v2.4.0.8

Income Taxes | 12 Months Ended
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Dec. 28, 2013
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The provision for income taxes was computed based on the following components of income (loss) before income tax expense and discontinued operations:
In thousands | Successor |  |  | Predecessor
Fiscal Year Ended December 28, 2013 |  | Fiscal Year Ended December 29, 2012 |  | Eleven Months Ended December 31, 2011 |  |  | One Month Ended January 28, 2011
Domestic | $ | (63,783 | ) |  | $ | (44,664 | ) |  | $ | (75,910 | ) |  |  | $ | (19,238 | )
Foreign | 2,918 |  |  | 26,281 |  |  | 2,809 |  |  |  | 1,485 |
Total | $ | (60,865 | ) |  | $ | (18,383 | ) |  | $ | (73,101 | ) |  |  | $ | (17,753 | )
The components of income tax (provision) benefit for the respective periods are as follows:
In thousands | Successor |  |  | Predecessor
Fiscal Year Ended December 28, 2013 |  | Fiscal Year Ended December 29, 2012 |  | Eleven Months Ended December 31, 2011 |  |  | One Month Ended January 28, 2011
Current: |  |  |  |  |  |  |  |
Federal and state | $ | 3,947 |  |  | $ | 397 |  |  | $ | 17,115 |  |  |  | $ | (302 | )
Foreign | (12,474 | ) |  | (9,175 | ) |  | (17,498 | ) |  |  | (247 | )
Deferred: |  |  |  |  |  |  |  |
Federal and state | 22,688 |  |  | 90 |  |  | — |  |  |  | — |
Foreign | 8,432 |  |  | 1,033 |  |  | 3,655 |  |  |  | — |
Income tax (provision) benefit | $ | 22,593 |  |  | $ | (7,655 | ) |  | $ | 3,272 |  |  |  | $ | (549 | )
The income tax (provision) benefit differs from the amount of income taxes determined by applying the applicable U.S. federal statutory rate of 35% to pretax income as a result of the following differences:
In thousands | Successor |  |  | Predecessor
Fiscal Year Ended December 28, 2013 |  | Fiscal Year Ended December 29, 2012 |  | Eleven Months Ended December 31, 2011 |  |  | One Month Ended January 28, 2011
Computed income tax (provision) benefit at statutory rate | $ | 21,303 |  |  | $ | 6,435 |  |  | $ | 25,585 |  |  |  | $ | 6,214 |
State income taxes, net of U.S. federal tax benefit | (540 | ) |  | (5 | ) |  | 1,207 |  |  |  | (27 | )
Change in valuation allowance | (7,120 | ) |  | (17,035 | ) |  | (30,823 | ) |  |  | (6,579 | )
Local country withholding tax | (5,307 | ) |  | (800 | ) |  | (3,574 | ) |  |  | (157 | )
Tax attribute carryforward expiration | — |  |  | — |  |  | — |  |  |  | — |
Intra-period allocation rule exception | 5,201 |  |  | — |  |  | 970 |  |  |  | — |
Foreign rate difference | 8,962 |  |  | 3,852 |  |  | (6,338 | ) |  |  | 56 |
Change in U.S. Personal Holding Company liability | — |  |  | — |  |  | 16,221 |  |  |  | (54 | )
Other | 94 |  |  | (102 | ) |  | 24 |  |  |  | (2 | )
Income tax (provision) benefit | $ | 22,593 |  |  | $ | (7,655 | ) |  | $ | 3,272 |  |  |  | $ | (549 | )
In the fourth quarter of 2013, Mexico passed and implemented tax reform. Among the many changes, the IETU tax regime was repealed. The PGI Mexico subsidiary was paying tax under the IETU tax regime and all deferred taxes were on the balance sheet using the attributes of the IETU tax regime. With the appeal, the PGI Mexico subsidiary had to remove all deferred tax items related to the IETU and replace them with the attributes consistent with the ISR, or income tax regime. The income statement impact on the tax expense related to this change was benefit of $4.1 million. During 2011, the Company determined that it may be subject to Personal Holding Company ("PHC") tax for past periods and established a liability in accordance with the recognition provisions of ASC 740 "Income Taxes" (ASC 740"). However, in the fourth quarter of 2011, the IRS issued a favorable ruling determining the Company was not a PHC. As a result, the Company released in its entirety the the unrecognized tax benefit (the “UTB”) associated with the PHC matter during the December 31, 2011 tax year. It included $2.2 million related to the expiration of the statute of limitations and $14.0 million related to the favorable Internal Revenue Service (the “IRS”) ruling. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, as well as net operating losses and other tax credit carryforwards. Deferred income tax assets and liabilities consist of the following:
In thousands | December 28, 2013 |  | December 29, 2012
Deferred tax assets: |  |  |
Provision for bad debts | $ | 1,169 |  |  | $ | 1,263 |
Inventory capitalization and allowances | 1,992 |  |  | 146 |
Net operating loss and capital loss carryforwards | 223,013 |  |  | 183,917 |
Tax credits | 5,748 |  |  | 3,681 |
Employee compensation and benefits | 10,322 |  |  | 10,732 |
Property, plant and equipment | — |  |  | — |
