XML 40 R26.htm IDEA: XBRL DOCUMENT
v3.10.0.1

Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2018
Income Tax Disclosure [Abstract] |
Income Taxes |
18. | 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. Earnings before income taxes in the table below include the impact of intercompany interest expense between domestic and foreign legal entities. Domestic intercompany interest income and offsetting foreign intercompany interest expense were $65.8 million in 2018, $64.2 million in 2017 and $110.7 million in 2016. Significant components of earnings before income taxes and the provision for income taxes are as follows (in millions):
|  | Year Ended December 31, |
|  | 2018 |  |  | 2017 |  |  | 2016 |
Earnings (losses) before income taxes: |  |  |  |  |  |  |  |  |  |  |  |
United States |  | $ | 337.6 |  |  | $ | 274.1 |  |  | $ | 335.7 |
Foreign, principally Australia, Canada, New Zealand and the U.K. |  |  | 141.8 |  |  |  | 85.7 |  |  |  | (2.1 | )
Total earnings before income taxes |  | $ | 479.4 |  |  | $ | 359.8 |  |  | $ | 333.6 |
Provision (benefit) for income taxes: |  |  |  |  |  |  |  |  |  |  |  |
Federal: |  |  |  |  |  |  |  |  |  |  |  |
Current |  | $ | — |  |  | $ | 7.1 |  |  | $ | 40.2 |
Deferred |  |  | (214.0 | ) |  |  | (183.5 | ) |  |  | (146.7 | )
|  |  | (214.0 | ) |  |  | (176.4 | ) |  |  | (106.5 | )
State and local: |  |  |  |  |  |  |  |  |  |  |  |
Current |  |  | 15.4 |  |  |  | 11.6 |  |  |  | 7.2 |
Deferred |  |  | (29.0 | ) |  |  | (3.9 | ) |  |  | (0.3 | )
|  |  | (13.6 | ) |  |  | 7.7 |  |  |  | 6.9 |
Foreign: |  |  |  |  |  |  |  |  |  |  |  |
Current |  |  | 60.7 |  |  |  | 25.9 |  |  |  | 20.7 |
Deferred |  |  | (29.6 | ) |  |  | (14.3 | ) |  |  | (17.8 | )
|  |  | 31.1 |  |  |  | 11.6 |  |  |  | 2.9 |
Total benefit for income taxes |  | $ | (196.5 | ) |  | $ | (157.1 | ) |  | $ | (96.7 | )
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, |
|  | 2018 |  |  | 2017 |  |  | 2016 |
|  | Amount |  |  | % of Pretax Earnings |  |  | Amount |  |  | % of Pretax Earnings |  |  | Amount |  |  | % of Pretax Earnings |
Federal statutory rate |  | $ | 100.7 |  |  |  | 21.0 |  |  | $ | 126.0 |  |  |  | 35.0 |  |  | $ | 116.7 |  |  |  | 35.0 |
State income taxes - net of |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Federal benefit |  |  | 8.5 |  |  |  | 1.8 |  |  |  | 5.0 |  |  |  | 1.4 |  |  |  | 4.5 |  |  |  | 1.3 |
Differences related to non U.S. operations |  |  | (14.8 | ) |  |  | (3.1 | ) |  |  | (46.9 | ) |  |  | (13.0 | ) |  |  | (33.1 | ) |  |  | (9.9 | )
Alternative energy, foreign and other tax credits |  |  | (252.9 | ) |  |  | (52.8 | ) |  |  | (230.1 | ) |  |  | (64.0 | ) |  |  | (194.4 | ) |  |  | (58.2 | )
Other permanent differences |  |  | 0.9 |  |  |  | 0.2 |  |  |  | (10.6 | ) |  |  | (2.9 | ) |  |  | (4.8 | ) |  |  | (1.4 | )
U.S. repatriation tax |  |  | (1.8 | ) |  |  | (0.4 | ) |  |  | 36.8 |  |  |  | 10.2 |  |  |  | — |  |  |  | — |
Stock-based compensation |  |  | (15.0 | ) |  |  | (3.1 | ) |  |  | (15.1 | ) |  |  | (4.2 | ) |  |  | — |  |  |  | — |
Changes in unrecognized tax benefits |  |  | (0.2 | ) |  |  | — |  |  |  | (0.9 | ) |  |  | (0.3 | ) |  |  | 2.2 |  |  |  | 0.7 |
Change in valuation allowance |  |  | (22.0 | ) |  |  | (4.6 | ) |  |  | 12.3 |  |  |  | 3.4 |  |  |  | 14.0 |  |  |  | 4.2 |
Change in U.S. and U.K. tax rates |  |  | — |  |  |  | — |  |  |  | (33.2 | ) |  |  | (9.2 | ) |  |  | (1.5 | ) |  |  | (0.4 | )
Other |  |  | 0.1 |  |  |  | — |  |  |  | (0.4 | ) |  |  | (0.1 | ) |  |  | (0.3 | ) |  |  | (0.1 | )
Benefit for income taxes |  | $ | (196.5 | ) |  |  | (41.0 | ) |  | $ | (157.1 | ) |  |  | (43.7 | ) |  | $ | (96.7 | ) |  |  | (29.0 | )
A reconciliation of the beginning and ending balances of the total amounts of gross unrecognized tax benefits is as follows (in millions):
|  | December 31, |
|  | 2018 |  |  | 2017 |
Gross unrecognized tax benefits at January 1 |  | $ | 10.9 |  |  | $ | 14.5 |
Increases in tax positions for current year |  |  | 1.7 |  |  |  | 1.6 |
Settlements |  |  | — |  |  |  | (1.8 | )
Lapse in statute of limitations |  |  | (1.4 | ) |  |  | (0.7 | )
Increases in tax positions for prior years |  |  | 0.4 |  |  |  | 0.6 |
Decreases in tax positions for prior years |  |  | (0.9 | ) |  |  | (3.3 | )
Gross unrecognized tax benefits at December 31 |  | $ | 10.7 |  |  | $ | 10.9 |
The total amount of net unrecognized tax benefits that, if recognized, would affect the effective tax rate was $8.8 million, and $9.0 million at December 31, 2018 and 2017, respectively. We accrue interest and penalties related to unrecognized tax benefits in our provision for income taxes. At December 31, 2018 and 2017, we had accrued interest and penalties related to unrecognized tax benefits of $2.9 million and $2.9 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, 2018, 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, |
|  | 2018 |  |  | 2017 |
Deferred tax assets: |  |  |  |  |  |  |  |
Alternative minimum tax and other credit carryforwards |  | $ | 856.9 |  |  | $ | 683.3 |
Accrued and unfunded compensation and employee benefits |  |  | 158.8 |  |  |  | 141.2 |
