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Income Taxes | 12 Months Ended
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Dec. 31, 2019
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes (Loss) income from continuing operations before income taxes for the periods presented below consisted of the following:
| Successor | Predecessor
| Year Ended December 31, 2019 |  | Year Ended December 31, 2018 |  | April 2 through December 31, 2017 | January 1 through April 1, 2017
| (Dollars in millions)
U.S. | $ | (374.2 | ) |  | $ | (43.4 | ) |  | $ | 10.4 |  | $ | 2,408.7 |
Non-U.S. | 231.9 |  |  | 707.5 |  |  | 541.7 |  | (2,868.0 | )
Total | $ | (142.3 | ) |  | $ | 664.1 |  |  | $ | 552.1 |  | $ | (459.3 | )
Total income tax provision (benefit) for the periods presented below consisted of the following:
| Successor | Predecessor
| Year Ended December 31, 2019 |  | Year Ended December 31, 2018 |  | April 2 through December 31, 2017 | January 1 through April 1, 2017
| (Dollars in millions)
Current: |  |  |  |  |  |  |
U.S. federal | $ | (21.5 | ) |  | $ | (46.8 | ) |  | $ | (101.4 | ) | $ | (3.1 | )
Non-U.S. | 28.4 |  |  | 29.8 |  |  | 40.4 |  | 8.3 |
State | (0.3 | ) |  | (0.1 | ) |  | (0.4 | ) | (6.7 | )
Total current | 6.6 |  |  | (17.1 | ) |  | (61.4 | ) | (1.5 | )
Deferred: |  |  |  |  |  |  |  |
U.S. federal | 20.3 |  |  | 30.4 |  |  | (85.1 | ) | (101.0 | )
Non-U.S. | 19.3 |  |  | 5.7 |  |  | (14.5 | ) | (160.4 | )
State | (0.2 | ) |  | (0.6 | ) |  | — |  | (0.9 | )
Total deferred | 39.4 |  |  | 35.5 |  |  | (99.6 | ) | (262.3 | )
Total income tax provision (benefit) | $ | 46.0 |  |  | $ | 18.4 |  |  | $ | (161.0 | ) | $ | (263.8 | )
The following is a reconciliation of the expected statutory federal income tax (benefit) expense to the Company’s income tax provision (benefit) for the periods presented below:
| Successor | Predecessor
| Year Ended December 31, 2019 |  | Year Ended December 31, 2018 |  | April 2 through December 31, 2017 | January 1 through April 1, 2017
| (Dollars in millions)
Expected income tax (benefit) expense at U.S. federal statutory rate | $ | (29.9 | ) |  | $ | 139.5 |  |  | $ | 193.2 |  | $ | (160.8 | )
Changes in valuation allowance, income tax | (32.0 | ) |  | (284.6 | ) |  | (744.9 | ) | (777.2 | )
Remeasurement due to the Tax Cuts and Jobs Act | — |  |  | 9.5 |  |  | 473.5 |  | — |
Reorganization costs | — |  |  | — |  |  | — |  | 2,130.0 |
Bad debt deduction | — |  |  | — |  |  | — |  | (1,639.6 | )
Changes in tax reserves | 3.0 |  |  | 2.1 |  |  | 7.2 |  | (9.2 | )
Excess depletion | (19.3 | ) |  | (28.5 | ) |  | (40.4 | ) | (11.2 | )
Foreign earnings repatriation | 76.1 |  |  | — |  |  | — |  | — |
Foreign earnings provision differential | 45.6 |  |  | 97.1 |  |  | (26.3 | ) | 158.2 |
Global intangible low-taxed income | 6.1 |  |  | 68.2 |  |  | — |  | — |
Remeasurement of foreign income tax accounts | (0.1 | ) |  | (0.2 | ) |  | (0.3 | ) | 9.4 |
State income taxes, net of federal tax benefit | (13.2 | ) |  | 3.2 |  |  | (3.1 | ) | 40.6 |
Other, net | 9.7 |  |  | 12.1 |  |  | (19.9 | ) | (4.0 | )
Total income tax provision (benefit) | $ | 46.0 |  |  | $ | 18.4 |  |  | $ | (161.0 | ) | $ | (263.8 | )
Certain reconciliation items included in the above table exclude the remeasurement of foreign income tax accounts as these foreign currency effects are separately presented. The Plan provided that the Company’s pre-petition equity and certain obligations were canceled and extinguished and a significant portion of its long-term debt was discharged in exchange for new Common Stock and other consideration. The Company excluded cancellation of debt income (CODI) with respect to the Plan from its taxable income in accordance with U.S. Internal Revenue Code (IRC) Section 108 and reduced certain income tax attributes by the amount of such CODI. On December 22, 2017, the Tax Cuts and Jobs Act (the Act) was signed into law making significant changes to the IRC. Key provisions of the Act that impacted the Company include: (i) repeal of the corporate alternative minimum tax (AMT) system, (ii) reduction of the U.S. federal corporate tax rate from 35% to 21% and (iii) the new global intangible low-taxed income (GILTI). Due to the repeal of the