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Income Taxes | 12 Months Ended
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Dec. 31, 2016
Income Tax Disclosure [Abstract] |
Income Taxes | INCOME TAXES Income from continuing operations before income taxes and income taxes are as follows:
(In Thousands) |  | 2016 |  | 2015 |  | 2014
Income from continuing operations before income taxes: |  |  |  |  |
Domestic | $ | 26,284 |  |  | $ | (9,116 | ) |  | $ | 38,402 |
Foreign | 1,399 |  |  | (14,091 | ) |  | 7,014 |
Total | $ | 27,683 |  |  | $ | (23,207 | ) |  | $ | 45,416 |
Current income taxes: |  |  |  |  |
Federal | $ | 4,302 |  |  | $ | 12,693 |  |  | $ | 14,568 |
State | (709 | ) |  | 973 |  |  | 2,178 |
Foreign | 3,255 |  |  | 6,064 |  |  | 4,102 |
Total | 6,848 |  |  | 19,730 |  |  | 20,848 |
Deferred income taxes: |  |  |  |  |
Federal | (2,505 | ) |  | (9,419 | ) |  | (9,530 | )
State | 1,396 |  |  | (1,035 | ) |  | (417 | )
Foreign | (2,522 | ) |  | (348 | ) |  | (1,514 | )
Total | (3,631 | ) |  | (10,802 | ) |  | (11,461 | )
Total income taxes | $ | 3,217 |  |  | $ | 8,928 |  |  | $ | 9,387 |
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
| 2016 |  | 2015 |  | 2014
Federal statutory rate | 35.0 |  |  | 35.0 |  |  | 35.0 |
State taxes, net of federal income tax benefit | 2.3 |  |  | 0.3 |  |  | 2.2 |
Foreign rate differences | 1.8 |  |  | 3.1 |  |  | (0.1 | )
Non-deductible expenses | 1.4 |  |  | (1.9 | ) |  | 0.9 |
Changes in estimates related to prior year tax provision | 1.2 |  |  | (2.1 | ) |  | (2.3 | )
Valuation allowance for capital loss carry-forwards | 1.0 |  |  | 1.3 |  |  | (10.2 | )
Tax contingency accruals and tax settlements | 0.4 |  |  | (3.1 | ) |  | 2.0 |
Tax incentive | — |  |  | 0.5 |  |  | (0.1 | )
Foreign investment write down | (0.7 | ) |  | (10.9 | ) |  | — |
Unremitted earnings from foreign operations | (0.9 | ) |  | 2.2 |  |  | (3.8 | )
Valuation allowance due to foreign losses | (1.5 | ) |  | — |  |  | (0.4 | )
Research and development tax credit | (2.0 | ) |  | 1.5 |  |  | (0.6 | )
Domestic Production Activities Deduction | (2.7 | ) |  | 3.6 |  |  | (1.9 | )
Remitted earnings from foreign operations | (23.7 | ) |  | 0.1 |  |  | — |
Goodwill impairment | — |  |  | (68.1 | ) |  | — |
Effective income tax rate for continuing operations | 11.6 |  |  | (38.5 | ) |  | 20.7 |
Income taxes from continuing operations in 2016 included the recognition of an additional valuation allowance of $0.3 million related to expected limitations on the utilization of assumed capital losses on certain investments. In 2016, the difference between the federal statutory rate and the effective tax rate is primarily driven by the $6.4 million tax benefit from excess foreign tax credits related to the repatriation of cash from Brazil. The change in income taxes from continuing operations in 2015 in comparison to the prior year can be attributed to several factors including recording no tax benefit on either the goodwill impairment charge or the unrealized loss on the portion of the Company’s investment in shares of kaléo shares held in a foreign jurisdiction. Also, there was a $0.5 million tax benefit related to the valuation allowance associated with capital losses in 2015 compared to a $4.9 million tax benefit in 2014. In 2014 there was a $2.2 million tax benefit recorded for changes in the underlying basis of certain foreign subsidiaries versus a $0.5 million tax benefit. 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 is the beneficiary of certain income tax incentives that allow 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 (6.25% of income tax and 9.0% social contribution on income). The current incentives will expire at the end of 2024. The benefit from the tax incentives was $0.1 million (0 cents per share) and $0.1 million (0 cent s per share) in 2015 and 2014, respectively (none in 2016). Deferred tax liabilities and deferred tax assets at December 31, 2016 and 2015, are as follows:
(In Thousands) | 2016 |  | 2015
Deferred tax liabilities: |  |  |
Amortization of goodwill and other intangibles | $ | 43,546 |  |  | $ | 42,900 |
Depreciation | 24,178 |  |  | 22,221 |
Foreign currency translation gain adjustment | 1,424 |  |  | 2,738 |
Derivative financial instruments | 493 |  |  | — |
Total deferred tax liabilities | 69,641 |  |  | 67,859 |
Deferred tax assets: |  |  |
Pensions | 30,733 |  |  | 31,972 |
Employee benefits | 10,262 |  |  | 10,397 |