Other, net | 14,509 |  |  | 18,291 |
Total deferred tax assets | 256,753 |  |  | 218,030 |
Valuation allowance | (201,112 | ) |  | (203,837 | )
Net deferred tax assets | $ | 55,641 |  |  | $ | 14,193 |
Deferred tax liabilities: |  |  |
Property, plant and equipment, net | $ | (20,773 | ) |  | $ | (29,832 | )
Intangibles | (33,643 | ) |  | (4,593 | )
Stock basis of subsidiaries | — |  |  | (281 | )
Undistributed Earnings | (12,477 | ) |  | (1,762 | )
Other, net | (6,532 | ) |  | (6,608 | )
Total deferred tax liabilities | (73,425 | ) |  | (43,076 | )
Net deferred tax liabilities | $ | (17,784 | ) |  | $ | (28,883 | )
The Company records a deferred tax liability associated with the excess of book basis over tax basis in the shares of subsidiaries not considered indefinitely invested. At December 28, 2013, the Company has not provided deferred income taxes on approximately $50.7 million of unremitted earnings of its foreign subsidiaries where the earnings are considered indefinitely invested. If management decided to repatriate these earnings, they would become taxable and would incur approximately $19.6 million of tax. In the event of additional tax, unrecognized tax attributes may be available to reduce some portion of any U.S. income tax liability. After Internal Revenue Code Section 382 (“Section 382”) limitations, the Company has $321.3 million of U.S. federal operating loss carryforwards that expire between 2024 and 2033. In addition, the Company has $659.8 million of aggregated state operating loss carryforwards that expire over various time periods, and has $286.5 million of foreign operating loss carryforwards, of which $153.8 million have an unlimited carryforward life and $93.0 million expire between 2014 and 2022. The remaining $39.7 million of foreign operating loss carryforwards expire between 2014 and 2033. The Company has potential tax benefits of $1.7 million of tax credit carryforwards on foreign jurisdictions, all of which expire between 2014 and 2023. The Company has $1.5 million of AMT credit with an unlimited carryforward life. A valuation allowance is recorded when, based on the weight of the evidence, it is more likely than not that some portion, or all, of the deferred tax asset will not be realized. In assessing the likelihood that a deferred tax asset will be realized, management considers, among other factors, the trend of historical and projected future taxable income, the scheduled reversal of deferred tax liabilities, the carryforward period for net operating losses and credits as well as tax planning strategies available to the Company. After consideration of all available evidence both positive and negative, the Company has determined that valuation allowances of $201.1 million and $203.8 million are appropriate as of December 28, 2013 and December 29, 2012, respectively. A reconciliation of the beginning and ending amount of unrecognized tax benefits, included in Other noncurrent liabilities in the accompanying Consolidated Balance Sheet, excluding potential interest and penalties associated with uncertain tax positions, is as follows:
In thousands | Successor |  |  | Predecessor
Fiscal Year Ended December 28, 2013 |  | Fiscal Year Ended December 29, 2012 |  | Eleven Months Ended December 31, 2011 |  |  | One Month Ended January 28, 2011
Unrecognized tax benefits at beginning of period | $ | 12,794 |  |  | $ | 12,892 |  |  | $ | 24,704 |  |  |  | $ | 24,357 |
Gross increases for tax positions of prior years | — |  |  | — |  |  | — |  |  |  | — |
Gross decreases for tax positions of prior years | (260 | ) |  | (127 | ) |  | (11,654 | ) |  |  | (239 | )
Increases in tax positions for the current year | 1,753 |  |  | 2,085 |  |  | 2,621 |  |  |  | 141 |
Lapse of statute of limitations | (1,873 | ) |  | (1,810 | ) |  | (2,898 | ) |  |  | — |
Purchase accounting adjustment | 2,594 |  |  | — |  |  | — |  |  |  | 445 |
Currency translation | (727 | ) |  | (246 | ) |  | 119 |  |  |  | — |
Unrecognized tax benefits at end of period | $ | 14,281 |  |  | $ | 12,794 |  |  | $ | 12,892 |  |  |  | $ | 24,704 |
