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Income Taxes (Tables) | 12 Months Ended
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Dec. 31, 2013
Income Tax Disclosure [Abstract] |
Components of Income Tax Expense Benefit | Income before income taxes and equity in net income of unconsolidated investments and current and deferred income tax expense (benefit) are composed of the following (in thousands):
| Year Ended December 31,
| 2013 |  | 2012 |  | 2011
Income before income taxes and equity in net income of unconsolidated investments: |  |  |  |  |
Domestic | $ | 355,375 |  |  | $ | 316,856 |  |  | $ | 209,714 |
Foreign | 189,052 |  |  | 57,737 |  |  | 270,863 |
Total | $ | 544,427 |  |  | $ | 374,593 |  |  | $ | 480,577 |
Current income tax expense: |  |  |  |  |
Federal | $ | 52,413 |  |  | $ | 71,930 |  |  | $ | 82,379 |
State | 2,121 |  |  | 6,478 |  |  | 4,774 |
Foreign | 16,923 |  |  | 18,712 |  |  | 28,179 |
Total | $ | 71,457 |  |  | $ | 97,120 |  |  | $ | 115,332 |
Deferred income tax expense (benefit): |  |  |  |  |
Federal | $ | 72,299 |  |  | $ | (2,632 | ) |  | $ | (23,060 | )
State | 2,525 |  |  | 477 |  |  | (417 | )
Foreign | (9,959 | ) |  | (12,432 | ) |  | 12,279 |
Total | $ | 64,865 |  |  | $ | (14,587 | ) |  | $ | (11,198 | )
Total income tax expense | $ | 136,322 |  |  | $ | 82,533 |  |  | $ | 104,134 |
Significant Differences Between United States Federal Statutory Rate and Effective Income Tax Rate | The significant differences between the U.S. federal statutory rate and the effective income tax rate are as follows:
| % of Income Before Income Taxes
| 2013 |  | 2012 |  | 2011
Federal statutory rate | 35.0 | % |  | 35.0 | % |  | 35.0 | %
State taxes, net of federal tax benefit | 0.7 |  |  | 1.4 |  |  | 0.6 |
Change in valuation allowance(a) | (2.2 | ) |  | 3.4 |  |  | (0.3 | )
Impact of foreign earnings, net(b) | (10.3 | ) |  | (6.1 | ) |  | (10.9 | )
Depletion | (0.9 | ) |  | (1.3 | ) |  | (0.9 | )
Revaluation of unrecognized tax benefits/reserve requirements(c) | (0.1 | ) |  | (1.7 | ) |  | (0.1 | )
Domestic Manufacturing tax deduction(d) | (0.9 | ) |  | (3.8 | ) |  | (1.2 | )
Undistributed earnings of foreign subsidiaries(b) | 2.9 |  |  | (4.9 | ) |  | (0.4 | )
Other items, net | 0.8 |  |  | — |  |  | (0.1 | )
Effective income tax rate | 25.0 | % |  | 22.0 | % |  | 21.7 | %
(a) | During 2013, the Avonmouth, United Kingdom legal entity was dissolved, therefore the corresponding valuation allowance and deferred tax assets were written off. During 2012, a valuation allowance was established for $15.9 million as a result of the planned shut-down of our Avonmouth, United Kingdom legal entity in connection with our exit of the phosphorus flame retardants business. See Note 19, “Special Items.”
(b) | In prior years, we designated the undistributed earnings of substantially all of our foreign subsidiaries as permanently reinvested. The benefit of the lower tax rates in the jurisdictions for which we made this designation have been reflected in our effective income tax rate. During 2013, 2012 and 2011, we received distributions of $12.3 million, $56.9 million and $33.8 million, respectively, from various foreign subsidiaries and joint ventures and realized an expense (benefit), net of foreign tax credits, of $2.4 million, $(1.8) million and $5.4 million, respectively, related to the repatriation of these high taxed earnings. We have asserted for all periods being reported, permanent reinvestment of our share of the income of JBC, a Free Zones company under the laws of the Hashemite Kingdom of Jordan. The applicable provisions of the Jordanian law, and applicable regulations thereunder, do not have a termination provision and the exemption is permanent. As a Free Zones company, JBC is not subject to income taxes on the profits of products exported from Jordan, and currently, substantially all of the profits are from exports. In 2012, undistributed foreign subsidiary earnings were primarily impacted by a $17.4 million change related to the closure of our Avonmouth, United Kingdom site in connection with our exit of the phosphorus flame retardants business.
(c) | During 2012, we released various tax reserves primarily related to the expiration of the applicable U.S. federal statute of limitations for 2008 which provided a net benefit of $5.2 million.
(d) | During 2012, we amended the calculation of the domestic manufacturing tax deduction for the year 2010 and filed the 2011 tax return. As a result, in 2012 we recognized tax benefits of $1.5 million and $3.0 million related to the 2010 and 2011 tax years, respectively.
