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Income Tax Matters | 12 Months Ended
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Dec. 31, 2016
Income Tax Disclosure [Abstract] |
Income Tax Matters | Income Tax Matters Tax (Provision) Benefit. Income (loss) before income taxes by geographic area was as follows (in millions of dollars):
| Year Ended December 31,
| 2016 |  | 2015 |  | 2014
Domestic | $ | 143.6 |  |  | $ | (373.6 | ) |  | $ | 102.1 |
Foreign | 3.6 |  |  | 1.8 |  |  | 5.0 |
Income (loss) before income taxes | $ | 147.2 |  |  | $ | (371.8 | ) |  | $ | 107.1 |
Income taxes are classified as either domestic or foreign, based on whether payment is made or due to the United States or a foreign country. Certain income classified as foreign is also subject to domestic income taxes. Income tax (provision) benefit consisted of (in millions of dollars):
| Federal |  | Foreign |  | State |  | Total
2016 |  |  |  |  |  |  |  |  |  |  |
Current | $ | 2.7 |  |  | $ | 0.6 |  |  | $ | (1.5 | ) |  | $ | 1.8 |
Deferred | (47.8 | ) |  | (1.2 | ) |  | (4.7 | ) |  | (53.7 | )
Expense applied to increase Additional paid in capital/ Other comprehensive income | (3.2 | ) |  | (0.1 | ) |  | (0.3 | ) |  | (3.6 | )
Income tax provision | $ | (48.3 | ) |  | $ | (0.7 | ) |  | $ | (6.5 | ) |  | $ | (55.5 | )
2015 |  |  |  |  |  |  |
Current | $ | 0.7 |  |  | $ | 2.1 |  |  | $ | 0.4 |  |  | $ | 3.2 |
Deferred | 93.2 |  |  | (1.2 | ) |  | 1.8 |  |  | 93.8 |
Benefit applied to decrease Additional paid in capital/ Other comprehensive income | 33.5 |  |  | 0.4 |  |  | 4.3 |  |  | 38.2 |
Income tax benefit | $ | 127.4 |  |  | $ | 1.3 |  |  | $ | 6.5 |  |  | $ | 135.2 |
2014 |  |  |  |  |  |  |
Current | $ | (1.0 | ) |  | $ | 1.0 |  |  | $ | (0.6 | ) |  | $ | (0.6 | )
Deferred | 6.4 |  |  | 0.3 |  |  | 5.1 |  |  | 11.8 |
Expense applied to increase Additional paid in capital/Other comprehensive income | (41.6 | ) |  | (0.5 | ) |  | (4.4 | ) |  | (46.5 | )
Income tax (provision) benefit | $ | (36.2 | ) |  | $ | 0.8 |  |  | $ | 0.1 |  |  | $ | (35.3 | )
A reconciliation between the (provision for) benefit from income taxes and the amount computed by applying the federal statutory income tax rate to income (loss) before income taxes is as follows (in millions of dollars):
| Year Ended December 31,
| 2016 |  | 2015 |  | 2014
Amount of federal income tax (provision) benefit based on the statutory rate | $ | (51.5 | ) |  | $ | 130.1 |  |  | $ | (37.5 | )
(Increase) decrease in federal valuation allowances | (0.3 | ) |  | (0.6 | ) |  | — |
Non-deductible compensation expense | 0.3 |  |  | (0.2 | ) |  | (0.1 | )
Non-deductible expense | (0.3 | ) |  | (0.3 | ) |  | (0.3 | )
State income tax (provision) benefit, net of federal benefit 1 | (4.2 | ) |  | 4.2 |  |  | — |
Foreign income tax benefit | 0.5 |  |  | 0.1 |  |  | 0.3 |
Expiration of statute of limitations | — |  |  | 1.7 |  |  | 2.3 |
Advance pricing agreement | — |  |  | (0.2 | ) |  | — |
Competent Authority settlement | — |  |  | 0.4 |  |  | — |
Income tax (provision) benefit | $ | (55.5 | ) |  | $ | 135.2 |  |  | $ | (35.3 | )
___________________________
1. | State income taxes were $4.1 million in 2016, but were offset by a $0.2 million decrease due to lower tax rates in various states and a $0.3 million increase in the valuation allowance relating to certain state net operating losses. The state income tax benefit was $10.3 million in 2015, but was offset by a $3.1 million increase due to state tax rate and state law changes enacted during the current year and a $3.0 million increase relating to the expiration of certain current and future state net operating losses. State income taxes were $2.3 million in 2014, but were offset by a $1.6 million decrease due to lower tax rates in various states and a $0.7 million decrease in the valuation allowance relating to certain state net operating losses.
