,599
Tax credits	13,373			(b)	13,288
Total deferred income tax assets	67,421			(c)	66,711
Valuation allowances	(22,068		)		(19,076		)
Net deferred income tax assets	45,353				47,635

Deferred income tax liabilities:
Property, plant and equipment	15,332				18,246
Inventories	1,699				1,639
Intangibles and other	4,987				4,708
Total deferred income tax liabilities	22,018				24,593
Net deferred income tax asset	$	23,335			$	23,042

___________________________


(a)	At December 31, 2018, U.S. operating loss carryforwards of $3.9 million expire between 2019 and 2038, and non-U.S. operating loss carryforwards of $10.2 million expire between 2021 and 2027.


(b)	At December 31, 2018, U.S. general business credit carryforwards of $3.0 million expire between 2024 and 2038. U.S. AMT credits of $1.3 million and the foreign credits of $9.0 million do not expire.


(c)	In order to fully realize our U.S. deferred tax assets as of December 31, 2018, the Company needs to generate approximately $151.9 million of future taxable income.

Change in Unrecognized Tax Benefits

A reconciliation of the beginning and ending gross unrecognized tax benefits, excluding interest and penalties, is as follows:



(dollars in thousands)	2018			2017
Beginning balance	$	5,007		$	3,521
Additions based on tax positions related to the current year	438			435
Additions for tax positions of prior years	9			1,735
Reductions for tax positions of prior years	(1,698		)	(468		)
Changes due to lapse of statute of limitations	513			279
Reductions due to settlements with tax authorities	(57		)	(495		)
Ending balance	$	4,212		$	5,007

Other Unrecognized Tax Benefits Disclosures

We recognize interest and penalties related to unrecognized tax benefits in the provision for income taxes. Other disclosures relating to unrecognized tax benefits are as follows:



December 31, (dollars in thousands)	2018		2017
Amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate	$	5,283	$	4,107
Interest, net of tax benefit, accrued in the Consolidated Balance Sheets	$	1,027	$	572
Penalties, accrued in the Consolidated Balance Sheets	$	43	$	38
Interest expense recognized in the Consolidated Statements of Operations	$	523	$	506
Penalties expense (benefit) recognized in the Consolidated Statements of Operations	$	5	$	(67	)

Tax Years Subject to Income Tax Examination

As of December 31, 2018, the tax years that remained subject to examination by major tax jurisdictions were as follows:



Jurisdiction	Open Years
Canada	2015	–	2018
China	2008	–	2018
Mexico (excluding 2011 which is closed)	2010	–	2018
Netherlands	2016	–	2018
Portugal	2008	–	2018
United States (excluding 2013 which is closed)	2011	–	2018