The total amount of UTBs as of December 28, 2013 and December 29, 2012 were $23.6 million and $25.0 million, respectively. These amounts include accrued interest and penalties of $9.3 million and $12.2 million at December 28, 2013 and December 29, 2012, respectively. Further, UTBs of $23.6 million represent the amount that, if recognized, would affect the effective tax rate of the Company in future periods. Included in the balance as of December 28, 2013 was $3.8 million related to tax positions for which it is reasonably possible that the total amounts could significantly change during the next twelve months. This amount represents a decrease in UTBs comprised of items related to lapse of statute of limitations or settlement of issues. The Company continues to recognize interest and/or penalties related to income taxes as a component of income tax expense. During 2013, Mexico initiated a tax amnesty program that provides a reduction in taxes owed and the elimination of all related penalties and interest. In May 2013, the Company exercised its right under the amnesty program related to the country's Asset Tax. As a result, the Company recorded a discrete tax expense of $2.9 million during the second quarter associated with the amnesty program. In July 2013, Colombia initiated a tax amnesty program under which the Company filed for tax amnesty for the 2007 tax year related to a transfer pricing issue. The Colombia tax authorities accepted the amnesty request and as a result, the Company paid $0.5 million to settle the outstanding issue. During 2012, the Company completed a sale of leased equipment between its' Netherlands and Colombia subsidiaries. At December 29, 2012, the capitalized assets have a book value of $20.7 million, which will be depreciated over the remaining useful life of the equipment. The Company recognized no gain or loss on this intercompany transaction. However, due to different tax rates in each jurisdiction, the transaction resulted in a deferred tax expense of $0.1 million at December 28, 2013 and a deferred tax benefit of $1.2 million at December 29, 2012 which the Company recorded within Additional paid-in-capital during 2012. The equity adjustment will be recognized in earnings over the remaining useful life of the equipment. Management judgment is required in determining tax provisions and evaluating tax positions. Although management believes its tax positions and related provisions reflected in the consolidated financial statements are fully supportable, it recognizes that these tax positions and related provisions may be challenged by various tax authorities. These tax positions and related provisions are reviewed on an ongoing basis and are adjusted as additional facts and information become available, including progress on tax audits, changes in interpretations of tax laws, developments in case law and closing of statute of limitations. The Company’s tax provision includes the impact of recording reserves and any changes thereto. As of December 28, 2013, the Company has a number of open tax years with various taxing jurisdictions that range from 2003 to 2013. The results of current tax audits and reviews related to open tax years have not been finalized, and management believes that the ultimate outcomes of these audits and reviews will not have a material adverse effect on the Company’s financial position, results of operations or cash flows. The major jurisdictions where the Company files income tax returns include the United States, Canada, China, India, the Netherlands, France, Germany, Spain, United Kingdom, Italy, Mexico, Colombia, and Argentina. The U.S. federal tax returns have been examined through fiscal 2004 and the various taxing jurisdictions generally remain open and subject to examination by the relevant tax authorities for the tax years 2003 through 2013. As a result of the acquisition of Fiberweb, the Company now has operations in the U.S., France, United Kingdom, Germany, Italy and India. Based on the weight of the evidence, it is management's opinion, it is more likely than not that some portion, or all, of the deferred tax assets associated with these entities will not be realized. Therefore, the net deferred tax asset associated with these entities were fully valued as of the opening balance sheet date. The Fiberweb U.S. operations are owned directly by Fiberweb PLC. Through tax planning, the U.S. entities became part of the Company's U.S. consolidated federal tax return on December 22, 2013. However, on the Acquisition Date, these entities were not part of the Company's U.S. consolidated federal tax return and as a result, it was management's opinion that it was more likely than not that these entities would recognize their deferred tax assets. Therefore, there were no valuation allowances established at the opening balance sheet date. Once they became part of the Company's U.S. consolidated federal tax return, these amounts became fully valued. Fiberweb entities in the U.S. have a net deferred tax liability which created a tax benefit of $22.8 million.

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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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