XML 37 R21.htm IDEA: XBRL DOCUMENT v3.22.0.1
Income Taxes
 12 Months Ended
Dec. 31, 2021
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The components of pre-tax book income (loss) consist of the following:
 Year Ended December 31,
 202120202019
U.S.$(250.5)$(76.7)$(15.8)
Foreign 52.9 (49.6)(69.7)
Total $(197.6)$(126.3)$(85.5)
Significant components of income tax expense consist of the following:
 Year Ended December 31,
 202120202019
Current:   
U.S. federal current expense (benefit)$— $— $— 
State current expense (benefit)— — (0.1)
Foreign current expense0.1 4.0 0.1 
Total current expense (benefit)0.1 4.0 (0.0)
Deferred:   
U.S. federal deferred benefit(0.2)(1.2)(2.2)
State deferred benefit— — (0.2)
Foreign deferred tax benefit(30.5)(5.9)(6.0)
Total deferred benefit(30.7)(7.1)(8.4)
Total income tax benefit$(30.6)$(3.1)$(8.4)
A reconciliation of the statutory U.S. Federal income tax rate to the effective income tax rate on income (loss) is as follows:
 202120202019
Federal Statutory Rate21.0 %21.0 %21.0 %
Permanent differences(0.3)(1.2)(13.1)
State taxes, net of Federal benefit— — (0.1)
Rate change2.5 (0.2)(3.5)
Foreign earnings taxed at different rates than U.S.(3.9)(0.3)(3.3)
Valuation allowance(15.9)(4.3)72.8 
Helguvik investment26.4 — — 
Foreign restructuring— (2.3)— 
Foreign dividends and inclusions(10.1)(1.5)— 
Net operating loss expiration and remeasurement(5.2)(10.8)(66.2)
Changes in uncertain tax reserves1.3 1.4 1.2 
Other(0.3)0.6 1.0 
Effective tax rate15.5 %2.4 %9.8 %
On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act (the "CARES Act") was enacted in response to the coronavirus ("COVID-19") pandemic. The CARES Act is aimed at providing assistance and health care for individuals, families, and businesses affected by COVID-19 and generally supporting the U.S. economy. The CARES Act, among other things, includes provisions related to refundable payroll tax credits, deferment of the employer portion of social security payments, net operating loss carryback periods, modifications to the net interest deduction limitations, and technical corrections to tax depreciation methods for qualified improvement property. The CARES Act did not have a material impact on the Company’s consolidated financial condition or results of operations for the year ended December 31, 2020. On December 27, 2020, the Consolidated Appropriations Act (“CAA”) was enacted in further response to the COVID-19 pandemic, in combination with omnibus spending for the 2021 federal fiscal year. The CAA extended many of the provisions enacted by the CARES Act, the extension of which likewise did not have a material impact on the Company’s consolidated financial statements for the year ended December 31, 2020.
On March 11, 2021, the American Rescue Plan Act, (or "ARPA"), was signed into law. The ARPA enacted certain provisions that are relevant to corporate income tax. On November 15, 2021, the Infrastructure Investment and Jobs Act was signed into law. These acts did not have a material impact on our income tax provision for 2021, 2020 or 2019.
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:
 
 20212020
Deferred tax assets:  
Accrued postretirement benefit cost$29.5 $38.9 
Net operating losses and tax credits453.1 430.3 
Disallowed interest expense17.8 6.9 
Foreign basis differences— 16.2 
Derivative and hedging contracts18.6 0.5 
Other13.9 12.3 
Total deferred tax assets532.9 505.1 
Valuation allowance(485.8)(499.4)
Net deferred tax assets$47.1 $5.7 
Deferred tax liabilities:  
Tax over financial statement depreciation(86.2)(95.0)
Foreign basis differences(19.6)— 
Total deferred tax liabilities(105.8)(95.0)
Net deferred tax liability$(58.7)$(89.3)
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. 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.
We recognized a deferred tax asset and recorded a discrete tax benefit of $49.8 million related to the recognition of a certain foreign deferred tax asset. The deferred tax asset represents the future tax benefit we expect to realize for deductible costs related to our historical investment in Nordural Helguvík ehf (“Helguvík”). As this deferred tax asset is expected to be realized prior to expiration, we have not recorded a valuation allowance. We did not change our judgment with respect to other valuation allowances previously recorded.
We have a valuation allowance of $485.8 million recorded for all of our U.S. deferred tax assets, and a portion of our Icelandic deferred tax assets as of December 31, 2021.
The changes in the valuation allowance are as follows:

 202120202019
Beginning balance, valuation allowance$499.4 $492.4 $552.5 
Remeasurement of deferred tax assets— — (41.6)
Release of valuation allowance— — — 
Expiration of net operating losses(13.2)(11.7)(10.8)
Other change in valuation allowance(0.4)18.7 (7.7)
Ending balance, valuation allowance$485.8 $499.4 $492.4 
The significant components of our NOLs are as follows:
 
 20212020
Federal (1)
$1,568.4 $1,572.9 
State (2)
1,161.0 1,090.7 
Foreign (3)
321.7 229.4 

(1)The federal NOL begins to expire in 2028.
(2)The state NOLs begin to expire in 2027.
(3)The Icelandic NOLs expire between 2022 and 2031.
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 benefits (excluding interest) is as follows:
 202120202019
Balance as of January 1,  $6.5 $8.2 $9.5 
Additions based on tax positions related to the current year— — — 
Decreases due to lapse of applicable statute of limitations(2.5)(1.7)(1.3)
Settlements — — — 
Balance as of December 31,$4.0 $6.5 $8.2 
 
As of December 31, 2021 and 2020, the Company’s gross unrecognized tax benefits totaled $4.0 million and $6.5 million, respectively. After considering the deferred tax accounting impact, it is expected that about $1.4 million of the total as of December 31, 2021 and 2020 would favorably affect the effective tax rate if resolved in the Company’s favor. Included in the above balances are tax positions relating to temporary differences where there is uncertainty about the timing of tax return inclusion, but not that the amounts will ultimately be tax deductible. 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. 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 2016.
Our Icelandic tax returns are subject to examination beginning with the 2019 tax year.