Excess capital losses and book/tax basis differences on investments | 7,595 |  |  | 8,026 |
Inventory | 3,622 |  |  | 4,636 |
Asset write-offs, divestitures and environmental accruals | 2,515 |  |  | 2,022 |
Tax benefit on state and foreign NOL and credit carryforwards | 4,921 |  |  | 1,624 |
Timing adjustment for unrecognized tax benefits on uncertain tax positions, including portion relating to interest and penalties | 395 |  |  | 1,006 |
Allowance for doubtful accounts | 198 |  |  | 406 |
Derivative financial instruments | — |  |  | 234 |
Other | 1,568 |  |  | 2,224 |
Deferred tax assets before valuation allowance | 61,809 |  |  | 62,547 |
Less: Valuation allowance | 12,694 |  |  | 13,344 |
Total deferred tax assets | 49,115 |  |  | 49,203 |
Net deferred tax liability | $ | 20,526 |  |  | $ | 18,656 |
Amounts recognized in the consolidated balance sheets: |  |  |
Other assets and deferred charges (noncurrent) | 584 |  |  | — |
Deferred income taxes (noncurrent) | $ | 21,110 |  |  | $ | 18,656 |
Net deferred tax liability | $ | 20,526 |  |  | $ | 18,656 |
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 $4.9 million and $1.6 million at December 31, 2016 and 2015, respectively, which primarily expire at different points over the next 5 to 8 years. Valuation allowances of $1.5 million, $1.5 million and $2.8 million at December 31, 2016, 2015 and 2014, respectively, are 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 $11.2 million, $10.9 million and $11.4 million at December 31, 2016, 2015 and 2014. The current year balance increased 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 $0.9 million at December 31, 2015 and $0.4 million at December 31, 2014 (none in 2016). A reconciliation of the Company’s unrecognized uncertain tax positions since January 1, 2014, is shown below:
|  | Years Ended December 31,
(In Thousands) |  | 2016 |  | 2015 |  | 2014
Balance at beginning of period | $ | 4,049 |  |  | $ | 3,255 |  |  | $ | 2,239 |
Increase (decrease) due to tax positions taken in: |  |  |  |  |
Current period | 1,151 |  |  | 518 |  |  | 619 |
Prior period | 43 |  |  | 326 |  |  | 397 |
Increase (decrease) due to settlements with taxing authorities | (1,706 | ) |  | — |  |  | — |
Reductions due to lapse of statute of limitations | (222 | ) |  | (50 | ) |  | — |
Balance at end of period | $ | 3,315 |  |  | $ | 4,049 |  |  | $ | 3,255 |
Additional information related to unrecognized uncertain tax positions since January 1, 2014 is summarized below:
|  | Years Ended December 31,
(In Thousands) |  | 2016 |  | 2015 |  | 2014
Gross unrecognized tax benefits on uncertain tax positions (reflected in current income tax and other noncurrent liability accounts in the balance sheet) | $ | 3,315 |  |  | $ | 4,049 |  |  | $ | 3,255 |
Deferred income tax assets related to unrecognized tax benefits on uncertain tax positions (reflected in deferred income tax accounts in the balance sheet) | (345 | ) |  | (858 | ) |  | (726 | )
Net unrecognized tax benefits on uncertain tax positions, which would impact the effective tax rate if recognized | 2,970 |  |  | 3,191 |  |  | 2,529 |
Interest and penalties accrued on deductions taken relating to uncertain tax positions (approximately $(262), $90 and $150 reflected in income tax expense in the income statement in 2016, 2015 and 2014, respectively, with the balance shown in current income tax and other noncurrent liability accounts in the balance sheet) | 135 |  |  | 397 |  |  | 310 |
Related deferred income tax assets recognized on interest and penalties | (49 | ) |  | (148 | ) |  | (116 | )
Interest and penalties accrued on uncertain tax positions net of related deferred income tax benefits, which would impact the effective tax rate if recognized | 86 |  |  | 249 |  |  | 194 |
Total net unrecognized tax benefits on uncertain tax positions reflected in the balance sheet, which would impact the effective tax rate if recognized | $ | 3,056 |  |  | $ | 3,440 |  |  | $ | 2,723 |
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 2013. The Company anticipates that it is reasonably possible that Federal and state income tax audits or statutes may settle or close within the next 12 months, which could result in the recognition of up to approximately $0.8 million of the balance of unrecognized tax positions, including any payments that may be made.

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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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