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Income taxes | 12 Months Ended
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Dec. 31, 2017
Income Tax Disclosure [Abstract] |
Income taxes | Income taxes On December 22, 2017, the President of the United States signed into law tax reform legislation (informally known as the Tax Cuts and Jobs Act (the “Act”)) that makes significant changes to various areas of U.S. federal income tax law. The new tax legislation contains several key tax provisions including the reduction of the corporate income tax rate effective January 1, 2018 as well as a variety of other changes including a one-time transition tax, new territorial tax system, acceleration of expensing of certain business assets and reductions in the amount of executive pay that could qualify as a tax deduction. ASC 740 requires us to recognize the effect of the tax law changes in the period of enactment. However, the SEC staff issued Staff Accounting Bulletin (SAB) 118 which will allow us to record provisional amounts during a measurement period which is similar to the measurement period used when accounting for business combinations. As of December 31, 2017, in accordance with SAB 118, the Company has made a reasonable estimate of: (i) the one-time transition tax, and (ii) the effects on the Company’s existing deferred tax balances, but has not completed its full accounting for the tax effects of enactment of the Act. Based on an initial assessment of the Act, the Company recorded no provision for the transition tax, and a tax benefit of approximately $1 million on the Company’s consolidated financial statements for the reduction of deferred tax liabilities related to indefinite lived intangible assets. While other deferred assets and liabilities will also be reduced, such reduction is offset by changes to the Company’s valuation allowance. In January 2018, the FASB released guidance on the accounting for tax on the global intangible low-taxed income ("GILTI") provisions of the Act. The GILTI provisions impose a tax on foreign income in excess of a deemed return on tangible assets of foreign corporations. The guidance indicates that either accounting for deferred taxes related to GILTI inclusions or to treat any taxes on GILTI inclusions as period cost are both acceptable methods subject to an accounting policy election. The Company is still evaluating the GILTI provisions and has not yet elected an accounting policy for GILTI. The Company expects that the Act will not have a significant impact on its financial statements or its future operational results. We will continue to assess the impact of the recently enacted tax law on our business and our consolidated financial statements through the measurement period allowed under SAB 118. Adjustments to provisional amounts, if any, that are identified during the measurement period will be recorded in the reporting period in which the adjustment is determined.
The components of pre-tax book income (loss) consist of the following:
| Year Ended December 31,
| 2017 |  | 2016 |  | 2015
U.S. | $ | 26,823 |  |  | $ | (86,545 | ) |  | $ | (62,203 | )
Foreign | 28,548 |  |  | (164,320 | ) |  | 21,081 |
Total | $ | 55,371 |  |  | $ | (250,865 | ) |  | $ | (41,122 | )
Significant components of the income tax expense consist of the following:
| Year Ended December 31,
| 2017 |  | 2016 |  | 2015
Current: |  |  |  |  |
U.S. federal current expense (benefit) | $ | (106 | ) |  | $ | (231 | ) |  | $ | — |
State current expense (benefit) | 1,244 |  |  | (130 | ) |  | (706 | )
Foreign current expense | 12,305 |  |  | 5,726 |  |  | 13,473 |
Total current expense | 13,443 |  |  | 5,365 |  |  | 12,767 |
Deferred: |  |  |  |  |  |  |  |
U.S. federal deferred benefit | (2,522 | ) |  | (1,564 | ) |  | (1,564 | )
State deferred benefit | (14 | ) |  | — |  |  | — |
Foreign deferred tax expense | (3,324 | ) |  | (977 | ) |  | (1,927 | )
Total deferred benefit | (5,860 | ) |  | (2,541 | ) |  | (3,491 | )
Total income tax expense | $ | 7,583 |  |  | $ | 2,824 |  |  | $ | 9,276 |
A reconciliation of the statutory U.S. Federal income tax rate to the effective income tax rate on income (loss) is as follows:
| 2017 |  | 2016 |  | 2015
Federal Statutory Rate | 35.0 | % |  | 35.0 | % |  | 35.0 | %
Permanent differences | 57.5 |  |  | 7.7 |  |  | 1.9 |
State taxes, net of Federal benefit | (6.6 | ) |  | 6.1 |  |  | (16.0 | )
Rate change | 370.5 |  |  | (4.2 | ) |  | — |
Foreign earnings taxed at different rates than U.S. | (40.5 | ) |  | (13.5 | ) |  | 3.0 |
Valuation allowance | (401.4 | ) |  | (27.5 | ) |  | (56.6 | )
Changes in uncertain tax reserves | 3.8 |  |  | (1.0 | ) |  | (4.2 | )
Other | (4.6 | ) |  | (3.7 | ) |  | 14.3 |
Effective tax rate | 13.7 | % |  | (1.1 | )% |  | (22.6 | )%
Upon enactment of the Act, the Company’s U.S. deferred tax asset and related valuation allowance decreased by $205,150. As the U.S. deferred tax asset has a full valuation allowance, this change in rates had no impact on the Company’s financial position or results of operations. The increase in permanent differences is a result of tax law changes related to our foreign operations. The effect of earnings of foreign subsidiaries includes the difference between the U.S. statutory rate and local jurisdiction tax rates. 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. The significant components of our deferred tax assets and liabilities as of December 31 are as follows:
| 2017 |  | 2016
Deferred tax assets: |  |  |
Accrued postretirement benefit cost | $ | 39,417 |  |  | $ | 69,725 |
Accrued liabilities | 3,125 |  |  | 4,679 |
Share-based compensation | 1,319 |  |  | 6,071 |
Goodwill | 1,996 |  |  | 5,539 |
Net operating losses and tax credits | 551,098 |  |  | 739,712 |
Foreign basis differences | 13,875 |  |  | 13,929 |
Ravenswood retiree legal settlement | 3,089 |  |  | 8,683 |
