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Income Taxes | 12 Months Ended
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Dec. 31, 2016
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes Income (loss) from continuing operations before income taxes for the Company’s U.S. and non-U.S. operations was as follows:
(In millions) |  | 2016 |  | 2015 |  | 2014
U.S. |  | $ | (782.1 | ) |  | $ | (534.6 | ) |  | $ | (46.1 | )
Non-U.S. |  | 48.1 |  |  | 56.6 |  |  | 47.6 |
Income (loss) from continuing operations before income taxes |  | $ | (734.0 | ) |  | $ | (478.0 | ) |  | $ | 1.5 |
The income tax provision (benefit) was as follows:
(In millions) |  | 2016 |  | 2015 |  | 2014
Continuing operations: |  |  |  |  |  |
Current: |  |  |  |  |  |
Federal |  | $ | 0.5 |  |  | $ | (60.7 | ) |  | $ | (47.9 | )
State |  | (1.5 | ) |  | (0.4 | ) |  | (4.0 | )
Foreign |  | 14.4 |  |  | 9.4 |  |  | 9.8 |
Total |  | 13.4 |  |  | (51.7 | ) |  | (42.1 | )
Deferred: |  |  |  |  |  |
Federal |  | (115.8 | ) |  | (90.9 | ) |  | 34.1 |
State |  | (3.5 | ) |  | 30.4 |  |  | (0.2 | )
Foreign |  | (1.0 | ) |  | 0.1 |  |  | (0.5 | )
Total |  | (120.3 | ) |  | (60.4 | ) |  | 33.4 |
Income tax benefit from continuing operations |  | $ | (106.9 | ) |  | $ | (112.1 | ) |  | $ | (8.7 | )
Income tax benefit from discontinued operations |  | $ | — |  |  | $ | — |  |  | $ | (0.3 | )
Total company income tax benefit |  | $ | (106.9 | ) |  | $ | (112.1 | ) |  | $ | (9.0 | )
The following is a reconciliation of income taxes computed at the statutory U.S. Federal income tax rate to the actual effective income tax benefit from continuing operations:
|  | Income Tax Provision (Benefit)
(In millions) |  | 2016 |  | 2015 |  | 2014
Taxes computed at the federal rate |  | $ | (256.9 | ) |  | $ | (167.3 | ) |  | $ | 0.5 |
State and local income taxes, net of federal tax benefit |  | (26.8 | ) |  | (20.6 | ) |  | (2.0 | )
Valuation allowance |  | 171.5 |  |  | 74.5 |  |  | 0.5 |
Foreign earnings taxed at different rate |  | (5.3 | ) |  | (11.2 | ) |  | (6.6 | )
Adjustment to prior years’ taxes |  | 3.4 |  |  | (5.4 | ) |  | 0.1 |
Tax reserve adjustments |  | 3.1 |  |  | 3.9 |  |  | (0.5 | )
Repatriation of foreign earnings |  | 2.1 |  |  | 13.4 |  |  | 0.3 |
Other |  | 2.0 |  |  | 0.6 |  |  | (1.0 | )
Income tax benefit |  | $ | (106.9 | ) |  | $ | (112.1 | ) |  | $ | (8.7 | )
Valuation allowances are established when it is estimated that it is more likely than not that the tax benefit of the deferred tax asset will not be realized. The evaluation includes the consideration of all available evidence, both positive and negative, regarding historical operating results including recent years with reported losses, the estimated timing of future reversals of existing taxable temporary differences, estimated future taxable income exclusive of reversing temporary differences and carryforwards, and potential tax planning strategies which may be employed to prevent an operating loss or tax credit carryforward from expiring unused. In situations where a three year cumulative loss condition exists, accounting standards limit the ability to consider projections of future results as positive evidence to assess the realizability of deferred tax assets. In 2015, the Company’s results reflected a three year cumulative loss from U.S. operations; prior thereto, the Company’s historical domestic results reflected a three year cumulative profit. As a result, the Company established $74.5 million in deferred tax asset valuation allowances in 2015, of which $68.4 million were for certain federal and state deferred tax assets. The three year cumulative loss condition continued in 2016, and the actions to indefinitely idle the Rowley, UT titanium sponge production facility (see Note 17 for further information) in 2016 resulted in a reassessment of the realizability of U.S. federal deferred tax assets. In 2016, the Company’s results of operations included an increase to deferred tax asset valuation allowances of $171.5 million, including an additional $165.8 million valuation allowance on federal and state deferred tax assets. Other