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Income Taxes | 12 Months Ended
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Dec. 31, 2014
Income Tax Disclosure [Abstract] |
Income Taxes | INCOME TAXES Income from continuing operations before income taxes and income taxes are as follows:
(In Thousands) |  | 2014 |  | 2013 |  | 2012
Income from continuing operations before income taxes: |  |  |  |  |
Domestic | $ | 38,402 |  |  | $ | 37,380 |  |  | $ | 35,488 |
Foreign | 7,014 |  |  | 15,552 |  |  | 26,016 |
Total | $ | 45,416 |  |  | $ | 52,932 |  |  | $ | 61,504 |
Current income taxes: |  |  |  |  |
Federal | $ | 14,568 |  |  | $ | 15,988 |  |  | $ | 10,905 |
State | 2,178 |  |  | 1,416 |  |  | 796 |
Foreign | 4,102 |  |  | 4,737 |  |  | 7,372 |
Total | 20,848 |  |  | 22,141 |  |  | 19,073 |
Deferred income taxes: |  |  |  |  |
Federal | (9,530 | ) |  | (2,933 | ) |  | 1,212 |
State | (417 | ) |  | (852 | ) |  | 163 |
Foreign | (1,514 | ) |  | (1,361 | ) |  | (2,129 | )
Total | (11,461 | ) |  | (5,146 | ) |  | (754 | )
Total income taxes | $ | 9,387 |  |  | $ | 16,995 |  |  | $ | 18,319 |
The significant differences between the U.S. federal statutory rate and the effective income tax rate for continuing operations are as follows:
| Percent of Income Before Income Taxes from Continuing Operations
| 2014 |  | 2013 |  | 2012
Income tax expense at federal statutory rate | 35.0 |  |  | 35.0 |  |  | 35.0 |
State taxes, net of federal income tax benefit | 2.2 |  |  | 0.1 |  |  | 1.1 |
Tax contingency accruals and tax settlements | 2.0 |  |  | 2.0 |  |  | (0.5 | )
Non-deductible expenses | 0.9 |  |  | 0.6 |  |  | 0.3 |
Foreign rate differences | (0.1 | ) |  | (0.7 | ) |  | (0.6 | )
Tax incentive | (0.1 | ) |  | (4.7 | ) |  | (7.0 | )
Valuation allowance for foreign operating loss carry-forwards | (0.4 | ) |  | 0.5 |  |  | (0.1 | )
Research and development tax credit | (0.6 | ) |  | (0.4 | ) |  | — |
Domestic Production Activities Deduction | (1.9 | ) |  | (1.4 | ) |  | (0.6 | )
Changes in estimates related to prior year tax provision | (2.3 | ) |  | (0.6 | ) |  | (0.5 | )
Unremitted earnings from foreign operations | (3.8 | ) |  | 0.9 |  |  | 0.6 |
Valuation allowance for capital loss carry-forwards | (10.2 | ) |  | 0.8 |  |  | 1.9 |
Other | — |  |  | — |  |  | 0.2 |
Effective income tax rate for continuing operations | 20.7 |  |  | 32.1 |  |  | 29.8 |
The reduction in income taxes from continuing operations in 2014 in comparison to prior years can be attributed to a pair of distinct tax adjustments. In recent years the Company has been evaluating various tax advantageous methods for executing its overall growth and international expansion strategies. The Company, having been authorized by its management in the fourth quarter of 2014 to proceed, implemented an international tax planning strategy that generated capital gains. These capital gains were offset against previously recorded capital losses on certain investments. Income taxes from continuing operations in 2014 therefore included the recognition of a tax benefit of $4.9 million related to a portion of its capital loss carryforwards that were previously offset by a valuation allowance associated with expected limitations on the utilization of historic capital losses carried over from the previous years. In addition, as previously discussed in Note 1, with the exception of Terphane Ltda., the Company accrues U.S. federal income taxes to the extent required under U.S. GAAP on unremitted earnings from foreign operations. As a result of changes in the underlying basis of certain foreign subsidiaries, income taxes from continuing operations in 2014 included an adjustment of $2.2 million in the fourth quarter, $1.7 million of which is a correction to prior years, to reverse previously accrued deferred tax liabilities accumulated over several years arising from changes in tax basis due to foreign currency translation adjustments and unremitted earnings. The corresponding prior period changes in the underlying basis of certain foreign subsidiaries primarily occurred before 2010, and the prior period components are not considered material to any period presented. The Brazilian federal statutory income tax rate is a composite of 34.0% (25.0% of income tax and 9.0% of social contribution on income). Terphane’s manufacturing facility in Brazil was the beneficiary of certain income tax incentives that allowed for a reduction in the statutory Brazilian federal income tax rate levied on the operating profit of its products. These incentives produce a current tax rate of 15.25% for Terphane Ltda. (6.25% of income tax and 9.0% social contribution on income). The current incentives expired at the end of 2014. The Company anticipates that it will qualify for additional incentives that will extend beyond 2014, but future benefits will not be recorded until the amount and extent of these incentives are more fully known. The benefit from the tax incentives was $51,000 (0 cents per share), $2.5 million (8 cents per share) and $4.3 million (13 cent s per share) in 2014, 2013 and 2012, respectively. Deferred tax liabilities and deferred tax assets at December 31, 2014 and 2013, are as follows:
(In Thousands) | 2014 |  | 2013
Deferred tax liabilities: |  |  |
Amortization of goodwill and other intangibles | $ | 45,696 |  |  | $ | 46,738 |
Depreciation | 27,550 |  |  | 29,994 |
Foreign currency translation gain adjustment | 4,233 |  |  | 8,620 |
Derivative financial instruments | 316 |  |  | 432 |
Total deferred tax liabilities | 77,795 |  |  | 85,784 |
Deferred tax assets: |  |  |
Pensions | 34,214 |  |  | 14,813 |
Employee benefits | 11,597 |  |  | 11,124 |
Inventory | 6,221 |  |  | 2,292 |
Excess capital losses and book/tax basis differences on investments | 3,282 |  |  | 4,316 |
