XML 85 R24.htm IDEA: XBRL DOCUMENT
v2.4.1.9

Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2014
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The following table summarizes the U.S. and non-U.S. components of income (loss) before provision (benefit) for income taxes:
| For the Year Ended December 31,
| 2012 |  | 2013 |  | 2014
| (Dollars in thousands)
U.S. | $ | 29,422 |  |  | $ | 8,495 |  |  | $ | (255,043 | )
Non-U.S. | 105,065 |  |  | (48,597 | ) |  | (39,749 | )
| $ | 134,487 |  |  | $ | (40,102 | ) |  | $ | (294,792 | )
Income tax expense (benefit) consists of the following:
| For the Year Ended December 31,
| 2012 |  | 2013 |  | 2014
| (Dollars in thousands)
U.S income taxes: |  |  |  |  |
Current | $ | (6,529 | ) |  | $ | 4,104 |  |  | $ | (1,762 | )
Deferred | 4,543 |  |  | (5,652 | ) |  | (537 | )
| (1,986 | ) |  | (1,548 | ) |  | (2,299 | )
Non-U.S. income taxes: |  |  |  |  |
Current | 12,371 |  |  | 5,422 |  |  | 8,349 |
Deferred | 6,461 |  |  | (16,717 | ) |  | (15,466 | )
| 18,832 |  |  | (11,295 | ) |  | (7,117 | )
Total income tax expense (benefit) | $ | 16,846 |  |  | $ | (12,843 | ) |  | $ | (9,416 | )
Income tax expense (benefit) differed from the amounts computed by applying the U.S. federal income tax rate of 35% to income before provision (benefit) for income taxes as set forth in the following table:
| For the Year Ended December 31,
| 2012 |  | 2013 |  | 2014
| (Dollars in thousands)
Tax at statutory U.S. federal rate | $ | 47,071 |  |  | $ | (14,036 | ) |  | $ | (103,177 | )
U.S. valuation allowance, net | (1,800 | ) |  | (700 | ) |  | 73,350 |
State taxes, net of federal tax benefit | 593 |  |  | (371 | ) |  | (4,387 | )
U.S. tax return adjustments to estimated taxes | 588 |  |  | (1,032 | ) |  | (368 | )
Establishment (resolution) of uncertain tax positions | (8,118 | ) |  | (752 | ) |  | (513 | )
Adjustment for foreign income taxed at different rates | (15,553 | ) |  | 6,832 |  |  | 7,376 |
U.S. tax credits | (2,200 | ) |  | (2,577 | ) |  | (1,000 | )
Non-U.S. tax exemptions, holidays and credits | (4,259 | ) |  | — |  |  | — |
Goodwill impairment | — |  |  | — |  |  | 17,161 |
Capital loss expiration | — |  |  | — |  |  | 2,422 |
Other | 524 |  |  | (207 | ) |  | (280 | )
Total income tax (benefit) expense | $ | 16,846 |  |  | $ | (12,843 | ) |  | $ | (9,416 | )
The Company has been granted a tax holiday in Brazil, which expires in 2016. The availability of the tax holiday in Brazil did not have a significant impact on the current tax year. The tax effects of temporary differences that give rise to significant components of the deferred tax assets and deferred tax liabilities at December 31, 2013, and December 31, 2014 are set forth in the following table:
| At December 31,
| 2013 |  | 2014
| (Dollars in thousands)
Deferred tax assets: |  |  |
Postretirement and other employee benefits | $ | 41,604 |  |  | $ | 43,204 |
Foreign tax credit and other carryforwards | 46,283 |  |  | 64,214 |
Capitalized research and experimental costs | 20,243 |  |  | 23,446 |
Environmental reserves | 3,503 |  |  | 3,366 |
Inventory adjustments | 16,255 |  |  | 19,568 |
Capital loss | 2,697 |  |  | 272 |
Long-term contract option amortization | — |  |  | 2,214 |
Provision for rationalization charges | 17,410 |  |  | 17,255 |
Other | 5,889 |  |  | 6,288 |
Total gross deferred tax assets | 153,884 |  |  | 179,827 |
Less: valuation allowance | (20,411 | ) |  | (95,721 | )
Total deferred tax assets | 133,473 |  |  | 84,106 |
Deferred tax liabilities: |  |  |
Fixed assets | $ | 109,824 |  |  | $ | 59,292 |
Debt discount amortization | 6,620 |  |  | 3,301 |
Inventory | 9,212 |  |  | 6,865 |
Goodwill and acquired intangibles | 10,813 |  |  | 1,046 |
Other | 2,204 |  |  | 3,761 |
Total deferred tax liabilities | 138,673 |  |  | 74,265 |
Net deferred tax (liability) asset | $ | (5,200 | ) |  | $ | 9,841 |
Deferred income tax assets and liabilities are classified on a net current and non-current basis within each tax jurisdiction. Net current deferred income tax assets are included in prepaid expenses and other current assets in the amount of $37.1 million as of December 31, 2013 and $28.4 million as of December 31, 2014. Net non-current deferred tax assets are separately stated as deferred income taxes in the amount of $10.3 million as of December 31, 2013 and $16.8 million as of December 31, 2014. Net current deferred tax liabilities are included in accrued income and other taxes in the amount of $10.9 million as of December 31, 2013 and $7.2 million as of December 31, 2014. Net non-current deferred tax liabilities are separately stated as deferred income taxes in the amount of $41.7 million at December 31, 2013 and $28.2 million at December 31, 2014. We continue to assess the need for valuation allowances against deferred tax assets based on determinations of whether it is more likely than not that deferred tax benefits will be realized through the generation of future taxable income. Appropriate consideration is given to all available evidence, both positive and negative, in assessing the need for a valuation allowance. Examples of positive evidence would include a strong earnings history, an event or events that would increase our taxable income through a continued reduction of expenses, and tax planning strategies that would indicate an ability to realize deferred tax assets. Examples of negative evidence would include cumulative losses in recent years and history of tax attributes expiring unused. GrafTech impaired the fixed assets and announced exiting of certain product lines in our Advanced Graphite Material ("AGM") product group, in the Company’s second quarter Form 10-Q. During the third quarter of 2014, we announced the conclusion