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Income Taxes (Tables) | 12 Months Ended
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Dec. 31, 2015
Income Tax Disclosure [Abstract] |
Components of Income Tax Expense Benefit | Income from continuing operations 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,
| 2015 |  | 2014 |  | 2013
Income from continuing operations before income taxes and equity in net income of unconsolidated investments: |  |  |  |  |
Domestic | $ | 8,594 |  |  | $ | 45,689 |  |  | $ | 351,731 |
Foreign | 349,593 |  |  | 167,490 |  |  | 186,711 |
Total | $ | 358,187 |  |  | $ | 213,179 |  |  | $ | 538,442 |
Current income tax expense: |  |  |  |  |
Federal | $ | 85,245 |  |  | $ | 36,708 |  |  | $ | 53,953 |
State | 71 |  |  | 3,209 |  |  | 2,195 |
Foreign | 80,104 |  |  | 25,700 |  |  | 18,414 |
Total | $ | 165,420 |  |  | $ | 65,617 |  |  | $ | 74,562 |
Deferred income tax (benefit) expense: |  |  |  |  |
Federal | $ | (129,433 | ) |  | $ | (32,890 | ) |  | $ | 69,817 |
State | (1,170 | ) |  | (1,139 | ) |  | 2,416 |
Foreign | (5,695 | ) |  | (13,104 | ) |  | (12,350 | )
Total | $ | (136,298 | ) |  | $ | (47,133 | ) |  | $ | 59,883 |
Total income tax expense | $ | 29,122 |  |  | $ | 18,484 |  |  | $ | 134,445 |
Significant Differences Between United States Federal Statutory Rate and Effective Income Tax Rate | The reconciliation of the U.S. federal statutory rate to the effective income tax rate is as follows:
| % of Income Before Income Taxes
| 2015 |  | 2014 |  | 2013
Federal statutory rate | 35.0 | % |  | 35.0 | % |  | 35.0 | %
State taxes, net of federal tax benefit | 1.7 |  |  | 0.2 |  |  | 0.7 |
Change in valuation allowance(a) | 4.7 |  |  | 1.0 |  |  | (2.2 | )
Impact of foreign earnings, net(b) | (19.6 | ) |  | (24.8 | ) |  | (10.7 | )
Subpart F income | 6.8 |  |  | 1.2 |  |  | 0.4 |
Deemed repatriation of foreign income(d) | 91.6 |  |  | — |  |  | — |
Undistributed earnings of foreign subsidiaries(b)(d) | (99.6 | ) |  | (0.3 | ) |  | 2.9 |
Nondeductible transaction costs | 1.8 |  |  | — |  |  | — |
Depletion | (1.6 | ) |  | (2.4 | ) |  | (0.9 | )
Revaluation of unrecognized tax benefits/reserve requirements(c) | (11.3 | ) |  | (0.6 | ) |  | (0.1 | )
Domestic manufacturing tax deduction | (0.9 | ) |  | (2.2 | ) |  | (0.9 | )
Other items, net | (0.5 | ) |  | 1.6 |  |  | 0.8 |
Effective income tax rate | 8.1 | % |  | 8.7 | % |  | 25.0 | %
(a) | During 2013, our Avonmouth, U.K. legal entity was dissolved, therefore the corresponding valuation allowance and deferred tax assets were written off.
(b) | During 2015, 2014 and 2013, we received actual and deemed distributions of $1.4 billion, $12.6 million and $12.3 million, respectively, from various foreign subsidiaries and joint ventures, and realized an expense, net of foreign tax credits, of $350.2 million, $2.8 million and $2.4 million, respectively, related to the repatriation of these earnings, which impacted our effective tax rate. We have asserted, for all periods being reported, indefinite investment 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 indefinite. 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. This gave us a rate benefit of 7.1%, 12.4%, and 4.5% for 2015, 2014, and 2013, respectively.