Other | 3,091 |  |  | 5,747 |
Total deferred tax assets | 617,010 |  |  | 854,085 |
Valuation allowance | (607,813 | ) |  | (839,082 | )
Net deferred tax assets | $ | 9,197 |  |  | $ | 15,003 |
Deferred tax liabilities: |  |  |  |  |
Tax over financial statement depreciation | $ | (109,733 | ) |  | $ | (119,378 | )
Unremitted foreign earnings | — |  |  | (808 | )
Total deferred tax liabilities | (109,733 | ) |  | (120,186 | )
Net deferred tax liability | $ | (100,536 | ) |  | $ | (105,183 | )
We regularly assess the likelihood that deferred tax assets will be recovered from future taxable income. To the extent we believe that it is more likely than not that a deferred tax asset will not be realized, a valuation allowance is established. When a valuation allowance is established or increased, an income tax charge is included in the consolidated statement of operations and net deferred tax assets are adjusted accordingly. Future changes in tax laws, statutory tax rates and taxable income levels could result in actual realization of the deferred tax assets being materially different from the amounts provided for in the consolidated financial statements. If the actual recovery amount of the deferred tax asset is less than anticipated, we would be required to write-off the remaining deferred tax asset and increase the tax provision. We have a valuation allowance of $607,813 recorded for all of our U.S. deferred tax assets, and a portion of our Icelandic deferred tax assets as of December 31, 2017. The Company is subject to the provisions of ASC 740-10, Income Taxes, which requires that the effect on deferred tax assets and liabilities of a change in tax rates be recognized in the period the tax rate change was enacted. The overall reduction in deferred tax assets, and the related valuation allowances, are primarily a result of the enactment of the Act in 2017 and a reduction in the corporate tax rate from 35% to 21%. The changes in the valuation allowance are as follows:
| 2017 |  | 2016 |  | 2015
Beginning balance, valuation allowance | $ | 839,082 |  |  | $ | 768,764 |  |  | $ | 748,283 |
Remeasurement of deferred tax assets | (205,150 | ) |  | — |  |  | — |
Release of valuation allowance | — |  |  | (6,007 | ) |  | — |
Other change in valuation allowance | (26,119 | ) |  | 76,325 |  |  | 20,481 |
Ending balance, valuation allowance | $ | 607,813 |  |  | $ | 839,082 |  |  | $ | 768,764 |
The significant components of our net operating loss carryforwards ("NOLs") are as follows:
| 2017 |  | 2016
Federal (1) | $ | 1,514,243 |  |  | $ | 1,510,558 |
State (2) | 2,480,523 |  |  | 1,901,554 |
Foreign (3) | 532,582 |  |  | 540,819 |
(1) | The federal NOL begins to expire in 2028.
(2) | The state NOLs begin to expire in 2027.
(3) | The Icelandic NOL begins to expire in 2017; the Netherlands NOL begins to expire in 2022.
Our ability to utilize our deferred tax assets to offset future federal taxable income may be significantly limited if we experience an "ownership change" as defined in the Code. In general, an ownership change would occur if our "five-percent shareholders," as defined under the Code, collectively increase their ownership in us by more than 50 percentage points over a rolling three-year period. Future transactions in our stock that may not be in our control may cause us to experience such an ownership change and thus limit our ability to utilize net operating losses, tax credits and other tax assets to offset future taxable income. A reconciliation of the beginning and ending amounts of gross unrecognized tax positions (excluding interest) is as follows:
| 2017 |  | 2016 |  | 2015
Balance as of January 1, | $ | 6,400 |  |  | $ | 3,800 |  |  | $ | 2,000 |
Additions based on tax positions related to the current year | 2,100 |  |  | 2,700 |  |  | 1,800 |
Decreases due to lapse of applicable statute of limitations | (100 | ) |  | (100 | ) |  | — |
Settlements | — |  |  | — |  |  | — |
Balance as of December 31, | $ | 8,400 |  |  | $ | 6,400 |  |  | $ | 3,800 |
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 positions would affect our effective tax rate if recognized. It is our policy to recognize potential accrued interest and penalties related to unrecognized tax positions in income tax expense. The components of our unrecognized tax positions are as follows:
| 2017 |  | 2016 |  | 2015
Highly certain tax positions | $ | 8,300 |  |  | $ | 6,300 |  |  | $ | 3,700 |
Other unrecognized tax benefits | 100 |  |  | 100 |  |  | 100 |
Gross unrecognized tax benefits | $ | 8,400 |  |  | $ | 6,400 |  |  | $ | 3,800 |
Accrued interest and penalties related to unrecognized tax positions | $ | 40 |  |  | $ | — |  |  | $ | — |
We do not expect a significant change in the balance of unrecognized tax benefits within the next twelve months. 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 have been reviewed by the IRS through 2010. However, we have NOLs beginning in 2008 that are available for carryforward to future years. Under U.S. tax law, NOLs may be adjusted by the IRS until the statute of limitations expires for the year in which the NOL is used. Accordingly, our 2008 and later NOLs may be reviewed until they are used or expire. Material state and local income tax matters have been concluded for years through 2006. The majority of our state returns beginning in 2008 are subject to examination. Our Icelandic tax returns are subject to examination beginning with the 2012 tax year. As of December 31, 2017 and 2016 we had income taxes payable of $12,186 and $5,745, respectively. The income taxes payable are included within accrued and other current liabilities in our Consolidated Balance Sheets.

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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 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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