corporate AMT system, the Company’s existing AMT credits as of December 31, 2017 are anticipated to be refunded through the 2021 federal tax return. During 2019, the Company received a refund of $45.7 million and is expecting an additional refund of $23.4 million in 2020. Deferred tax assets and liabilities attributable to the U.S. were remeasured from 35% to the reduced tax rate of 21%. The Company recorded a provision of $473.5 million and an offsetting valuation allowance adjustment for the remeasurement for the period April 2 through December 31, 2017. The Company recorded an additional provision of $9.5 million during the year ended December 31, 2018 upon completion of the filing of both U.S. and foreign tax returns for the 2017 tax year and an offsetting valuation allowance. The Company elected to recognize the tax on GILTI as a period expense in the period the tax is incurred and recorded a provision of $6.1 million and $68.2 million for the years ended December 31, 2019 and 2018, which was fully offset by the release of valuation allowance associated with the NOLs that absorbed the GILTI inclusion. The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and liabilities as of December 31, 2019 and 2018 consisted of the following:
| December 31,
| 2019 |  | 2018
| (Dollars in millions)
Deferred tax assets: |  |  |  |  |
Tax loss carryforwards and credits | $ | 1,530.9 |  |  | $ | 1,729.3 |
Property, plant, equipment and mine development, principally due to differences in depreciation, depletion and asset impairments | 276.6 |  |  | 304.5 |
Accrued postretirement benefit obligations | 142.6 |  |  | 139.5 |
Asset retirement obligations | 86.6 |  |  | 47.2 |
Employee benefits | 25.3 |  |  | 24.8 |
Take or pay obligations | 12.0 |  |  | 17.1 |
Investments and other assets | 89.0 |  |  | 82.7 |
Workers’ compensation obligations | 7.6 |  |  | 6.2 |
Operating lease right-of-use assets | 20.8 |  |  | — |
Other | 16.7 |  |  | 38.2 |
Total gross deferred tax assets | 2,208.1 |  |  | 2,389.5 |
Valuation allowance, income tax | (2,068.4 | ) |  | (2,094.3 | )
Total deferred tax assets | 139.7 |  |  | 295.2 |
Deferred tax liabilities: |  |  |  |  |
Property, plant, equipment and mine development, principally due to differences in depreciation, depletion and asset impairments | 100.9 |  |  | 203.4 |
Operating lease liabilities | 20.8 |  |  | — |
Coal supply agreements | 3.1 |  |  | 9.3 |
Investments and other assets | 15.4 |  |  | 43.7 |
Total deferred tax liabilities | 140.2 |  |  | 256.4 |
Net deferred tax (liability) asset | $ | (0.5 | ) |  | $ | 38.8 |
Deferred taxes are classified as follows: |  |  |  |  |
Noncurrent deferred income tax asset | $ | 28.3 |  |  | $ | 48.5 |
Noncurrent deferred income tax liability | (28.8 | ) |  | (9.7 | )
Net deferred tax (liability) asset | $ | (0.5 | ) |  | $ | 38.8 |
As of December 31, 2019, the Company had gross Australia NOLs of $3.2 billion in Australian dollars and gross U.S. federal NOLs of $2.5 billion. The Company’s tax loss carryforwards and credits of $1.5 billion as of December 31, 2019 were comprised primarily of net Australia NOLs and capital tax loss carryforwards of $766.4 million, net federal NOLs of $530.6 million, state NOLs of $81.5 million, AMT credits of $23.4 million, tax general business credits (GBCs) of $112.6 million and other foreign NOLs of $14.5 million. The AMT credits will be fully refunded by 2022. The foreign tax loss carryforwards have no expiration date. The federal NOLs begin to expire in 2036. The state NOLs begin to expire in 2023, and the GBCs begin to expire in 2027. In assessing the near-term use of NOLs and tax credits and corresponding valuation allowance adjustments, the Company evaluated the expected level of future taxable income, available tax planning strategies, reversals of existing taxable temporary differences and taxable income in carryback years. For the year ended December 31, 2019, the Company continued to record valuation allowances of $2.1 billion against net deferred tax asset positions, comprised primarily of $0.9 billion in the U.S. and $1.2 billion in Australia. Recognition of those valuation allowances was driven by recent cumulative book losses, as determined by considering all sources of available income (including items classified as discontinued operations or recorded directly to “Accumulated other comprehensive income”), which limited the Company’s ability to look to future taxable income in assessing the realizability of the related assets. Unrecognized Tax Benefits Net unrecognized tax benefits (excluding interest and penalties) were recorded as follows in the consolidated balance sheets as of December 31, 2019 and 2018:
