XML 103 R19.htm IDEA: XBRL DOCUMENT
v2.4.1.9

Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2014
Income Tax Disclosure [Abstract] |
Income Taxes | Note 12—Income taxes:
|  | Years ended December 31, |
|  | 2012 |  |  | 2013 |  |  | 2014 |
|  | (In millions) |
Pre-tax income (loss) from continuing operations: |  |  |  |  |  |  |  |  |  |  |  |
United States |  | $ | 89.0 |  |  | $ | (70.4 | ) |  | $ | 40.1 |
Non-U.S. subsidiaries |  |  | 212.4 |  |  |  | (147.5 | ) |  |  | 71.9 |
Total |  | $ | 301.4 |  |  | $ | (217.9 | ) |  | $ | 112.0 |
Expected tax expense (benefit) at U.S. federal statutory income tax rate of 35% |  | $ | 105.4 |  |  | $ | (76.3 | ) |  | $ | 39.2 |
Non-U.S. tax rates |  |  | (11.9 | ) |  |  | 4.3 |  |  |  | (4.1 | )
Incremental tax (benefit) on earnings of non-U.S. and non-tax group companies |  |  | 1.0 |  |  |  | (18.5 | ) |  |  | (2.2 | )
U.S. state income taxes, net |  |  | 1.3 |  |  |  | (3.4 | ) |  |  | 4.1 |
Adjustment to the reserve for uncertain tax positions, net |  |  | 4.2 |  |  |  | 2.1 |  |  |  | (3.7 | )
Nondeductible expenses |  |  | 4.3 |  |  |  | 2.9 |  |  |  | 2.8 |
Tax rate changes |  |  | 1.9 |  |  |  | (.2 | ) |  |  | — |
French dividend surtax |  |  | .3 |  |  |  | — |  |  |  | — |
Tax credits |  |  | (2.3 | ) |  |  | .1 |  |  |  | (.9 | )
Other, net |  |  | .6 |  |  |  | (2.0 | ) |  |  | (2.7 | )
Provision for income taxes (benefit) |  | $ | 104.8 |  |  | $ | (91.0 | ) |  | $ | 32.5 |
Components of income tax expense (benefit): |  |  |  |  |  |  |  |  |  |  |  |
Currently payable (refundable): |  |  |  |  |  |  |  |  |  |  |  |
U.S. federal and state |  | $ | .9 |  |  | $ | 9.1 |  |  | $ | 7.4 |
Non-U.S. |  |  | 42.6 |  |  |  | (1.2 | ) |  |  | 15.2 |
Total |  |  | 43.5 |  |  |  | 7.9 |  |  |  | 22.6 |
Deferred income taxes (benefit): |  |  |  |  |  |  |  |  |  |  |  |
U.S. federal and state |  |  | 34.5 |  |  |  | (57.9 | ) |  |  | 3.8 |
Non-U.S. |  |  | 26.8 |  |  |  | (41.0 | ) |  |  | 6.1 |
Total |  |  | 61.3 |  |  |  | (98.9 | ) |  |  | 9.9 |
Provision for income taxes (benefit) |  | $ | 104.8 |  |  | $ | (91.0 | ) |  | $ | 32.5 |
Comprehensive provision for income taxes (benefit) allocable to: |  |  |  |  |  |  |  |  |  |  |  |
Income (loss) from continuing operations |  | $ | 104.8 |  |  | $ | (91.0 | ) |  | $ | 32.5 |
Income from discontinued operations |  |  | 5.4 |  |  |  | — |  |  |  | — |
Other comprehensive income (loss): |  |  |  |  |  |  |  |  |  |  |  |
Marketable securities |  |  | (11.6 | ) |  |  | 5.1 |  |  |  | (11.3 | )
Currency translation |  |  | 4.9 |  |  |  | 5.5 |  |  |  | (16.9 | )
Pension plans |  |  | (18.3 | ) |  |  | 14.1 |  |  |  | (33.2 | )
OPEB plans |  |  | (.7 | ) |  |  | 1.0 |  |  |  | (1.2 | )
Total |  | $ | 84.5 |  |  | $ | (65.3 | ) |  | $ | (30.1 | )
The components of the net deferred tax liability at December 31, 2013 and 2014 are summarized below.
|  | December 31, |
|  | 2013 |  |  | 2014 |
|  | Assets |  |  | Liabilities |  |  | Assets |  |  | Liabilities |
|  | (In millions) |
Tax effect of temporary differences related to: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Inventories |  | $ | 4.4 |  |  | $ | (2.6 | ) |  | $ | 5.4 |  |  | $ | (5.2 | )
Marketable securities |  |  | — |  |  |  | (145.8 | ) |  |  | — |  |  |  | (126.4 | )
Property and equipment |  |  | — |  |  |  | (115.8 | ) |  |  | — |  |  |  | (109.2 | )
Accrued OPEB costs |  |  | 4.6 |  |  |  | — |  |  |  | 4.8 |  |  |  | — |
Accrued pension costs |  |  | 21.8 |  |  |  | — |  |  |  | 52.0 |  |  |  | — |
Accrued environmental liabilities |  |  | 40.1 |  |  |  | — |  |  |  | 38.8 |  |  |  | — |
Other deductible differences |  |  | 58.8 |  |  |  | — |  |  |  | 40.3 |  |  |  | — |
Other taxable differences |  |  | — |  |  |  | (35.1 | ) |  |  | — |  |  |  | (21.6 | )
Investments in subsidiaries and affiliates |  |  | — |  |  |  | (280.6 | ) |  |  | — |  |  |  | (278.7 | )
Tax on unremitted earnings of non-U.S. subsidiaries |  |  | — |  |  |  | (2.6 | ) |  |  | — |  |  |  | (2.6 | )
Tax loss and tax credit carryforwards |  |  | 191.8 |  |  |  | — |  |  |  | 163.6 |  |  |  | — |
Valuation allowance |  |  | (.1 | ) |  |  | — |  |  |  | (.1 | ) |  |  | — |
Adjusted gross deferred tax assets (liabilities) |  |  | 321.4 |  |  |  | (582.5 | ) |  |  | 304.8 |  |  |  | (543.7 | )
Netting of items by tax jurisdiction |  |  | (149.2 | ) |  |  | 149.2 |  |  |  | (127.0 | ) |  |  | 127.0 |
|  |  | 172.2 |  |  |  | (433.3 | ) |  |  | 177.8 |  |  |  | (416.7 | )
Less net current deferred tax asset (liability) |  |  | 23.0 |  |  |  | (2.2 | ) |  |  | 13.4 |  |  |  | (3.9 | )
Net noncurrent deferred tax asset (liability) |  | $ | 149.2 |  |  | $ | (431.1 | ) |  | $ | 164.4 |  |  | $ | (412.8 | )
In the third quarter of 2012, France enacted certain changes in their income tax laws, including a 3% nondeductible surtax on all dividend distributions on which tax is assessed at the time of the distribution against the company making such distribution. Consequently, our Chemicals Segment’s French subsidiary will be required to pay an additional 3% tax on all future dividend distributions. Our undistributed earnings in France are deemed to be permanently reinvested and such tax will be recognized as part of our income tax expense if and when a dividend is declared and at that time the related tax will be remitted to the French government in accordance with the applicable tax law. During 2013 and 2014, our Chemicals Segment’s French subsidiary distributed no dividends. At December 31, 2014, our French subsidiary has undistributed earnings of approximately $12.8 million that, if distributed, would be subject to the 3% surtax. We also accrue U.S. incremental income taxes on earnings of non-U.S. subsidiaries which we have determined are not permanently reinvested. Our income tax provision in 2012 includes a net incremental tax benefit of $3.1 million attributable to our Chemicals Segment. We determined during the third quarter that due to global changes in the business we would not remit certain dividends from our Chemicals Segment’s non-U.S. jurisdictions. As a result, certain current year tax attributes were available for carryback to offset prior year tax expense and our provision for income taxes in the third quarter included an incremental tax benefit of $11.1 million. During the fourth quarter as a result of a change in circumstances related to our sale and the sale by certain of our affiliates of their shares of TIMET common stock, which sale provided an opportunity for us and other members of our consolidated U.S. federal income tax group to elect to claim foreign tax credits, we determined that we could tax-efficiently remit non-cash dividends from our Chemical Segment’s non-U.S. jurisdictions before the end of the year that absent the TIMET sale would not have been considered. Our provision for income taxes in the fourth quarter of 2012 includes an incremental tax related to the non-cash dividend distributions of $8.0 million. Our acquisition of an additional ownership interest in BMI in December 2013, discussed in Note 3, increased our ownership interest in BMI from 32% to 63%. As a result, effective December 31, 2013 we no longer account for our ownership interest in BMI by the equity method of accounting but instead BMI is a consolidated subsidiary. Prior to December 31, 2013, we recognized a deferred income tax liability for the excess of our book basis over our tax basis of our investment in BMI at capital gains rates, because we did not have the ability to control BMI and hence we could assume we would only realize such excess upon a disposition of our ownership interest in BMI. Upon gaining control of BMI in December 2013, we now have the ability to control the means in which such excess would be realized, and accordingly the deferred income tax liability we now recognize for such excess is based on the assumption that we would realize such excess from dividend distributions from BMI (which are taxed at a lower rate, after considering the effect of the dividends received deduction). Our income tax benefit in 2013 includes an aggregate $11.1 million benefit (classified in the table above as part of our incremental U.S. tax on earnings of non-U.S. and non-tax group companies) related to the remeasurement of such deferred income tax liability with respect to our investment in BMI from capital gains rates to dividend received deduction rates, including the deferred income taxes related to (i) the gain from the remeasurement of our existing investment in BMI to estimated fair value and (ii) the bargain purchase gain related to the additional ownership interest in BMI acquired in December 2013. See Note 3. Tax authorities are