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Income Taxes | 12 Months Ended
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Dec. 31, 2011
Income Tax Disclosure [Abstract] |
Income Taxes |
14. | Income Taxes
The components of pre-tax book income (loss) consist of the following: |
|  | Year Ended December 31, |
|  | 2011 |  |  | 2010 |  |  | 2009 |
U.S. |  | $ | (22,865 | ) |  | $ | 37,487 |  |  | $ | (114,273 | )
Foreign |  |  | 45,104 |  |  |  | 30,059 |  |  |  | (35,870 | )
Total |  | $ | 22,239 |  |  | $ | 67,546 |  |  | $ | (150,143 | )
Significant components of the income tax expense (benefit) consist of the following: |
|  | Year Ended December 31, |
|  | 2011 |  |  | 2009 |  |  | 2008 |
Current: |  |  |  |  |  |  |  |  |
U.S. federal current expense (benefit) |  | $ | (22 | ) |  | $ | 191 |  |  | $ | (22,166 | )
State current expense (benefit) |  |  | 1,395 |  |  |  | (1,047 | ) |  |  | (1,294 | )
Foreign current expense (benefit) |  |  | 13,467 |  |  |  | 11,485 |  |  |  | (2,123 | )
Total current expense (benefit) |  |  | 14,840 |  |  |  | 10,629 |  |  |  | (25,583 | )
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
U.S. federal deferred expense (benefit) |  |  | (5,772 | ) |  |  | (2,945 | ) |  |  | (3,024 | )
State deferred expense (benefit) |  |  | - |  |  |  | (75 | ) |  |  | 677 |
Foreign deferred tax expense |  |  | 5,291 |  |  |  | 3,524 |  |  |  | 15,573 |
Total deferred expense (benefit) |  |  | (481 | ) |  |  | 504 |  |  |  | 13,226 |
Total income tax expense (benefit) |  | $ | 14,359 |  |  | $ | 11,133 |  |  | $ | (12,357 | )
A reconciliation of the statutory U.S. Federal income tax rate to the effective income tax rate on income (loss) is as follows: |
|  | 2011 |  |  | 2010 |  |  | 2009 |
Federal Statutory Rate |  |  | 35.0 | % |  |  | 35.0 | % |  |  | 35.0 | %
Permanent differences |  |  | 38.2 |  |  |  | (9.8 | ) |  |  | (1.0 | )
State taxes, net of Federal benefit |  |  | 6.3 |  |  |  | (1.7 | ) |  |  | 7.6 |
Foreign earnings taxed at different rates than U.S. |  |  | (93.9 | ) |  |  | (27.8 | ) |  |  | 3.0 |
Equity earnings in joint ventures |  |  | - |  |  |  | - |  |  |  | 1.7 |
Unremitted earnings |  |  | 33.6 |  |  |  | 7.3 |  |  |  | 10.7 |
Valuation allowance |  |  | 65.8 |  |  |  | 22.7 |  |  |  | (57.0 | )
Changes in uncertain tax reserves |  |  | 5.6 |  |  |  | (5.1 | ) |  |  | 8.2 |
Other |  |  | (26.0 | ) |  |  | (4.1 | ) |  |  | - |
Effective tax rate |  |  | 64.6 | % |  |  | 16.5 | % |  |  | 8.2 | %
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of our deferred tax assets and liabilities as of December 31 are as follows:
|  | 2011 |  |  | 2010 |
Deferred tax assets: |  |  |  |  |  |
Accrued postretirement benefit cost |  | $ | 8,281 |  |  | $ | 8,690 |
Accrued liabilities |  |  | 3,308 |  |  |  | 11,963 |
Share-based compensation |  |  | 3,758 |  |  |  | 4,169 |
Derivative and hedging contracts |  |  | 103,048 |  |  |  | 25,157 |
Goodwill |  |  | 17,551 |  |  |  | 20,760 |
Equity contra - other comprehensive loss |  |  | 77,142 |  |  |  | 55,810 |
Capital losses |  |  | 7,506 |  |  |  | 7,802 |
Net operating losses |  |  | 619,357 |  |  |  | 675,427 |
Other |  |  | 55 |  |  |  | 39 |
Total deferred tax assets |  |  | 840,006 |  |  |  | 809,817 |
Valuation allowance |  |  | (773,714 | ) |  |  | (714,423 | )
Net deferred tax assets |  | $ | 66,292 |  |  | $ | 95,394 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Tax over financial statement depreciation |  | $ | (147,021 | ) |  | $ | (152,204 | )
Pension |  |  | (7,021 | ) |  |  | (1,311 | )
Income from domestic partnership |  |  | 4 |  |  |  | 3 |
Unremitted foreign earnings |  |  | - |  |  |  | (23,560 | )
Foreign basis differences |  |  | (3,212 | ) |  |  | (4,321 | )
Total deferred tax liabilities |  |  | (157,250 | ) |  |  | (181,393 | )
Net deferred tax liability |  | $ | (90,958 | ) |  | $ | (85,999 | )
Our net deferred tax liabilities at December 31, 2011 and December 31, 2010, respectively, are comprised of our foreign deferred income tax liability. Under ASC 740, “Accounting for Income Taxes”, a valuation allowance must be established when it is more likely than not that all or a portion of a deferred tax asset will not be realized. The amount of valuation allowance is based upon our best estimate of our ability to realize the net deferred tax assets. A valuation allowance can subsequently be reversed when we believe that the assets are realizable on a more likely than not basis. The valuation allowance increases are primarily due to U.S. and foreign operating income and losses generated in jurisdictions where a full valuation allowance has been recorded. The changes in the allowance allowances are as follows:
