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Income Taxes | 12 Months Ended
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Dec. 31, 2017
Income Tax Disclosure [Abstract] |
Income Taxes |
17. | Income Taxes
We and our principal domestic subsidiaries are included in a consolidated U.S. Federal income tax return. Our international subsidiaries file various income tax returns in their jurisdictions. The foreign earnings (losses) before income taxes were $99.5 million in 2017, $5.6 million in 2016 and $(52.1) million in 2015. Earnings before income taxes include the impact of intercompany interest expense between domestic and foreign legal entities. Foreign intercompany interest expense was $64.2 million in 2017, $110.7 million in 2016 and $107.0 million in 2015. Domestic intercompany interest income was $64.2 million in 2017, $110.7 million in 2016 and $107.0 million in 2015. Significant components of earnings before income taxes and the provision for income taxes are as follows (in millions):
|  | Year Ended December 31, |
|  | 2017 |  |  | 2016 |  |  | 2015 |
Earnings (losses) before income taxes: |  |  |  |  |  |  |  |  |  |  |  |
United States |  | $ | 278.6 |  |  | $ | 351.3 |  |  | $ | 345.6 |
Foreign, principally Australia, Canada, New Zealand and the U.K. |  |  | 99.5 |  |  |  | 5.6 |  |  |  | (52.1 | )
Total earnings before income taxes |  | $ | 378.1 |  |  | $ | 356.9 |  |  | $ | 293.5 |
Provision (benefit) for income taxes: |  |  |  |  |  |  |  |  |  |  |  |
Federal: |  |  |  |  |  |  |  |  |  |  |  |
Current |  | $ | 16.4 |  |  | $ | 45.9 |  |  | $ | 43.9 |
Deferred |  |  | (160.4 | ) |  |  | (146.7 | ) |  |  | (139.4 | )
|  |  | (144.0 | ) |  |  | (100.8 | ) |  |  | (95.5 | )
State and local: |  |  |  |  |  |  |  |  |  |  |  |
Current |  |  | 6.7 |  |  |  | 8.4 |  |  |  | 18.9 |
Deferred |  |  | 1.4 |  |  |  | (0.3 | ) |  |  | (3.3 | )
|  |  | 8.1 |  |  |  | 8.1 |  |  |  | 15.6 |
Foreign: |  |  |  |  |  |  |  |  |  |  |  |
Current |  |  | 29.1 |  |  |  | 22.4 |  |  |  | 22.9 |
Deferred |  |  | (14.3 | ) |  |  | (17.8 | ) |  |  | (38.6 | )
|  |  | 14.8 |  |  |  | 4.6 |  |  |  | (15.7 | )
Total benefit for income taxes |  | $ | (121.1 | ) |  | $ | (88.1 | ) |  | $ | (95.6 | )
A reconciliation of the provision for income taxes with the U.S. Federal statutory income tax rate is as follows (in millions, except percentages):
|  | Year Ended December 31, |
|  | 2017 |  |  | 2016 |  |  | 2015 |
|  | Amount |  |  | % of Pretax Earnings |  |  | Amount |  |  | % of Pretax Earnings |  |  | Amount |  |  | % of Pretax Earnings |
Federal statutory rate |  | $ | 132.4 |  |  |  | 35.0 |  |  | $ | 124.9 |  |  |  | 35.0 |  |  | $ | 102.7 |  |  |  | 35.0 |
State income taxes - net of |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Federal benefit |  |  | 5.3 |  |  |  | 1.4 |  |  |  | 5.3 |  |  |  | 1.5 |  |  |  | 10.2 |  |  |  | 3.5 |
Differences related to non U.S. operations |  |  | (48.5 | ) |  |  | (12.8 | ) |  |  | (34.1 | ) |  |  | (9.6 | ) |  |  | (22.6 | ) |  |  | (7.7 | )
Alternative energy, foreign and other tax credits |  |  | (230.1 | ) |  |  | (60.9 | ) |  |  | (194.4 | ) |  |  | (54.5 | ) |  |  | (181.3 | ) |  |  | (61.8 | )
Other permanent differences |  |  | (10.6 | ) |  |  | (2.8 | ) |  |  | (4.8 | ) |  |  | (1.3 | ) |  |  | (4.9 | ) |  |  | (1.7 | )
U.S. repatriation tax |  |  | 36.8 |  |  |  | 9.7 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Stock-based compensation |  |  | (15.1 | ) |  |  | (4.0 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Changes in unrecognized tax benefits |  |  | (0.9 | ) |  |  | (0.2 | ) |  |  | 2.2 |  |  |  | 0.6 |  |  |  | 3.0 |  |  |  | 1.0 |
Change in valuation allowance |  |  | 12.3 |  |  |  | 3.3 |  |  |  | 14.0 |  |  |  | 3.9 |  |  |  | 1.7 |  |  |  | 0.6 |
Change in U.S. and U.K. tax rates |  |  | (2.2 | ) |  |  | (0.6 | ) |  |  | (1.5 | ) |  |  | (0.4 | ) |  |  | (4.2 | ) |  |  | (1.4 | )
Other |  |  | (0.5 | ) |  |  | (0.1 | ) |  |  | 0.3 |  |  |  | 0.1 |  |  |  | (0.2 | ) |  |  | (0.1 | )