Amortizable intangible assets |  |  | 48.8 |  |  |  | 45.8 |
Compensation expense related to stock options |  |  | 12.2 |  |  |  | 13.4 |
Accrued liabilities |  |  | 63.8 |  |  |  | 64.8 |
Accrued pension liability |  |  | 11.5 |  |  |  | 16.8 |
Investments |  |  | 1.5 |  |  |  | 1.1 |
Net operating loss carryforwards |  |  | 36.8 |  |  |  | 30.5 |
Capital loss carryforwards |  |  | 12.2 |  |  |  | 12.9 |
Deferred rent liability |  |  | 4.2 |  |  |  | 4.8 |
Hedging instruments |  |  | 1.9 |  |  |  | — |
Other |  |  | 3.4 |  |  |  | 5.4 |
Total deferred tax assets |  |  | 1,212.0 |  |  |  | 1,020.0 |
Valuation allowance for deferred tax assets |  |  | (67.4 | ) |  |  | (79.1 | )
Deferred tax assets |  |  | 1,144.6 |  |  |  | 940.9 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Nondeductible amortizable intangible assets |  |  | 297.6 |  |  |  | 273.8 |
Investment-related partnerships |  |  | 13.6 |  |  |  | 17.6 |
Depreciable fixed assets |  |  | 25.4 |  |  |  | 26.5 |
Revenue recognition |  |  | 98.1 |  |  |  | 80.6 |
Hedging instruments |  |  | — |  |  |  | 3.8 |
Other prepaid items |  |  | 10.6 |  |  |  | 10.3 |
Total deferred tax liabilities |  |  | 445.3 |  |  |  | 412.6 |
Net deferred tax assets |  | $ | 699.3 |  |  | $ | 528.3 |
At December 31, 2018 and 2017, $106.9 million and $323.3 million, respectively, have been included in noncurrent liabilities in the accompanying consolidated balance sheet. Alternative minimum tax credits of $48.5 million have an indefinite life and will be utilized or refunded beginning in 2019 and ending in 2021, according to a specific formula, general business tax credits of $799.1 million begin to expire, if not utilized, in 2034, excess foreign tax credits of $1.9 million will be carried back for utilization in 2017, and state credits, net of federal benefit, of $7.4 million expire, if not used, by 2023. 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 have not provided for state or withholding income taxes on the undistributed earnings ($631.0 million and $651.0 million at December 31, 2018 and 2017, 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 is not expected to be material at December 31, 2018 and 2017. There are only select jurisdictions for which the company regards the undistributed earnings as no longer permanently reinvested. We have recognized the deferred tax liability associated with these undistributed earnings during 2018, however, such liability was also not material. For U.S. federal income tax purposes, we now recognize current income tax expense on undistributed earnings of foreign subsidiaries in accordance with the provisions of the Tax Cuts and Jobs Act (which we refer to as the Tax Act). On December 22, 2017, the U.S. enacted tax legislation commonly referred 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 earnings of foreign subsidiaries. See discussion of the various impacts of the Tax Act 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 made reasonable estimates for certain effects of tax reform in our 2017 consolidated financial statements. We recognized provisional amounts for our deferred income taxes and repatriation tax based on reasonable estimates. As of the date of this Annual Report on Form 10-K, we have finalized our estimates under SAB 118. Finalization of the previous estimates under SAB 118 have been recorded as discrete items in 2018. We have completed our analysis with respect to the income tax implications of the Tax Act, which has been reflected in our 2018 consolidated financial statements. Deferred Income Taxes - For the year ended December 31, 2017, we have determined that our net deferred tax asset required revaluation as a result of the Tax Act. At that time, we recognized a provisional $1.0 million net benefit to the provision for income taxes as a result of the restatement of our net deferred tax assets. In the 2018 consolidated financial statements, we finalized the revaluation of our net deferred tax asset by recognizing an additional $2.9 million net benefit to the provision for income taxes. Repatriation Tax - All U.S. shareholders that own at least 10% of foreign corporations must include in their income a one-time inclusion of all accumulated post 1986 undistributed foreign earnings as of December 31, 2017. We previously recognized a provisional income tax expense of $40.0 million as a result of this repatriation tax. In the 2018 consolidated financial statements, we finalized the repatriation tax by recognizing a benefit of $2.9 million to the provision for income taxes. Cost Recovery - We previously recorded an immaterial provisional benefit based on our intent to fully expense all qualifying expenditures as of December 31, 2017. This resulted in a decrease to our current income taxes payable and a corresponding increase in our deferred tax liability. In our 2018 consolidated financial statements, we finalized the cost recovery analysis with no change to the provision for income taxes. We have also completed our analysis of the broader tax effects of the Tax Act which is reflected in our 2018 consolidated financial statements.

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration