

	2016			2015			2014
Current:
Federal	$	44.1		$	26.8		$	61.1
State and local	0.1			5.4			2.8
Foreign	31.3			16.3			44.1
	$	75.5		$	48.5		$	108.0
Deferred:
Federal	$	(15.1	)	$	(146.1	)	$	(46.9	)
State and local	(0.1		)	(13.1		)	(4.4		)
Foreign	8.9			(10.9		)	(2.0		)
	$	(6.3	)	$	(170.1	)	$	(53.3	)
United States and foreign tax provision (benefit) on income (loss)	$	69.2		$	(121.6	)	$	54.7



	2016			2015			2014
Income tax at the U.S. federal statutory rate	$	77.7		$	(66.4	)	$	71.4
Adjustments:
State and local income taxes, net of federal tax benefit	2.4			(4.9		)	(0.3		)
Tax on foreign remittances and U.S. tax on foreign income	8.3			13.8			19.6
Tax expense related to undistributed earnings of foreign subsidiaries	—			—			(8.7		)
Foreign losses without current tax benefits	6.4			5.3			4.3
Foreign earnings taxed at different rates including tax holidays	(3.5		)	(11.0		)	(15.7		)
U.S. domestic manufacturing deduction	(5.0		)	(4.5		)	(6.6		)
U.S. foreign tax credit	(8.0		)	(22.4		)	(15.1		)
U.S. research tax credit	(0.6		)	(1.1		)	(1.0		)
Accruals and settlements related to tax audits	(8.1		)	(5.9		)	12.8
Valuation allowance changes, net	0.2			(34.7		)	—
Deferred taxes related to branch operations	(1.3		)	11.6			—
Other items, net	0.7			(1.4		)	(6.0		)
Provision (benefit) for income taxes	$	69.2		$	(121.6	)	$	54.7
Effective income tax rate	31.2		%	64.1		%	26.8		%

In connection with various investment arrangements, the Company has been granted a “holiday” from income taxes for one affiliate in Asia for 2016, 2015 and 2014. These agreements began to expire at the end of 2010, with full expiration in 2018. In total, the agreements reduced income tax expense by $0.5 million in 2016, $1.3 million in 2015 and $1.3 million in 2014. These savings resulted in an increase to earnings per diluted share of approximately $0.01 in 2016, approximately $0.01 in 2015 and approximately $0.01 in 2014.

Income tax expense includes U.S. and international income taxes. No income tax provision has been made on undistributed foreign earnings of $561.7 million and $547.6 million at December 31, 2016 and December 31, 2015, respectively, as it is our intention to indefinitely reinvest the undistributed foreign earnings. It is not practicable to calculate the taxes that might be payable on such earnings indefinitely reinvested outside the U.S.



	2016			2015
Deferred tax assets:
Accrued postretirement benefits cost	$	56.8		$	72.3
Accrued pension cost	63.3			36.3
Other employee benefit accruals	11.5			10.9
Tax loss and credit carryforwards	84.7			100.3
Other, net	43.8			40.0
Valuation allowances	(85.5		)	(83.7		)
	$	174.6		$	176.1
Deferred tax liabilities - principally depreciation and amortization	(124.1		)	(113.8		)
Net deferred tax assets	$	50.5		$	62.3

The Company has a U.S. foreign tax credit carryforward of $1.1 million that will expire in 2023, and U.S. state and local credit carryforwards of $0.9 million, portions of which will expire in 2017. The Company also has U.S. state and local loss carryforwards with tax benefits totaling $1.1 million, portions of which will expire at the end of 2017. In addition, the Company has loss carryforwards in various non-U.S. jurisdictions with tax benefits totaling $81.6 million having various expiration dates, as well as tax credit carryforwards of $0.1 million. The Company has provided valuation allowances of $62.4 million against certain of these carryforwards. The majority of the non-U.S. loss carryforwards represent local country net operating losses for branches of the Company or entities treated as branches of the Company under U.S. tax law. Tax benefits have been recorded for these losses in the United States. The related local country net operating loss carryforwards are offset fully by valuation allowances. In addition to loss and credit carryforwards, the Company has provided valuation allowances of $23.1 million against other deferred tax assets.

As of December 31, 2016, the Company had $39.2 million of total gross unrecognized tax benefits. Included in this amount was $35.9 million of unrecognized tax benefits that would favorably impact the Company’s effective income tax rate in any future periods if such benefits were recognized. As of December 31, 2016, the Company believes it is reasonably possible that the amount of unrecognized tax positions could decrease by approximately $25 million during the next 12 months. The potential decrease would be primarily driven by settlements with tax authorities and the expiration of various statutes of limitation. As of December 31, 2016, the Company had accrued $8.5 million of interest and penalties related to uncertain tax positions. The Company records interest and penalties related to uncertain tax positions as a component of income tax expense.

As of December 31, 2015, the Company had $50.4 million of total gross unrecognized tax benefits. Included in this amount was $38.0 million of unrecognized tax benefits that would favorably impact the Company’s effective income tax rate in any future periods if such benefits were recognized. As of December 31, 2015, the Company had accrued $12.2 million of interest and penalties related to uncertain tax positions. The Company records interest and penalties related to uncertain tax positions as a component of income tax expense.

As of December 31, 2014, the Company had $57.5 million of total gross unrecognized tax benefits. Included in this amount was $47.3 million of unrecognized tax benefits that would favorably impact the Company’s effective income tax rate in any future periods if such benefits were recognized. As of December 31, 2014, the Company had accrued $16.5 million of interest and penalties related to uncertain tax positions.



	2016			2015			2014
Beginning balance, January 1	$	50.4		$	57.5		$	49.5
Tax positions related to the current year:
Additions	—			6.5			0.7
Tax positions related to prior years:
Additions	5.7			5.0			14.7
Reductions	(7.8		)	(4.0		)	(3.5		)
Settlements with tax authorities	(9.1		)	(14.6		)	(3.0		)
Lapses in statutes of limitation	—			—			(0.9		)
Ending balance, December 31	$	39.2		$	50.4		$	57.5

During 2016, gross unrecognized tax benefits decreased primarily due to settlements with tax authorities related to various prior year tax matters, including certain U.S. federal taxes, U.S. state and local taxes and taxes related to the Company’s international operations. The decrease was also related to expiration of statute of limitations in multiple jurisdictions. These decreases were partially offset by accruals related to prior year tax matters, including certain U.S. federal taxes, U.S. state and local taxes and taxes related to the Company’s international operations.

During 2015, gross unrecognized tax benefits decreased primarily due to settlements with tax authorities related to various prior year tax matters, including certain U.S. federal taxes, U.S. state and local taxes and taxes related to the Company’s international operations. These decreases were partially offset by accruals related to prior year tax matters, including certain U.S. federal taxes, U.S. state and local taxes and taxes related to the Company’s international operations.

During 2014, gross unrecognized tax benefits decreased primarily due to net reductions related to various current year and prior year tax matters, including settlement of tax matters with government authorities and taxes related to the Company’s international operations. These decreases were partially offset by additions related to prior year tax matters, including certain U.S. federal taxes, U.S. state and local taxes and taxes related to the Company’s international operations.

As of December 31, 2016, the Company is subject to examination by the IRS for tax years 2006 to 2009 and 2012 to the present. The Company was also subject to tax examination in various U.S. state and local tax jurisdictions for tax years 2006 to the present, as well as various foreign tax jurisdictions, including Mexico, Poland and India for tax years 2002 to the present. The Company’s unrecognized tax benefits were presented on the Consolidated Balance Sheets as a component of other non-current liabilities.