Deferred Income Taxes. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and amounts used for income tax purposes. The components of our net deferred income tax assets were as follows (in millions of dollars):
| Year Ended December 31,
| 2016 |  | 2015
Deferred income tax assets: |  |  |
Loss and credit carryforwards | $ | 191.8 |  |  | $ | 255.7 |
VEBAs (see Note 6) | 23.2 |  |  | 25.9 |
Other assets | 39.8 |  |  | 38.7 |
Valuation allowances | (15.7 | ) |  | (21.2 | )
Total deferred income tax assets | 239.1 |  |  | 299.1 |
Deferred income tax liabilities: |  |  |
Property, plant and equipment | (82.7 | ) |  | (79.6 | )
Inventories | — |  |  | (9.4 | )
Total deferred income tax liabilities | (82.7 | ) |  | (89.0 | )
Net deferred income tax assets 1 | $ | 156.4 |  |  | $ | 210.1 |
__________________________
1. | Of the total net deferred income tax assets of $156.4 million, $159.7 million was presented as Deferred tax assets, net and $3.3 million was presented as Deferred tax liabilities on the Consolidated Balance Sheet as of December 31, 2016. Of the total net deferred income tax assets of $210.1 million, $49.6 million was included in Prepaid expenses and other current assets and $162.6 million was presented as Deferred tax assets, net and $2.1 million was presented as Deferred tax liabilities on the Consolidated Balance Sheet as of December 31, 2015.
Tax Attributes. At December 31, 2016, we had $414.1 million of net operating loss ("NOL") carryforwards available to reduce future cash payments for income taxes in the United States. The NOL carryforwards expire periodically through 2030. We also had $26.8 million of alternative minimum tax credit carryforwards with an indefinite life, available to offset regular federal income tax requirements. In assessing the realizability of deferred tax assets, management considers whether it is "more likely than not" that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers taxable income in carryback years, the scheduled reversal of deferred tax liabilities, tax planning strategies and projected future taxable income in making this assessment. Due to uncertainties surrounding the realization of some of our deferred tax assets, primarily including state NOL carryforwards sustained during the prior years and expiring tax benefits, we have a valuation allowance against our deferred tax assets. When recognized, the tax benefits relating to any reversal of this valuation allowance will be recorded as a reduction of income tax expense. The (decrease) increase in the valuation allowance was $(5.5) million, $2.0 million and $(0.7) million in 2016, 2015 and 2014, respectively. The decrease in the valuation allowance for 2016 was primarily due to the expiration of state NOL carryforwards and the related reversal of their valuation allowances. The increase in the valuation allowance in 2015 was primarily due to unutilized state NOL carryforwards and Federal Separate Return Limitation Year losses that were expected to expire. The decrease in the valuation allowance for 2014 was primarily due to the projected utilization of state NOL carryforwards. Other. We and our subsidiaries file income tax returns in the U.S. federal jurisdiction and various states and foreign jurisdictions. Our tax returns for certain past years are still subject to examination by taxing authorities and the use of NOL carryforwards in future periods could trigger a review of attributes and other tax matters in years that are not otherwise subject to examination. We have gross unrecognized benefits relating to uncertain tax positions. A reconciliation of changes in the gross unrecognized tax benefits is as follows (in millions of dollars):
|  | Year Ended December 31,
|  | 2016 |  | 2015 |  | 2014
Gross unrecognized tax benefits at beginning of period |  | $ | 1.7 |  |  | $ | 2.2 |  |  | $ | 3.8 |
Gross increases for tax positions of prior years |  | 0.1 |  |  | 0.1 |  |  | — |
Gross decrease for tax positions relating to lapse of a statute of limitation |  | — |  |  | (0.6 | ) |  | (1.4 | )
Foreign currency translation |  | — |  |  | — |  |  | (0.2 | )
Gross unrecognized tax benefits at end of period |  | $ | 1.8 |  |  | $ | 1.7 |  |  | $ | 2.2 |