of another phase of our on-going companywide cost savings assessment. This resulted in changes to the Company’s operating and management structure in order to streamline, simplify and decentralize the organization as described in more detail in Note 2, Rationalizations. The impairment charges and other rationalization related charges were incurred primarily in the U.S. jurisdiction. As a result, we determined that it is no longer “more likely than not” that we will generate sufficient future U.S. taxable income to realize our deferred tax assets related to U.S. foreign tax credits and state net operating loss carryforwards, as well as our net U.S. deferred tax assets. With the additional significant negative evidence of recent losses, the Company recognized a $73.4 million non-cash charge to the P&L in 2014 to reflect a full valuation allowance against these U.S. deferred income tax assets. The recognition of the valuation allowance does not result in or limit the Company's ability to utilize these tax assets in the future. Valuation allowance activity for the years ended December 31, 2012, 2013 and 2014 is as follows:
| For the year ended December 31,
| 2012 |  | 2013 |  | 2014
| (Dollars in thousands)
Balance at January 1 | $ | 25,509 |  |  | $ | 26,312 |  |  | $ | 20,411 |
(Credited) / charged to income | (1,800 | ) |  | (614 | ) |  | 74,157 |
Translation adjustment | (52 | ) |  | (746 | ) |  | (800 | )
Changes attributable to movement in underlying assets | 2,655 |  |  | (4,541 | ) |  | 1,953 |
Balance at December 31 | $ | 26,312 |  |  | $ | 20,411 |  |  | $ | 95,721 |
We have total foreign tax credit carryforwards of $19.5 million as of December 31, 2014, for which a full valuation allowance is recorded. These tax credit carryforwards expire as of December 31, 2016. In addition, we have a federal net operating loss carryforward of $36.3 million and state net operating losses carryforwards of $191.5 million, which can be carried forward from 5 to 20 years. These net operating losses carryforwards generate a deferred tax asset of $25.6 million as of December 31, 2014. We also have U.S. non-net operating loss related deferred tax assets of $44.3 million as of December 31, 2014. We have assessed the need for valuation allowances against these deferred tax assets based on determinations of whether it is more likely than not that deferred tax benefits will be realized through the generation of future taxable income. Appropriate consideration is given to all available evidence, both positive and negative, in assessing the need for a valuation allowance, including existing level of profitability and recently available projections of future taxable income, which are comparable with current year results. Based upon the levels of historical federal and state taxable income and projections of future federal and state taxable income over the periods during which the carryforwards can be utilized, we do not believe it is more likely than not that we will realize the tax benefits of these deferred tax assets. Until we determine that we will generate sufficient jurisdictional taxable income to realize our net operating losses and deferred tax assets, these assets will continue to be fully reserved. We have non-U.S. loss and tax credit carryforwards on a gross tax effected basis of $23.1 million, which can be carried forward from 7 years to indefinitely. As of December 31, 2014, we had unrecognized tax benefits of $3.7 million, $2.7 million of which, if recognized, would have a favorable impact on our effective tax rate. We have elected to report interest and penalties related to uncertain tax positions as income tax expense. Accrued interest and penalties were $1.0 million as of December 31, 2012 (a reduction of $0.3 million in from 2011), $0.6 million as of December 31, 2013 and $0.5 million as of December 31, 2014. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
| As of December 31,
| 2012 |  | 2013 |  | 2014
| (Dollars in thousands)
Balance at January 1 | $ | 16,788 |  |  | $ | 9,769 |  |  | $ | 7,203 |
Additions based on tax positions related to the current year | 90 |  |  | 881 |  |  | 268 |
Additions for tax positions of prior years | 4,643 |  |  | 323 |  |  | 232 |
Reductions for tax positions of prior years | (11,019 | ) |  | (2,779 | ) |  | (1,204 | )
Lapse of statutes of limitations | (163 | ) |  | — |  |  | (1,180 | )
Settlements | (576 | ) |  | (988 | ) |  | (1,503 | )
Foreign currency impact | 6 |  |  | (3 | ) |  | (106 | )
Balance at December 31 | $ | 9,769 |  |  | $ | 7,203 |  |  | $ | 3,710 |
It is reasonably possible that a reduction of unrecognized tax benefits of up to $2.0 million may occur within 12 months due to settlements and the expiration of statutes of limitation. We file income tax returns in the U.S. federal jurisdiction, and various state and foreign jurisdictions. All U.S. federal tax years prior to 2012 are generally closed by statute or have been audited and settled with the applicable domestic tax authorities. All other jurisdictions are still open to examination beginning after 2008. The Company has not provided for U.S. income taxes or foreign withholding taxes on the differences between the financial reporting basis in our foreign investments, and the tax basis in such investments, estimated to be $1.1 billion, which are considered to be permanently reinvested as of December 31, 2014. Any outside basis difference would be taxable upon the sale or liquidation of the foreign subsidiaries, or upon the remittance of dividends. The measurement of the unrecognized U.S. income taxes, if any, that may be associated with these outside basis differences, is not practicable.

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