valuation allowances recognized in 2016 and prior years affecting the income tax benefit from continuing operations relate to uncertainties of realizing tax attributes unrelated to the U.S. operations cumulative loss impact. These deferred tax valuation allowances in 2015 and 2016 had the effect of significantly reducing the reported income tax benefit applicable to the pre-tax loss in each period. In addition, the Company established a $45.6 million valuation allowance on amounts recorded in other comprehensive income in 2016, which are not reflected in the preceding table reconciling amounts recognized in the income tax benefit from continuing operations (see Note 13). Deferred income taxes result from temporary differences in the recognition of income and expense for financial and income tax reporting purposes, and differences between the fair value of assets acquired in business combinations accounted for as purchases for financial reporting purposes and their corresponding tax bases. Deferred income taxes represent future tax benefits or costs to be recognized when those temporary differences reverse. The categories of assets and liabilities that have resulted in differences in the timing of the recognition of income and expense at December 31, 2016 and 2015 were as follows:
(In millions) |  | 2016 |  | 2015
Deferred income tax assets |  |  |  |
Pensions |  | $ | 281.2 |  |  | $ | 281.0 |
Postretirement benefits other than pensions |  | 122.9 |  |  | 144.7 |
Federal and state net operating loss tax carryovers |  | 400.9 |  |  | 228.1 |
Federal and state tax credits |  | 57.2 |  |  | 52.2 |
Deferred compensation and other benefit plans |  | 25.7 |  |  | 25.9 |
Self insurance reserves |  | 9.7 |  |  | 10.8 |
Other items |  | 106.3 |  |  | 85.2 |
Gross deferred income tax assets |  | 1,003.9 |  |  | 827.9 |
Valuation allowance for deferred tax assets |  | (322.2 | ) |  | (105.1 | )
Total deferred income tax assets |  | 681.7 |  |  | 722.8 |
Deferred income tax liabilities |  |  |  |
Bases of property, plant and equipment |  | 533.8 |  |  | 664.1 |
Inventory valuation |  | 77.8 |  |  | 62.2 |
Bases of amortizable intangible assets |  | 23.3 |  |  | 25.4 |
Other items |  | 50.4 |  |  | 46.7 |
Total deferred tax liabilities |  | 685.3 |  |  | 798.4 |
Net deferred tax liability |  | $ | (3.6 | ) |  | $ | (75.6 | )
The Company had $322.2 million and $105.1 million in deferred tax asset valuation allowances at December 31, 2016 and 2015, respectively, which includes the following:
(In millions) |  | 2016 |  | 2015
Federal deferred tax valuation allowances |  |  |  |
| Net operating losses |  | $ | 37.8 |  |  | $ | — |
| Tax credits |  | 40.5 |  |  | 24.8 |
| Temporary differences |  | 141.2 |  |  | — |
| Total federal deferred tax valuation allowances |  | 219.5 |  |  | 24.8 |
State deferred tax valuation allowances |  |  |  |
| Net operating losses |  | 77.9 |  |  | 61.8 |
| Tax credits |  | 13.3 |  |  | 13.8 |
| Temporary differences |  | 6.5 |  |  | 3.3 |
| Total state deferred tax valuation allowances |  | 97.7 |  |  | 78.9 |
Foreign deferred tax valuation allowances |  | 5.0 |  |  | 1.4 |
Total deferred tax valuation allowances |  | $ | 322.2 |  |  | $ | 105.1 |
Income taxes paid and amounts received as refunds were as follows:
(In millions) |  | 2016 |  | 2015 |  | 2014
Income taxes paid |  | $ | 8.6 |  |  | $ | 10.8 |  |  | $ | 15.1 |
Income tax refunds received |  | (10.5 | ) |  | (63.3 | ) |  | (20.2 | )
Income taxes received, net |  | $ | (1.9 | ) |  | $ | (52.5 | ) |  | $ | (5.1 | )
In general, the Company is responsible for filing consolidated U.S. Federal, foreign and combined, unitary or separate state income tax returns. The Company is responsible for paying the taxes relating to such returns, including any subsequent adjustments resulting from the redetermination of such tax liability by the applicable taxing authorities. No provision has been made for U.S. Federal, state or additional foreign taxes related to approximately $133 million of undistributed earnings of foreign subsidiaries which have been permanently re-invested. It is not practical to determine the deferred tax liability on these earnings. The Company’s income tax payments have benefited over the last several years from provisions under the U.S. tax code allowing companies to immediately deduct a significant portion of the cost of new capital investments placed into service. In 2015 and 2016, the Company received $59.9 million and $7.3 million, respectively, for federal tax refunds of prior years’ taxes paid. The Company has approximately $323 million of tax-effected federal net operating loss carryforwards, $52 million of other federal tax credits, $83 million of state net operating loss carryforwards, and $13 million of state tax credits to offset future federal and state tax liabilities. For the federal net operating loss tax carryforwards, expiration will generally occur within 20 years of the year generated. For the state net operating loss tax carryforwards, expiration will generally occur within 20 years of the year generated and some utilization of the tax benefit may be limited to $5 million per year or 30% of apportioned income, whichever is greater. The changes in the liability for unrecognized income tax benefits for the years ended December 31, 2016, 2015 and 2014 were as follows:
(In millions) |  | 2016 |  | 2015 |  | 2014
Balance at beginning of year |  | $ | 15.0 |  |  | $ | 73.4 |  |  | $ | 72.8 |
Increases in prior period tax positions |  | 7.9 |  |  | 4.2 |  |  | 2.0 |
Decreases in prior period tax positions |  | (0.1 | ) |  | (0.6 | ) |  | (0.6 | )
Increases in current period tax positions |  | 0.7 |  |  | 1.3 |  |  | 0.7 |
Expiration of the statute of limitations |  | (1.1 | ) |  | (0.7 | ) |  | (0.5 | )
Settlements |  | (4.3 | ) |  | (62.1 | ) |  | (0.7 | )
Interest and penalties, net |  | (0.3 | ) |  | (0.5 | ) |  | (0.3 | )
Balance at end of year |  | $ | 17.8 |  |  | $ | 15.0 |  |  | $ | 73.4 |
The liability at December 31, 2016 includes $7.6 million of unrecognized tax benefits that are classified within deferred income taxes as a reduction of net operating loss carryforwards. At December 31, 2016, interest and penalties included in the liability for unrecognized tax benefits were $3.6 million. For the year ended December 31, 2014, $60.9 million of the liability for unrecognized income tax benefits related to temporary differences, which would not impact the effective tax rate upon resolution of the uncertainty. In 2015, the Company resolved these various uncertain tax position matters related to temporary differences which resulted in this $60.9 million long-term liability for uncertain tax positions to be reclassified to a deferred tax liability. Including tax positions for which the Company determined that the tax position would not meet the more-likely-than-not recognition threshold upon examination by the tax authorities based upon the technical merits of the position, the total estimated unrecognized tax benefit that, if recognized, would affect ATI’s effective tax rate was approximately $15 million, which would be offset by a corresponding valuation allowance adjustment, resulting in no net impact to the effective tax rate. At this time, the Company believes that it is reasonably possible that approximately $9 million of the estimated unrecognized tax benefits as of December 31, 2016 will be recognized within the next twelve months based on the expiration of statutory review periods. The Company, and/or one of its subsidiaries, files income tax returns in the U.S. Federal jurisdiction and in various state and foreign jurisdictions. A summary of tax years that remain subject to examination, by major tax jurisdiction, is as follows:
Jurisdiction |  | Earliest Year Open to Examination
U.S. Federal |  | 2015
States: |  |
California |  | 2012
Ohio |  | 2012
North Carolina |  | 2010
Oregon |  | 2013
Pennsylvania |  | 2013
Foreign: |  |
China |  | 2013
Poland |  | 2010
United Kingdom |  | 2014

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32559-109319 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32718-109319 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32537-109319 + Details
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