Benefit for income taxes |  | $ | (121.1 | ) |  |  | (32.0 | ) |  | $ | (88.1 | ) |  |  | (24.7 | ) |  | $ | (95.6 | ) |  |  | (32.6 | )
A reconciliation of the beginning and ending balances of the total amounts of gross unrecognized tax benefits is as follows (in millions):
|  | December 31, |
|  | 2017 |  |  | 2016 |
Gross unrecognized tax benefits at January 1 |  | $ | 14.5 |  |  | $ | 15.7 |
Increases in tax positions for current year |  |  | 1.6 |  |  |  | 2.4 |
Settlements |  |  | (1.8 | ) |  |  | (1.4 | )
Lapse in statute of limitations |  |  | (0.7 | ) |  |  | (1.8 | )
Increases in tax positions for prior years |  |  | 0.6 |  |  |  | 1.8 |
Decreases in tax positions for prior years |  |  | (3.3 | ) |  |  | (2.2 | )
Gross unrecognized tax benefits at December 31 |  | $ | 10.9 |  |  | $ | 14.5 |
The total amount of net unrecognized tax benefits that, if recognized, would affect the effective tax rate was $9.0 million and $10.0 million at December 31, 2017 and 2016, respectively. We accrue interest and penalties related to unrecognized tax benefits in our provision for income taxes. At December 31, 2017 and 2016, we had accrued interest and penalties related to unrecognized tax benefits of $2.9 million and $2.8 million, respectively. We file income tax returns in the U.S. and in various state, local and foreign jurisdictions. We are routinely examined by tax authorities in these jurisdictions. At December 31, 2017, our corporate returns had been examined by the IRS through calendar year 2010. The IRS is currently conducting various examinations of calendar years 2011 and 2012. In addition, a number of foreign, state, local and partnership examinations are currently ongoing. It is reasonably possible that our gross unrecognized tax benefits may change within the next twelve months. However, we believe any changes in the recorded balance would not have a significant impact on our consolidated financial statements. 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. Significant components of our deferred tax assets and liabilities are as follows (in millions):
|  | December 31, |
|  | 2017 |  |  | 2016 |
Deferred tax assets: |  |  |  |  |  |  |  |
Alternative minimum tax and other credit carryforwards |  | $ | 683.3 |  |  | $ | 477.9 |
Accrued and unfunded compensation and employee benefits |  |  | 143.2 |  |  |  | 219.0 |
Amortizable intangible assets |  |  | 45.8 |  |  |  | 38.8 |
Compensation expense related to stock options |  |  | 13.4 |  |  |  | 16.9 |
Accrued liabilities |  |  | 28.9 |  |  |  | 31.7 |
Accrued pension liability |  |  | 14.8 |  |  |  | 22.9 |
Investments |  |  | 1.1 |  |  |  | 7.7 |
Net operating loss carryforwards |  |  | 30.5 |  |  |  | 20.4 |
Capital loss carryforwards |  |  | 12.9 |  |  |  | 16.0 |
Deferred rent liability |  |  | 4.8 |  |  |  | 8.1 |
Other |  |  | 5.5 |  |  |  | 3.9 |
Total deferred tax assets |  |  | 984.2 |  |  |  | 863.3 |
Valuation allowance for deferred tax assets |  |  | (79.1 | ) |  |  | (66.8 | )
Deferred tax assets |  |  | 905.1 |  |  |  | 796.5 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Nondeductible amortizable intangible assets |  |  | 273.8 |  |  |  | 310.2 |
Investment-related partnerships |  |  | 17.6 |  |  |  | 34.5 |
Depreciable fixed assets |  |  | 26.5 |  |  |  | 18.2 |
Hedging instruments |  |  | 3.8 |  |  |  | 4.1 |
Other prepaid items |  |  | 10.3 |  |  |  | 4.1 |
Total deferred tax liabilities |  |  | 332.0 |  |  |  | 371.1 |
Net deferred tax assets |  | $ | 573.1 |  |  | $ | 425.4 |