Deferred Income Tax Assets and Liabilities Recorded on Consolidated Balance Sheets | The deferred income tax assets and liabilities recorded on the consolidated balance sheets as of December 31, 2013 and 2012 consist of the following (in thousands):
| December 31,
| 2013 |  | 2012
Deferred tax assets: |  |  |
Postretirement benefits other than pensions | $ | 300 |  |  | $ | 14,900 |
Accrued employee benefits | 31,089 |  |  | 26,603 |
Operating loss carryovers | 88,614 |  |  | 74,934 |
Pensions | 37,172 |  |  | 74,521 |
Tax credit carryovers | 35,170 |  |  | 37,684 |
Undistributed earnings of foreign subsidiaries | — |  |  | 15,583 |
Other | 15,447 |  |  | 23,280 |
Gross deferred tax assets | 207,792 |  |  | 267,505 |
Valuation allowance | (33,757 | ) |  | (49,562 | )
Deferred tax assets | 174,035 |  |  | 217,943 |
Deferred tax liabilities: |  |  |
Depreciation | (213,575 | ) |  | (193,021 | )
Foreign currency translation adjustments | (3,104 | ) |  | (4,933 | )
Undistributed earnings of foreign subsidiaries | (71 | ) |  | — |
Other | (19,747 | ) |  | (20,348 | )
Deferred tax liabilities | (236,497 | ) |  | (218,302 | )
Net deferred tax liabilities | $ | (62,462 | ) |  | $ | (359 | )
Classification in the consolidated balance sheets: |  |  |
Current deferred tax assets | $ | 3,912 |  |  | $ | 4,197 |
Current deferred tax liabilities | (2,853 | ) |  | (5,700 | )
Noncurrent deferred tax assets | 65,667 |  |  | 64,512 |
Noncurrent deferred tax liabilities | (129,188 | ) |  | (63,368 | )
Net deferred tax liabilities | $ | (62,462 | ) |  | $ | (359 | )
Changes in Balance of Deferred Tax Asset Valuation Allowance | Changes in the balance of our deferred tax asset valuation allowance are as follows (in thousands):
| Year Ended December 31,
| 2013 |  | 2012 |  | 2011
Balance at January 1 | $ | (49,562 | ) |  | $ | (36,419 | ) |  | $ | (39,802 | )
Additions | (4,359 | ) |  | (20,182 | ) |  | (6,155 | )
Deductions | 20,164 |  |  | 7,039 |  |  | 9,538 |
Balance at December 31 | $ | (33,757 | ) |  | $ | (49,562 | ) |  | $ | (36,419 | )
Reconciliation of Total Gross Liability Related to Uncertain Tax Positions | The following is a reconciliation of our total gross liability related to uncertain tax positions for 2013, 2012 and 2011 (in thousands):
| Year Ended December 31,
| 2013 |  | 2012 |  | 2011
Balance at January 1 | $ | 28,398 |  |  | $ | 29,789 |  |  | $ | 20,949 |
Additions for tax positions related to prior years | — |  |  | 4,242 |  |  | — |
Reductions for tax positions related to prior years | (348 | ) |  | — |  |  | (1,639 | )
Additions for tax positions related to current year | 2,061 |  |  | 3,639 |  |  | 10,802 |
Lapses in statutes of limitations | (473 | ) |  | (10,057 | ) |  | (323 | )
Foreign currency translation adjustment | (495 | ) |  | 785 |  |  | — |
Balance at December 31 | $ | 29,143 |  |  | $ | 28,398 |  |  | $ | 29,789 |

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- Definition Tabular disclosure of the components of income tax expense attributable to continuing operations for each year presented including, but not limited to: current tax expense (benefit), deferred tax expense (benefit), investment tax credits, government grants, the benefits of operating loss carryforwards, tax expense that results from allocating certain tax benefits either directly to contributed capital or to reduce goodwill or other noncurrent intangible assets of an acquired entity, adjustments of a deferred tax liability or asset for enacted changes in tax laws or rates or a change in the tax status of the entity, and adjustments of the beginning-of-the-year balances of a valuation allowance because of a change in circumstances that causes a change in judgment about the realizability of the related deferred tax asset in future years. + References Reference 1: 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=6907707&loc=d3e32639-109319 + Details
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- Definition Tabular disclosure of tax positions taken in the tax returns filed or to be filed for which it is more likely than not that the tax position will not be sustained upon examination by taxing authorities (i.e., uncertain tax positions) and other types of income tax contingencies, including: (1) the policy on classification of interest and penalties; (2) a tabular reconciliation of the total amounts of unrecognized tax benefits at the beginning and end of the period; the total amount(s) of: (3) unrecognized tax benefits that, if recognized, would affect the effective tax rate, and (4) interest and penalties recognized in each of the income statement and balance sheet; (5) for positions for which it is reasonably possible that the total amounts unrecognized will significantly change within 12 months of the reporting date the: (i) nature of the uncertainty, (ii) nature of the event that could occur that would cause the change, and (iii) an estimate of the range of the reasonably possible change or a statement that an estimate of the range cannot be made; and (6) a description of tax years that remain subject to examination by major tax jurisdictions. + References Reference 1: 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=6907707&loc=d3e32718-109319 + Details
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