XML 40 R24.htm IDEA: XBRL DOCUMENT
v3.10.0.1

INCOME TAXES | 12 Months Ended
--- | ---
Dec. 31, 2018
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES Income tax expense consisted of the following (in millions of dollars):
| For the Years Ended December 31,
| 2018 |  | 2017 |  | 2016
Current income tax expense: |  |  |  |  |
U.S. Federal | $ | 166 |  |  | $ | 248 |  |  | $ | 311 |
U.S. State | 32 |  |  | 29 |  |  | 38 |
Foreign | 47 |  |  | 22 |  |  | 25 |
Total current | 245 |  |  | 299 |  |  | 374 |
Deferred income tax expense | 13 |  |  | 14 |  |  | 12 |
Total income tax expense | $ | 258 |  |  | $ | 313 |  |  | $ | 386 |
Earnings (losses) before income taxes by geographical area consisted of the following (in millions of dollars):
| For the Years Ended December 31,
| 2018 |  | 2017 |  | 2016
U.S. | $ | 1,163 |  |  | $ | 971 |  |  | $ | 1,074 |
Foreign | (82 | ) |  | (35 | ) |  | (55 | )
| $ | 1,081 |  |  | $ | 936 |  |  | $ | 1,019 |
The income tax effects of temporary differences that gave rise to the net deferred tax asset (liability) as of December 31, 2018 and 2017 were as follows (in millions of dollars):
| As of December 31,
| 2018 |  | 2017
Deferred tax assets: |  |  |
Inventory | $ | 4 |  |  | $ | 14 |
Accrued expenses | 35 |  |  | 44 |
Accrued employment-related benefits | 49 |  |  | 63 |
Foreign operating loss carryforwards | 64 |  |  | 72 |
Tax credit carryforward | 22 |  |  | 20 |
Other | 7 |  |  | 8 |
Deferred tax assets | 181 |  |  | 221 |
Less valuation allowance | (72 | ) |  | (84 | )
Deferred tax assets, net of valuation allowance | $ | 109 |  |  | $ | 137 |
Deferred tax liabilities: |  |  |
Property, buildings and equipment | (29 | ) |  | (33 | )
Intangibles | (105 | ) |  | (119 | )
Software | (15 | ) |  | (20 | )
Prepaids | (6 | ) |  | (6 | )
Other | (8 | ) |  | (4 | )
Deferred tax liabilities | (163 | ) |  | (182 | )
Net deferred tax liability | $ | (54 | ) |  | $ | (45 | )
The net deferred tax asset (liability) is classified as follows: |  |  |
Noncurrent assets | $ | 12 |  |  | $ | 22 |
Noncurrent liabilities (foreign) | (66 | ) |  | (67 | )
Net deferred tax liability | $ | (54 | ) |  | $ | (45 | )
At December 31, 2018 the Company had $269 million of net operating loss (NOLs) carryforwards related primarily to foreign operations. Some of the operating loss carryforwards may expire at various dates through 2038. The Company has recorded a valuation allowance, which represents a provision for uncertainty as to the realization of the tax benefits of these carryforwards and deferred tax assets that may not be realized. The Company's valuation allowance changed as follows (in millions of dollars):
| For the Years Ended December 31,
| 2018 |  | 2017
Balance at beginning of period | $ | (84 | ) |  | $ | (73 | )
Increases primarily related to foreign NOLs | (3 | ) |  | (13 | )
Releases related to foreign NOLs | 16 |  |  | 8 |
Other changes, net | — |  |  | 5 |
Increase related to U.S. foreign tax credits | (1 | ) |  | (11 | )
Balance at end of period | $ | (72 | ) |  | $ | (84 | )
A reconciliation of income tax expense with federal income taxes at the statutory rate follows (in millions of dollars):
| For the Years Ended December 31,
| 2018 |  | 2017 |  | 2016
Federal income tax | $ | 227 |  |  | $ | 327 |  |  | $ | 357 |
State income taxes, net of federal income tax benefit | 32 |  |  | 20 |  |  | 26 |
Clean energy credit | (20 | ) |  | (38 | ) |  | (29 | )
Foreign rate difference | 20 |  |  | 10 |  |  | 21 |
Goodwill impairment | 20 |  |  | — |  |  | — |
U.S. tax legislation impact (see note below) | — |  |  | (3 | ) |  | — |
Excess tax benefits from stock-based compensation | (15 | ) |  | (14 | ) |  | — |
Other - net | (6 | ) |  | 11 |  |  | 11 |
Income tax expense | $ | 258 |  |  | $ | 313 |  |  | $ | 386 |
Effective tax rate | 23.9 | % |  | 33.5 | % |  | 37.9 | %
Clean Energy Credit In 2015 and 2016, the Company acquired noncontrolling interests in limited liability companies established to produce refined coal. The production and sale of refined coal that results in required emission reductions is eligible for tax credits under Section 45 of the Internal Revenue Code. The Company received tax credits in proportion to its equity interest. During the second half of 2018, the Company concluded its investments and will not have future benefits from these interests. U.S. Tax Legislation On December 22, 2017, the Tax Cuts and Jobs Act (the Tax Act) was signed into law, which significantly revised the U.S. corporate income tax system by lowering federal