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Income Taxes | 12 Months Ended
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Dec. 31, 2011
Income Taxes [Abstract] |
Income Taxes | 6) INCOME TAXES Components of income tax expense/(benefit) are as follows (amounts in thousands):
|  | Year Ended December 31, |
|  | 2011 |  |  | 2010 |  |  | 2009 |
Current |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 165,409 |  |  | $ | 105,077 |  |  | $ | 130,798 |
Foreign |  |  | 300 |  |  |  | 2,555 |  |  |  | — |
State |  |  | 22,901 |  |  |  | 16,547 |  |  |  | 18,976 |
|  |  | 188,610 |  |  |  | 124,179 |  |  |  | 149,774 |
Deferred |  |  |  |  |  |  |  |  |  |  |  |
Federal and foreign |  |  | 53,056 |  |  |  | 26,419 |  |  |  | 18,524 |
State |  |  | 5,800 |  |  |  | 1,704 |  |  |  | 2,177 |
|  |  | 58,856 |  |  |  | 28,123 |  |  |  | 20,701 |
Total |  | $ | 247,466 |  |  | $ | 152,302 |  |  | $ | 170,475 |
Deferred taxes are required to be classified based on the financial statement classification of the related assets and liabilities which give rise to temporary differences. Deferred taxes result from temporary differences between the financial statement carrying amounts and the tax bases of assets and liabilities. The components of deferred taxes are as follows (amounts in thousands):
|  | Year Ended December 31, |
|  | 2011 |  |  | 2010 |
Deferred income tax assets: |  |  |  |  |  |  |  |
Self-insurance reserves |  | $ | 115,201 |  |  | $ | 121,249 |
Compensation accruals |  |  | 49,717 |  |  |  | 53,855 |
State and foreign net operating loss carryforwards and other state and foreign deferred tax assets |  |  | 52,506 |  |  |  | 46,338 |
Other currently non-deductible accrued liabilities |  |  | 19,699 |  |  |  | 19,016 |
Net pension liability—OCI only |  |  | 13,959 |  |  |  | 9,268 |
Doubtful accounts and other reserves |  |  | 17,345 |  |  |  | 31,046 |
Other combined items—OCI only |  |  | 17,684 |  |  |  | 3,196 |
|  |  | 286,111 |  |  |  | 283,968 |
Less: Valuation Allowance |  |  | (42,143 | ) |  |  | (32,352 | )
Net deferred income tax assets: |  |  | 243,968 |  |  |  | 251,616 |
Deferred income tax liabilities: |  |  |  |  |  |  |  |
Depreciable and amortizable assets |  |  | (342,655 | ) |  |  | (299,566 | )
Other deferred tax liabilities |  |  | (2,581 | ) |  |  | (4,570 | )
Net deferred income tax liabilities |  | $ | (101,268 | ) |  | $ | (52,520 | )
The effective tax rates, as calculated by dividing the provision for income taxes by income before income taxes, were as follows for each of the years ended December 31, 2011, 2010 and 2009 (dollar amounts in thousands):
|  | 2011 |  |  | 2010 |  |  | 2009 |
Provision for income taxes |  | $ | 247,466 |  |  | $ | 152,302 |  |  | $ | 170,475 |
Income before income taxes |  |  | 696,336 |  |  |  | 428,097 |  |  |  | 474,722 |
Effective tax rate |  |  | 35.5 | % |  |  | 35.6 | % |  |  | 35.9 | %
Impacting the effective tax rates during 2011 was approximately $1 million favorable discrete tax item recorded to adjust the estimated liabilities for uncertain tax positions. Impacting the effective tax rates during 2010 were the following items: (i) $5 million unfavorable discrete tax item recorded to adjust the non-deductible portion of certain transaction costs incurred during 2010 in connection with our acquisition of PSI; (ii) a $4 million unfavorable discrete tax item recorded to adjust for the non-deductible, $9 million charge incurred from split-dollar life insurance agreements entered into during 2010 on the lives of our chief executive officer and his wife, partially offset by; (iii) a $4 million favorable discrete tax item recorded during 2010 to adjust the estimated non-deductible portion of the previously disclosed South Texas Health System settlement with the government based upon the final agreement. A reconciliation between the federal statutory rate and the effective tax rate is as follows:
|  | Year Ended December 31, |
|  | 2011 |  |  | 2010 |  |  | 2009 |
Federal statutory rate |  |  | 35.0 | % |  |  | 35.0 | % |  |  | 35.0 | %
State taxes, net of federal income tax benefit |  |  | 2.9 |  |  |  | 3.1 |  |  |  | 3.2 |
Nondeductible transaction costs |  |  | — |  |  |  | 1.3 |  |  |  | — |