At December 31, 2017 and 2016, $332.0 million and $371.1 million, respectively, have been included in noncurrent liabilities in the accompanying consolidated balance sheet. Alternative minimum tax credits of $108.2 million have an indefinite life and will be utilized or refunded beginning in 2018 and ending in 2021, according to a specific formula, general business tax credits of $571.6 million begin to expire, if not utilized, in 2034, and state credits of $3.5 million expire, if not used, in 2021. We expect the historically favorable trend in earnings before income taxes to continue in the foreseeable future. Accordingly, we expect to make full use of the net deferred tax assets. Valuation allowances have been established for certain foreign intangible assets and various state net operating loss carryforwards that may not be utilized in the future. We do not provide for U.S. Federal income taxes on the undistributed earnings ($330.0 million and $243.0 million at December 31, 2017 and 2016, respectively) of foreign subsidiaries which are considered permanently invested outside of the U.S. The amount of unrecognized deferred tax liability on these undistributed earnings was immaterial at December 31, 2017 and $15.6 million at December 31, 2016, respectively. If undistributed earnings are repatriated to the U.S. in the future they would be considered previously taxed income in the U.S., however the amount of unrecognized tax liability on these earnings is not expected to be material. On December 22, 2017, the U.S. enacted tax legislation commonly referred to as the Tax Cuts and Jobs Act (which we refer to as the Tax Act), which significantly revises the U.S. tax code by, among other things, lowering the corporate income tax rate from 35.0% to 21.0%; limiting the deductibility of interest expense; implementing a territorial tax system, and imposing a repatriation tax on deemed repatriated earnings of foreign subsidiaries. See discussion of repatriation tax below. SEC Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (which we refer to as SAB 118) describes three scenarios associated with a company’s status of accounting for income tax reform. Under the SAB 118 guidance, we have determined that we are able to make reasonable estimates for certain effects of tax reform. In our 2017 consolidated financial statements, we have recognized provisional amounts for our deferred income taxes and repatriation tax based on reasonable estimates. However, as of the date of this Annual Report on Form 10-K, we are continuing to evaluate the accounting impactions of the Tax Act as we continue to assemble and analyze all the information required to prepare and analyze these effects and await additional guidance from the U.S. Treasury Department, IRS or other standard-setting bodies. We continue to assess information relating to these amounts, and with respect to the repatriation tax, we continue to assess its application in other jurisdictions. Additionally, we continue to analyze other information and regulatory guidance and accordingly we may record additional provisional amounts or adjustments to provisional amounts in future periods. Deferred Income Taxes: We have determined that our net deferred tax asset will require revaluation as a result of the Tax Act. We have recognized a provisional $1.0 million net benefit to the provision for income taxes for the years ended December 31, 2017 as a result of the restatement of our net deferred tax assets. The revaluation of our net deferred tax asset is subject to further refinement as additional information becomes available and further analysis is completed. Repatriation Tax: All U.S. shareholders of foreign corporations that own at least 10% must include in their income a one-time inclusion of all accumulated post 1986 undistributed earnings as of December 31, 2017. We have recognized a provisional income tax expense of $40.0 million as a result of this repatriation tax. Cost Recovery: While we have not yet completed all of the computations necessary to determine the 2017 expenditures that qualify for immediate expensing, we have recorded an immaterial provisional benefit based on our current intent to fully expense all qualifying expenditures. This resulted in a decrease to our current income taxes payable and a corresponding increase in our deferred tax liability.

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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 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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