|  | 2011 |  |  | 2010 |
Beginning balance, valuation allowance |  | $ | 714,423 |  |  | $ | 681,094 |
Change in valuation allowance |  |  | 59,291 |  |  |  | 33,329 |
Ending balance, valuation allowance |  | $ | 773,714 |  |  | $ | 714,423 |
The significant components of our NOL carryforwards are as follows:
|  | 2011 |  |  | 2010 |
Federal (1) |  | $ | 1,447,616 |  |  | $ | 1,691,172 |
State (2) |  |  | 1,450,934 |  |  |  | 1,133,249 |
Icelandic (3) |  |  | 298,113 |  |  |  | 185,881 |
(1) | The federal NOL begins to expire in 2028.
(2) | The state NOL begins to expire in 2027.
(3) | The Icelandic NOL begins to expire in 2016.
We have removed our election to permanently reinvest foreign earnings for 2011, 2010, and 2009. The cumulative amount of foreign undistributed net earnings for which no deferred taxes have been provided was $159,087 at December 31, 2011. Management has no plans to distribute such earnings in the foreseeable future. A reconciliation of the beginning and ending amounts of gross unrecognized tax benefits (excluding interest) is as follows:
|  | 2011 |  |  | 2010 |  |  | 2009 |
Balance as of January 1, |  | $ | 16,600 |  |  | $ | 21,200 |  |  | $ | 21,600 |
Additions based on tax positions related to the current year |  |  | 2,500 |  |  |  | 4,400 |  |  |  | 5,200 |
Reductions based on tax positions related to the current year |  |  | - |  |  |  | - |  |  |  | - |
Additions based on tax positions of prior years |  |  | - |  |  |  | - |  |  |  | - |
Reductions for tax positions of prior years |  |  | - |  |  |  | - |  |  |  | (4,600 | )
Decreases due to lapse of applicable statute of limitations |  |  | (3,200 | ) |  |  | (9,000 | ) |  |  | (700 | )
Settlements |  |  | - |  |  |  | - |  |  |  | (300 | )
Balance as of December 31, |  | $ | 15,900 |  |  | $ | 16,600 |  |  | $ | 21,200 |
Included in the above balances are tax positions whose tax characterization is highly certain but for which there is uncertainty about the timing of tax return inclusion. Because of the impact of deferred tax accounting, other than interest and penalties, the timing would not impact the annual effective tax rate but could accelerate the payment of cash to the taxing authority to an earlier period. The remaining amounts of unrecognized tax benefits would affect our effective tax rate if recognized. It is our policy to recognize potential accrued interest and penalties related to unrecognized tax benefits in income tax expense. The components of our unrecognized tax positions are as follows:
|  | 2011 |  |  | 2010 |  |  | 2009 |
Highly certain tax positions |  | $ | 15,100 |  |  | $ | 14,600 |  |  | $ | 17,400 |
Other unrecognized tax benefits |  |  | 800 |  |  |  | 2,000 |  |  |  | 4,600 |
Gross unrecognized tax benefits |  | $ | 15,900 |  |  | $ | 16,600 |  |  | $ | 21,200 |
Accrued interest and penalties related to unrecognized tax benefits |  | $ | 100 |  |  | $ | 300 |  |  | $ | 1,700 |
Century and its subsidiaries file income tax returns in the U.S. federal jurisdiction, various state and local jurisdictions, and several foreign jurisdictions. Our federal income tax returns beginning in 2008 are subject to examination. Our 2008 tax year is currently under audit by the Internal Revenue Service (“IRS”). Additionally, a 2005 amended return is also under audit with respect to carry back items. Material state and local income tax matters have been concluded for years through 2002. The majority of our other state returns beginning in 2005 are subject to examination. Our Icelandic tax returns are subject to examination beginning with the 2005 tax year. We do not expect a significant change in the balance of unrecognized tax benefits within the next twelve months.

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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 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 136, 172 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 43, 44, 45, 46, 47, 48, 49 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 Reference 5: 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=6907707&loc=d3e32559-109319 Reference 6: 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 Reference 7: 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 Reference 8: 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=6881521&loc=d3e23780-122690 + Details
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