Tax benefit on state and foreign NOL and credit carryforwards | 2,967 |  |  | 1,871 |
Asset write-offs, divestitures and environmental accruals | 1,593 |  |  | 3,734 |
Timing adjustment for unrecognized tax benefits on uncertain tax positions, including portion relating to interest and penalties | 842 |  |  | 600 |
Allowance for doubtful accounts | 479 |  |  | 639 |
Other | 799 |  |  | 1,247 |
Deferred tax assets before valuation allowance | 61,994 |  |  | 40,636 |
Less: Valuation allowance | 14,577 |  |  | 20,019 |
Total deferred tax assets | 47,417 |  |  | 20,617 |
Net deferred tax liability | $ | 30,378 |  |  | $ | 65,167 |
Included in the balance sheet: |  |  |
Noncurrent deferred tax liabilities in excess of assets | $ | 39,255 |  |  | $ | 70,795 |
Current deferred tax assets in excess of liabilities | 8,877 |  |  | 5,628 |
Net deferred tax liability | $ | 30,378 |  |  | $ | 65,167 |
Except as noted below, the Company believes that it is more likely than not that future taxable income will exceed future tax deductible amounts thereby resulting in the realization of deferred tax assets. The Company has estimated gross state and foreign tax credits and net operating loss carryforwards of $3.0 million at December 31, 2014, which primarily expire at different points over the next 5 to 8 years. A valuation allowance of $2.8 million at December 31, 2014 and $1.7 million at December 31, 2013, respectively, is recorded against the tax benefit on state and foreign tax credits and net operating loss carryforwards generated by certain foreign and domestic subsidiaries that may not be recoverable in the carryforward period. The valuation allowance for excess capital losses from investments and other related items was decreased from $16.4 million at December 31, 2013 to $11.4 million at December 31, 2014 due to changes in the relative amounts of capital gains and losses generated during the year. The amount of the deferred tax asset considered realizable, however, could be adjusted in the near term if estimates of the fair value of certain investments during the carryforward period change. Tredegar continues to evaluate opportunities to utilize capital loss carryforwards prior to their expiration at various dates in the future. As circumstances and events warrant, allowances will be reversed when it is more likely than not that future taxable income will exceed deductible amounts, thereby resulting in the realization of deferred tax assets. The valuation allowance for asset impairments in foreign jurisdictions where the Company believes it is more likely than not that the deferred tax asset will not be realized was $0.4 million at December 31, 2014 and $1.9 million at December 31, 2013. A reconciliation of the Company’s unrecognized uncertain tax positions since January 1, 2012, is shown below:
|  | Years Ended December 31,
(In Thousands) |  | 2014 |  | 2013 |  | 2012
Balance at beginning of period | $ | 2,239 |  |  | $ | 910 |  |  | $ | 1,025 |
Increase (decrease) due to tax positions taken in: |  |  |  |  |
Current period | 619 |  |  | 643 |  |  | 432 |
Prior period | 397 |  |  | 686 |  |  | (21 | )
Increase (decrease) due to settlements with taxing authorities | — |  |  | — |  |  | (398 | )
Reductions due to lapse of statute of limitations | — |  |  | — |  |  | (128 | )
Balance at end of period | $ | 3,255 |  |  | $ | 2,239 |  |  | $ | 910 |
Additional information related to unrecognized uncertain tax positions since January 1, 2012 is summarized below:
|  | Years Ended December 31,
(In Thousands) |  | 2014 |  | 2013 |  | 2012
Gross unrecognized tax benefits on uncertain tax positions (reflected in current income tax and other noncurrent liability accounts in the balance sheet) | $ | 3,255 |  |  | $ | 2,239 |  |  | $ | 910 |
Deferred income tax assets related to unrecognized tax benefits on uncertain tax positions (reflected in deferred income tax accounts in the balance sheet) | (726 | ) |  | (540 | ) |  | (212 | )
Net unrecognized tax benefits on uncertain tax positions, which would impact the effective tax rate if recognized | 2,529 |  |  | 1,699 |  |  | 698 |
Interest and penalties accrued on deductions taken relating to uncertain tax positions (approximately $150, $100 and $(300) reflected in income tax expense in the income statement in 2014, 2013 and 2012, respectively, with the balance shown in current income tax and other noncurrent liability accounts in the balance sheet) | 310 |  |  | 156 |  |  | 60 |
Related deferred income tax assets recognized on interest and penalties | (116 | ) |  | (60 | ) |  | (23 | )
Interest and penalties accrued on uncertain tax positions net of related deferred income tax benefits, which would impact the effective tax rate if recognized | 194 |  |  | 96 |  |  | 37 |
Total net unrecognized tax benefits on uncertain tax positions reflected in the balance sheet, which would impact the effective tax rate if recognized | $ | 2,723 |  |  | $ | 1,795 |  |  | $ | 735 |
Tredegar, or one of its subsidiaries, files income tax returns in the U.S. federal jurisdiction, various states and jurisdictions outside the U.S. With few exceptions, Tredegar is no longer subject to U.S. federal, state or non-U.S. income tax examinations by tax authorities for years before 2011. The Company anticipates that it is reasonably possible a state income tax audit may settle within the next 12 months, which could result in the recognition of up to approximately $1.4 million of the balance of unrecognized state tax positions.

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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 -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
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