corporate income tax rates from 35% to 21% effective January 1, 2018, allowing accelerated expensing of qualified capital investments for a specific period, limiting net interest expense deductions and transitioning U.S. international taxation from a worldwide to a territorial tax system that required a one-time transition tax on unremitted earnings of certain foreign subsidiaries that were previously tax deferred, among other changes. During 2018, the Company completed the accounting for the impact from the Tax Act. The Company determined that there was no material change from its estimate recorded on December 31, 2017. Accounting for Income Taxes on Global Intangible Low-Taxed Income (GILTI) The Company recognizes the tax on GILTI as a period expense in the period the tax is incurred. Under this policy, the Company has not provided deferred taxes related to temporary differences that upon their reversal will affect the amount of income subject to GILTI in the period. Foreign Undistributed Earnings Estimated gross undistributed earnings of foreign subsidiaries at December 31, 2018, amounted to $545 million. The Company considers these undistributed earnings permanently reinvested in its foreign operations and is not recording a deferred tax liability for any foreign withholding taxes on such amounts. The Company's permanent reinvestment assertion has not changed following the enactment of the Tax Act. If at some future date the Company ceases to be permanently reinvested in its foreign subsidiaries, the Company may be subject to foreign withholding and other taxes on these undistributed earnings and may need to record a deferred tax liability for any outside basis difference in its investments in its foreign subsidiaries. Tax Uncertainties The Company recognizes in the financial statements a provision for tax uncertainties, resulting from application of complex tax regulations in multiple tax jurisdictions. The changes in the liability for tax uncertainties, excluding interest, are as follows (in millions of dollars):
| For the Years Ended December 31,
| 2018 |  | 2017 |  | 2016
Balance at beginning of year | $ | 45 |  |  | $ | 59 |  |  | $ | 61 |
Additions for tax positions related to the current year | 4 |  |  | 4 |  |  | 14 |
Additions for tax positions of prior years | 3 |  |  | 5 |  |  | 13 |
Reductions for tax positions of prior years | (5 | ) |  | (13 | ) |  | (15 | )
Reductions due to statute lapse | (9 | ) |  | (5 | ) |  | (1 | )
Settlements, audit payments, refunds - net | (1 | ) |  | (5 | ) |  | (13 | )
Balance at end of year | $ | 37 |  |  | $ | 45 |  |  | $ | 59 |
The Company classifies the liability for tax uncertainties in deferred income taxes and tax uncertainties. Included in this amount are $13 million and $21 million at December 31, 2018 and 2017, respectively, of tax positions for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility. Any changes in the timing of deductibility of these items would not affect the annual effective tax rate but would accelerate the payment of cash to the taxing authorities to an earlier period. Excluding the timing items, the remaining amounts would affect the annual tax rate. In 2018, the changes to tax positions related generally to the impact of expiring statutes, conclusion of audits and audit settlements. The Company regularly undergoes examination of its federal income tax returns by the Internal Revenue Service. The statute of limitations expired for the Company's 2014 federal tax return. The tax years 2015 through 2018 are open. The Company is also subject to audit by state, local and foreign taxing authorities. Tax years 2009-2018 remain subject to state and local audits and 2007-2018 remain subject to foreign audits. The amount of liability associated with the Company's tax uncertainties may change within the next 12 months due to the pending audit activity, expiring statutes or tax payments. A reasonable estimate of such change cannot be made. The Company recognizes interest expense and penalties related to its tax uncertainties in the provision for income taxes. For the years ended December 31, 2018, 2017 and 2016, the Company recognized an expense of approximately $1 million for each year. Total accrued interest and penalties related to tax uncertainties as of December 31, 2018, 2017 and 2016, were approximately $4 million, $5 million and $4 million, respectively.

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://www.xbrl.org/2003/role/presentationRef -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