examining certain of our U.S. and non-U.S. tax returns and have or may propose tax deficiencies, including penalties and interest. Because of the inherent uncertainties involved in settlement initiatives and court and tax proceedings, we cannot guarantee that these tax matters will be resolved in our favor, and therefore our potential exposure, if any, is also uncertain. In 2011 and 2012 Kronos received notices of re-assessment from the Canadian federal and provincial tax authorities related to the years 2002 through 2004. We objected to the re-assessments and believed the position was without merit. Accordingly, we appealed the re-assessments and in connection with such appeal we were required to post letters of credit aggregating Cdn. $7.9 million (see Note 9). In the second quarter of 2014, the Appeals Division of the Canadian Revenue Authority ruled in our favor and reversed in their entirety such notices of re-assessment. As a result, we recognized a non-cash income tax benefit of $3.0 million related to the release of a portion of our reserve for uncertain tax positions in the second quarter of 2014 related to the completion of this Canadian income tax audit. In addition, the related letters of credit have been cancelled (see Note 9). Also during the second quarter of 2014, we recognized a non-cash income tax benefit of $3.1 million related to the release of a portion of our reserve for uncertain tax positions in conjunction with the completion of an audit of our U.S. income tax return for 2009. We believe we have adequate accruals for additional taxes and related interest expense which could ultimately result from tax examinations. We believe the ultimate disposition of tax examinations should not have a material adverse effect on our consolidated financial position, results of operations or liquidity. The following table shows the changes in the amount of our uncertain tax positions (exclusive of the effect of interest and penalties) during 2012, 2013 and 2014:
|  | Years ended December 31, |
|  | 2012 |  |  | 2013 |  |  | 2014 |
|  | (In millions) |
Unrecognized tax benefits: |  |  |  |  |  |  |  |  |  |  |  |
Amount beginning of year |  | $ | 23.0 |  |  | $ | 33.4 |  |  | $ | 47.9 |
Net increase (decrease): |  |  |  |  |  |  |  |  |  |  |  |
Tax positions taken in prior periods |  |  | 1.1 |  |  |  | .5 |  |  |  | (19.6 | )
Tax positions taken in current period |  |  | 11.0 |  |  |  | 11.3 |  |  |  | 3.6 |
Settlements with taxing authorities—cash paid |  |  | (.1 | ) |  |  | — |  |  |  | — |
Lapse due to applicable statute of limitations |  |  | (1.8 | ) |  |  | 3.4 |  |  |  | (.7 | )
Acquisition of BMI and LandWell |  |  | — |  |  |  | .1 |  |  |  | — |
Changes in currency exchange rates |  |  | .2 |  |  |  | (.8 | ) |  |  | (1.1 | )
Amount at end of year |  | $ | 33.4 |  |  | $ | 47.9 |  |  | $ | 30.1 |
If our uncertain tax positions were recognized, a benefit of $27.9 million, $29.2 million and $24.2 million at December 31, 2012, 2013 and 2014, respectively, would affect our effective income tax rate. We currently estimate that our unrecognized tax benefits will decrease by approximately $5.8 million during the next twelve months due to the reversal of certain timing differences and the expiration of certain statutes of limitations. We file income tax returns in various U.S. federal, state and local jurisdictions. We also file income tax returns in various foreign jurisdictions, principally in Germany, Canada, Belgium and Norway. Our U.S. income tax returns prior to 2011 are generally considered closed to examination by applicable tax authorities. Our foreign income tax returns are generally considered closed to examination for years prior to: 2005 for Norway; 2009 for Canada; 2010 for Germany; and 2011 for Belgium. We accrue interest and penalties on our uncertain tax positions as a component of our provision for income taxes. We accrued $.9 million, $1.3 million and $1.2 million of interest and penalties during 2012, 2013 and 2014, respectively, and at December 31, 2013 and 2014 we had $5.0 million and $4.1 million, respectively, accrued for interest and an immaterial amount accrued for penalties for our uncertain tax positions. At December 31, 2014, Kronos had the equivalent of $738 million and $94 million of net operating loss carryforwards for German corporate and trade tax purposes, respectively, and it had the equivalent of $87 million of net operating loss carryforwards for Belgian corporate tax purposes. At December 31, 2014, we have concluded that no deferred income tax asset valuation allowance is required to be recognized with respect to such carryforwards, principally because (i) such carryforwards have an indefinite carryforward period, (ii) we have utilized a portion of such carryforwards during the most recent three-year period and (iii) we currently expect to utilize the remainder of such carryforwards over the long term. However, prior to the complete utilization of these carryforwards, if we generate operating losses in our German and Belgian operations for an extended period of time, it is possible we might conclude the benefit of the carryforwards would no longer meet the more-likely-than-not recognition criteria, at which point we would be required to recognize a valuation allowance against some or all of the then-remaining tax benefit associated with the carryforwards.

X
- Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 2: 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 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 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=6907707&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=6907707&loc=d3e32537-109319 Reference 6: 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 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration