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Income Taxes (Tables)
 12 Months Ended
Dec. 31, 2015
Income Tax Disclosure [Abstract]  
Components of Income Tax Expense Benefit
Income from continuing operations before income taxes and equity in net income of unconsolidated investments, and current and deferred income tax expense (benefit) are composed of the following (in thousands):
 
Year Ended December 31,
 
2015
 
2014
 
2013
Income from continuing operations before income taxes and equity in net income of unconsolidated investments:
 
 
 
 
 
Domestic
$
8,594

 
$
45,689

 
$
351,731

Foreign
349,593

 
167,490

 
186,711

Total
$
358,187

 
$
213,179

 
$
538,442

 
 
 
 
 
 
Current income tax expense:
 
 
 
 
 
Federal
$
85,245

 
$
36,708

 
$
53,953

State
71

 
3,209

 
2,195

Foreign
80,104

 
25,700

 
18,414

Total
$
165,420

 
$
65,617

 
$
74,562

 
 
 
 
 
 
Deferred income tax (benefit) expense:
 
 
 
 
 
Federal
$
(129,433
)
 
$
(32,890
)
 
$
69,817

State
(1,170
)
 
(1,139
)
 
2,416

Foreign
(5,695
)
 
(13,104
)
 
(12,350
)
Total
$
(136,298
)
 
$
(47,133
)
 
$
59,883

 
 
 
 
 
 
Total income tax expense
$
29,122

 
$
18,484

 
$
134,445
Significant Differences Between United States Federal Statutory Rate and Effective Income Tax Rate
The reconciliation of the U.S. federal statutory rate to the effective income tax rate is as follows:
 
% of Income Before Income Taxes
 
2015
 
2014
 
2013
Federal statutory rate
35.0
 %
 
35.0
 %
 
35.0
 %
State taxes, net of federal tax benefit
1.7

 
0.2

 
0.7

Change in valuation allowance(a)
4.7

 
1.0

 
(2.2
)
Impact of foreign earnings, net(b)
(19.6
)
 
(24.8
)
 
(10.7
)
Subpart F income
6.8

 
1.2

 
0.4

Deemed repatriation of foreign income(d)
91.6

 
—

 
—

Undistributed earnings of foreign subsidiaries(b)(d)
(99.6
)
 
(0.3
)
 
2.9

Nondeductible transaction costs
1.8

 
—

 
—

Depletion
(1.6
)
 
(2.4
)
 
(0.9
)
Revaluation of unrecognized tax benefits/reserve requirements(c)
(11.3
)
 
(0.6
)
 
(0.1
)
Domestic manufacturing tax deduction
(0.9
)
 
(2.2
)
 
(0.9
)
Other items, net
(0.5
)
 
1.6

 
0.8

Effective income tax rate
8.1
 %
 
8.7
 %
 
25.0
 %
(a)
During 2013, our Avonmouth, U.K. legal entity was dissolved, therefore the corresponding valuation allowance and deferred tax assets were written off.
(b)
During 2015, 2014 and 2013, we received actual and deemed distributions of $1.4 billion, $12.6 million and $12.3 million, respectively, from various foreign subsidiaries and joint ventures, and realized an expense, net of foreign tax credits, of $350.2 million, $2.8 million and $2.4 million, respectively, related to the repatriation of these earnings, which impacted our effective tax rate. We have asserted, for all periods being reported, indefinite investment of our share of the income of JBC, a Free Zones company under the laws of the Hashemite Kingdom of Jordan. The applicable provisions of the Jordanian law, and applicable regulations thereunder, do not have a termination provision and the exemption is indefinite. As a Free Zones company, JBC is not subject to income taxes on the profits of products exported from Jordan, and currently, substantially all of the profits are from exports. This gave us a rate benefit of 7.1%, 12.4%, and 4.5% for 2015, 2014, and 2013, respectively.
(c)
During 2014, we released various tax reserves primarily related to the expiration of the applicable U.S. federal statute of limitations for 2009 through 2010 which provided a net benefit of approximately $2.5 million. In 2015, the main impact is from the release of reserves on the close of a U.S. federal audit, and lapse of statute of limitations. These releases provided a net benefit of approximately $41 million.
(d)
In prior years, we designated the undistributed earnings of substantially all of our foreign subsidiaries as indefinitely invested. In 2015, we were not indefinitely invested in a portion of earnings from legacy Rockwood entities that were part of the repatriation planning, for which a deferred tax liability of $387.0 million was established in the opening balance sheet. This liability reversed upon the completion of the repatriation with $356.2 million impacting earnings and $30.8 million from foreign exchange differences. The reversal of this liability offsets the tax amount of $327.9 million from legacy Rockwood entities included in the deemed repatriation of foreign income.
Deferred Income Tax Assets and Liabilities Recorded on Consolidated Balance Sheets
Deferred income tax assets and liabilities recorded on the consolidated balance sheets as of December 31, 2015 and 2014 consist of the following (in thousands):
 
December 31,
 
2015
 
2014
Deferred tax assets:
 
 
 
Accrued employee benefits
$
28,167

 
$
20,834

Accrued expenses
33,048

 
2,379

Operating loss carryovers
131,985

 
82,017

Pensions
111,059

 
79,113

Intangibles
—

 
5,732

Tax credit carryovers
2,555

 
34,469

Other
32,725

 
20,227

Gross deferred tax assets
339,539

 
244,771

Valuation allowance
(85,370
)
 
(30,768
)
Deferred tax assets
254,169

 
214,003

 
 
 
 
Deferred tax liabilities:
 
 
 
Depreciation
(378,669
)
 
(190,280
)
Intangibles
(488,855
)
 
—

Foreign currency translation adjustments
—

 
(4,752
)
Other
(46,937
)
 
(18,420
)
Deferred tax liabilities
(914,461
)
 
(213,452
)
 
 
 
 
Net deferred tax (liabilities) assets
$
(660,292
)
 
$
551

Classification in the consolidated balance sheets:
 
 
 
Current deferred tax assets
$
—

 
$
1,801

Current deferred tax liabilities
—

 
(6,806
)
Noncurrent deferred tax assets
76,025

 
62,440

Noncurrent deferred tax liabilities
(736,317
)
 
(56,884
)
Net deferred tax (liabilities) assets
$
(660,292
)
 
$
551
Changes in Balance of Deferred Tax Asset Valuation Allowance
Changes in the balance of our deferred tax asset valuation allowance are as follows (in thousands):
 
Year Ended December 31,
 
2015
 
2014
 
2013
Balance at January 1
$
(30,768
)
 
$
(33,757
)
 
$
(49,562
)
Additions(a)
(61,122
)
 
(1,895
)
 
(4,359
)
Deductions
6,520

 
4,884

 
20,164

Balance at December 31
$
(85,370
)
 
$
(30,768
)
 
$
(33,757
)
Reconciliation of Total Gross Liability Related to Uncertain Tax Positions
The following is a reconciliation of our total gross liability related to uncertain tax positions for 2015, 2014 and 2013 (in thousands):
 
Year Ended December 31,
 
2015
 
2014
 
2013
Balance at January 1
$
24,969

 
$
29,143

 
$
28,398

Acquisition of Rockwood
124,758

 
—

 
—

Additions for tax positions related to prior years
4,329

 
—

 
—

Reductions for tax positions related to prior years
(46,211
)
 
(214
)
 
(348
)
Additions for tax positions related to current year
202

 
2,232

 
2,061

Lapses in statutes of limitations/settlements
(6,736
)
 
(5,057
)
 
(473
)
Foreign currency translation adjustment
(5,596
)
 
(1,135
)
 
(495
)
Balance at December 31
$
95,715

 
$
24,969

 
$
29,143