If and when the $1.8 million, $1.7 million and $2.2 million of gross unrecognized tax benefits at December 31, 2016, December 31, 2015 and December 31, 2014, respectively, are recognized, $0.7 million, $0.6 million and $1.1 million will be reflected, respectively, in our income tax provision and thus affect the effective tax rate in future periods. The change during 2016 was primarily due to a change in tax positions. The change in gross unrecognized tax benefits during 2015 was primarily due to the expiration of statutes. The change during 2014 was due to the expiration of statutes and foreign currency fluctuations. In addition, we recognize interest and penalties related to unrecognized tax benefits in the income tax provision. We had $0.2 million accrued for interest and penalties at both December 31, 2016 and December 31, 2015. Of these amounts, none were recorded as current liabilities and included in Other accrued liabilities on the Consolidated Balance Sheets at December 31, 2016 and December 31, 2015. There was no change to interest and penalty in 2016. We recognized a $1.2 million and $0.9 million change to interest and penalty in our tax provision in 2015 and 2014, respectively. In connection with the gross unrecognized tax benefits (including interest and penalties) denominated in foreign currency, we incurred a foreign currency translation adjustment in 2015 and 2014. During 2015 and 2014, the foreign currency impact on such liabilities resulted in currency translation adjustments of $0.1 million and $0.3 million, respectively, which increased Other comprehensive income. We do not expect our gross unrecognized tax benefits to significantly change within the next 12 months. ASU No. 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, was issued and early adopted in March 2016. ASU 2016-09 eliminates APIC pools and requires excess tax benefits and tax deficiencies to be recorded in the income statement when the awards vest or are settled. In addition, modified retrospective adoption of ASC 2016-09 eliminates the requirement that excess tax benefits be realized (i.e., through a reduction in income taxes payable) before we can recognize them and therefore, we have recorded a cumulative-effect adjustment of $0.7 million through Retained earnings and Deferred tax assets - net during the first quarter of 2016 to record excess tax benefits not previously recognized. Tax Asset Protection Rights Agreement. On April 7, 2016, our Board of Directors adopted a tax asset protection rights plan ("Tax Asset Rights Plan") designed to preserve our ability to utilize our NOL carryforwards and other significant tax attributes (collectively, "Tax Benefits") to offset future taxable income in the United States, and declared a dividend of one preferred share purchase right ("Right") for each outstanding share of our common stock. Our stockholders ratified the Tax Asset Rights Plan at our 2016 Annual Meeting of Stockholders on May 26, 2016. In general, the Tax Asset Rights Plan imposes a significant penalty upon any person or group that acquires beneficial ownership (defined generally as direct or constructive ownership as determined under Section 382 of the Code) of 4.99% or more of our outstanding common stock without the approval of our Board of Directors. Any Rights held by a person or group that acquires a percentage of common stock in excess of that threshold ("Acquiring Person") are void and may not be exercised. If the Rights become exercisable, each Right would allow its holder to purchase from us one one-hundredth of a share of our Series A Junior Participating Preferred Stock ("Series A Preferred Stock") for a purchase price of $400.00. Each fractional share of Series A Preferred Stock would give the stockholder approximately the same dividend, voting and liquidation rights as does one share of our common stock. Prior to exercise, however, a Right does not give its holder any dividend, voting or liquidation rights. The Rights will not be exercisable until the earlier of: (i) 10 days after a public announcement by us that a person or group has become an Acquiring Person and (ii) 10 business days (or a later date determined by our Board of Directors) after a person or group begins a tender or exchange offer that, if completed, would result in that person or group becoming an Acquiring Person. Until the date that the Rights become exercisable ("Distribution Date"), our common stock certificates will also evidence the Rights and will contain a notation to that