(c) | During 2014, we released various tax reserves primarily related to the expiration of the applicable U.S. federal statute of limitations for 2009 through 2010 which provided a net benefit of approximately $2.5 million. In 2015, the main impact is from the release of reserves on the close of a U.S. federal audit, and lapse of statute of limitations. These releases provided a net benefit of approximately $41 million.
(d) | In prior years, we designated the undistributed earnings of substantially all of our foreign subsidiaries as indefinitely invested. In 2015, we were not indefinitely invested in a portion of earnings from legacy Rockwood entities that were part of the repatriation planning, for which a deferred tax liability of $387.0 million was established in the opening balance sheet. This liability reversed upon the completion of the repatriation with $356.2 million impacting earnings and $30.8 million from foreign exchange differences. The reversal of this liability offsets the tax amount of $327.9 million from legacy Rockwood entities included in the deemed repatriation of foreign income.
Deferred Income Tax Assets and Liabilities Recorded on Consolidated Balance Sheets | Deferred income tax assets and liabilities recorded on the consolidated balance sheets as of December 31, 2015 and 2014 consist of the following (in thousands):
| December 31,
| 2015 |  | 2014
Deferred tax assets: |  |  |
Accrued employee benefits | $ | 28,167 |  |  | $ | 20,834 |
Accrued expenses | 33,048 |  |  | 2,379 |
Operating loss carryovers | 131,985 |  |  | 82,017 |
Pensions | 111,059 |  |  | 79,113 |
Intangibles | — |  |  | 5,732 |
Tax credit carryovers | 2,555 |  |  | 34,469 |
Other | 32,725 |  |  | 20,227 |
Gross deferred tax assets | 339,539 |  |  | 244,771 |
Valuation allowance | (85,370 | ) |  | (30,768 | )
Deferred tax assets | 254,169 |  |  | 214,003 |
Deferred tax liabilities: |  |  |
Depreciation | (378,669 | ) |  | (190,280 | )
Intangibles | (488,855 | ) |  | — |
Foreign currency translation adjustments | — |  |  | (4,752 | )
Other | (46,937 | ) |  | (18,420 | )
Deferred tax liabilities | (914,461 | ) |  | (213,452 | )
Net deferred tax (liabilities) assets | $ | (660,292 | ) |  | $ | 551 |
Classification in the consolidated balance sheets: |  |  |
Current deferred tax assets | $ | — |  |  | $ | 1,801 |
Current deferred tax liabilities | — |  |  | (6,806 | )
Noncurrent deferred tax assets | 76,025 |  |  | 62,440 |
Noncurrent deferred tax liabilities | (736,317 | ) |  | (56,884 | )
Net deferred tax (liabilities) assets | $ | (660,292 | ) |  | $ | 551 |
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,
| 2015 |  | 2014 |  | 2013
Balance at January 1 | $ | (30,768 | ) |  | $ | (33,757 | ) |  | $ | (49,562 | )
Additions(a) | (61,122 | ) |  | (1,895 | ) |  | (4,359 | )
Deductions | 6,520 |  |  | 4,884 |  |  | 20,164 |
Balance at December 31 | $ | (85,370 | ) |  | $ | (30,768 | ) |  | $ | (33,757 | )
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 2015, 2014 and 2013 (in thousands):
| Year Ended December 31,
| 2015 |  | 2014 |  | 2013
Balance at January 1 | $ | 24,969 |  |  | $ | 29,143 |  |  | $ | 28,398 |
Acquisition of Rockwood | 124,758 |  |  | — |  |  | — |
Additions for tax positions related to prior years | 4,329 |  |  | — |  |  | — |
Reductions for tax positions related to prior years | (46,211 | ) |  | (214 | ) |  | (348 | )
Additions for tax positions related to current year | 202 |  |  | 2,232 |  |  | 2,061 |
Lapses in statutes of limitations/settlements | (6,736 | ) |  | (5,057 | ) |  | (473 | )
Foreign currency translation adjustment | (5,596 | ) |  | (1,135 | ) |  | (495 | )
Balance at December 31 | $ | 95,715 |  |  | $ | 24,969 |  |  | $ | 29,143 |

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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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