| December 31,
| 2019 |  | 2018
| (Dollars in millions)
Deferred income taxes | $ | 15.5 |  |  | $ | 13.0 |
Other noncurrent liabilities | 1.0 |  |  | 1.0 |
Net unrecognized tax benefits | $ | 16.5 |  |  | $ | 14.0 |
Gross unrecognized tax benefits | $ | 16.5 |  |  | $ | 14.0 |
The amount of the Company’s gross unrecognized tax benefits increased by $2.5 million since December 31, 2018 due to adjustments to existing positions and additions for current positions. The amount of the net unrecognized tax benefits that, if recognized, would directly affect the effective tax rate was $16.5 million and $14.0 million at December 31, 2019 and 2018, respectively. A reconciliation of the beginning and ending amount of gross unrecognized tax benefits for the periods presented below is as follows:
| Successor | Predecessor
| Year Ended December 31, 2019 |  | Year Ended December 31, 2018 |  | April 2 through December 31, 2017 | January 1 through April 1, 2017
| (Dollars in millions)
Balance at beginning of period | $ | 14.0 |  |  | $ | 12.7 |  |  | $ | 12.5 |  | $ | 20.1 |
Additions for current year tax positions | 2.2 |  |  | 1.8 |  |  | 0.8 |  | — |
Additions (reductions) for prior year tax positions | 0.3 |  |  | — |  |  | (0.5 | ) | (7.6 | )
Reductions for settlements with tax authorities | — |  |  | (0.5 | ) |  | (0.1 | ) | — |
Balance at end of period | $ | 16.5 |  |  | $ | 14.0 |  |  | $ | 12.7 |  | $ | 12.5 |
The Company recognizes interest and penalties related to unrecognized tax benefits in its income tax provision. The Company recorded $0.4 million, $0.4 million and $4.8 million of gross interest and penalties for the years ended December 31, 2019 and 2018 and the period April 2 through December 31, 2017, respectively, and reversed gross interest and penalties of $2.1 million for the period January 1 through April 1, 2017. The Company had $5.8 million and $5.4 million of accrued gross interest and penalties related to unrecognized tax benefits at December 31, 2019 and 2018, respectively. The Company expects a decrease of $5.3 million in its net unrecognized tax benefits during the next twelve months. Tax Returns Subject to Examination The Company’s federal income tax returns for the 2016 through 2018 tax years are subject to potential examinations by the Internal Revenue Service. The Company’s state income tax returns for the tax years 2000 and thereafter remain potentially subject to examination by various state taxing authorities due to NOL carryforwards. Australian income tax returns for tax years 2013 through 2018 continue to be subject to potential examinations by the Australian Taxation Office. Foreign Earnings As of December 31, 2019, the Company has a consolidated earnings deficit outside the U.S. but with some immaterial unremitted earnings in certain jurisdictions. The Company continues to be permanently reinvested with respect to its historical earnings. However, when appropriate, the Company has the ability to access foreign cash without incurring residual cash taxes due to the existence of NOLs. Tax Payments and Refunds The following table summarizes the Company’s income tax (refunds) payments, net for the periods presented below:
| Successor | Predecessor
| Year Ended December 31, 2019 |  | Year Ended December 31, 2018 |  | April 2 through December 31, 2017 | January 1 through April 1, 2017
| (Dollars in millions)
U.S. — federal | $ | (45.7 | ) |  | $ | (103.1 | ) |  | $ | (11.2 | ) | $ | — |
U.S. — state and local | 0.3 |  |  | (1.6 | ) |  | — |  | — |
Non-U.S. | 36.3 |  |  | 40.7 |  |  | 10.4 |  | 5.5 |
Total income tax (refunds) payments, net | $ | (9.1 | ) |  | $ | (64.0 | ) |  | $ | (0.8 | ) | $ | 5.5 |

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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