effect. Any transfer of shares of our common stock prior to the Distribution Date will constitute a transfer of the associated Rights. After the Distribution Date, the Rights will separate from our common stock and be evidenced by Right certificates, which we will mail to all holders of Rights that have not become void. After the Distribution Date, if a person or group already is or becomes an Acquiring Person, all holders of Rights, except the Acquiring Person, may exercise their Rights upon payment of the purchase price to purchase shares of our common stock (or other securities or assets as determined by the Board) with a market value of two times the purchase price ("Flip-in Event"). After the Distribution Date, if a Flip-in Event has already occurred and we are acquired in a merger or similar transaction, all holders of Rights except the Acquiring Person may exercise their Rights upon payment of the purchase price, to purchase shares of the acquiring or other appropriate entity with a market value of two times the purchase price of the Rights. Rights may be exercised to purchase Series A Preferred Stock only after the Distribution Date occurs and prior to the occurrence of a Flip-in Event as described above. A Distribution Date resulting from the commencement of a tender offer or exchange offer as described in (ii) above could precede the occurrence of a Flip-in Event, in which case the Rights could be exercised to purchase Series A Preferred Stock. A Distribution Date resulting from any occurrence described in (i) above would necessarily follow the occurrence of a Flip-in Event, in which case the Rights could be exercised to purchase shares of common stock (or other securities or assets) as described above. The Rights will expire on the earliest of: (i) April 7, 2019 or such earlier date as of which our Board of Directors determines that the Tax Assets Rights Plan is no longer necessary for the preservation of our Tax Benefits; (ii) the time at which the Rights are redeemed; (iii) the time at which the Rights are exchanged; (iv) the effective time of the repeal of Section 382 of the Internal Revenue Code of 1986 ("Code") if the Board determines that the Tax Assets Rights Plan is no longer necessary for the preservation of our Tax Benefits; and (v) the first day of a taxable year to which our Board of Directors determines that no Tax Benefits may be carried forward. Successor Transfer Restrictions. In addition to ratifying our Tax Asset Rights Plan, at our 2016 Annual Meeting of Stockholders, our stockholders approved an amendment to our certificate of incorporation to implement stock transfer restrictions designed to preserve our ability to fully utilize our Tax Benefits ("Successor Transfer Restrictions") to replace similar restrictions that were scheduled to expire in July 2016. In general terms, absent a waiver by our Board of Directors, the Successor Transfer Restrictions restrict the transfer of our equity securities if, as a result of the transfer, either any person would become the owner of 4.99% or more of our stock as determined under Section 382 of the Code ("5% Stockholder") or the percentage stock ownership of any 5% Stockholder would be increased. Any transfer that violates the Successor Transfer Restrictions is void and will be unwound as provided in our certificate of incorporation. The Successor Transfer Restrictions expire on the earliest of: (i) May 26, 2019; (ii) the effective date of the repeal of Section 382 of the Code if our Board of Directors determines that the Successor Transfer Restrictions are no longer necessary for the preservation of our Tax Benefits; and (iii) the first day of a taxable year to which our Board of Directors determines that no Tax Benefits may be carried forward.

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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 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 2: 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=65882285&loc=d3e32559-109319 Reference 3: 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=65882285&loc=d3e32718-109319 Reference 4: 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=65882285&loc=d3e32639-109319 Reference 5: 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=65882285&loc=d3e32537-109319 + Details
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