Other items |  |  | 0.4 |  |  |  | 0.4 |  |  |  | 1.4 |
Impact of income attributable to noncontrolling interests |  |  | (2.8 | ) |  |  | (4.2 | ) |  |  | (3.7 | )
Effective tax rate |  |  | 35.5 | % |  |  | 35.6 | % |  |  | 35.9 | %
Included in "Other current assets" on our Consolidated Balance Sheet are prepaid federal, foreign, and state income taxes amounting to approximately $25 million and $51 million as of December 31, 2011 and 2010, respectively. The net deferred tax assets and liabilities are comprised as follows (amounts in thousands):
|  | Year Ended December 31, |
|  | 2011 |  |  | 2010 |
Current deferred taxes |  |  |  |  |  |  |  |
Assets |  | $ | 109,297 |  |  | $ | 123,362 |
Liabilities |  |  | (973 | ) |  |  | (2,528 | )
Total deferred taxes-current |  |  | 108,324 |  |  |  | 120,834 |
Noncurrent deferred taxes |  |  |  |  |  |  |  |
Assets |  |  | 135,189 |  |  |  | 128,254 |
Liabilities |  |  | (344,781 | ) |  |  | (301,608 | )
Total deferred taxes-noncurrent |  |  | (209,592 | ) |  |  | (173,354 | )
Total deferred tax liabilities |  | $ | (101,268 | ) |  | $ | (52,520 | )
The assets and liabilities classified as current relate primarily to the allowance for uncollectible patient accounts, compensation-related accruals and the current portion of the temporary differences related to self- insurance reserves. At December 31, 2011, state net operating loss carryforwards (expiring in years 2012 through 2031), and credit carryforwards available to offset future taxable income approximated $881 million, representing approximately $44 million in deferred state tax benefit (net of the federal benefit). At December 31, 2011, related to the acquisition of PSI, there were federal net operating losses of approximately $2 million expiring in 2022 representing approximately $1 million in deferred federal tax benefits and foreign net operating loss carryforwards of approximately $8 million expiring through 2021 representing approximately $3 million in deferred foreign tax benefit. A valuation allowance is required when it is more likely than not that some portion of the deferred tax assets will not be realized. Based on available evidence, it is more likely than not that certain of our state tax benefits will not be realized. Therefore, valuation allowances of approximately $39 million and $28 million have been reflected as of December 31, 2011 and 2010, respectively. During 2011, the valuation allowance on these state tax benefits increased by approximately $11 million due to additional net operating losses incurred. In addition, valuation allowances of approximately $3 million and $4 million have been reflected as of December 31, 2011 and 2010, respectively, related to foreign net operating losses. We adopted the provisions of Accounting for Uncertainty in Income Taxes effective January 1, 2007. During 2011 and 2010, the estimated liabilities for uncertain tax positions (including accrued interest and penalties) were increased in the amount of approximately $1 million and $3 million, respectively, due to tax positions taken in the current and prior years. The increase in 2010 is primarily attributable to tax positions taken by PSI on pre-acquisition tax return years. Also during 2011, the estimated liabilities for uncertain tax positions (including accrued interest and penalties) were reduced due to the lapse of the statute of limitations resulting in a net income tax benefit of approximately $2 million. The balance at each of December 31, 2011 and 2010, if subsequently recognized, that would favorably affect the effective tax rate and the provision for income taxes is approximately $5 million. We recognize accrued interest and penalties associated with uncertain tax positions as part of the tax provision. As of December 31, 2011 and 2010, we have approximately $1 million of accrued interest and penalties. The U.S. federal statute of limitations remains open for the 2008 and subsequent years. Foreign and U.S. state and local jurisdictions have statutes of limitations generally ranging for 3 to 4 years. The statute of limitations on certain jurisdictions could expire within the next twelve months. It is reasonably possible that the amount of unrecognized tax benefits will change during the next 12 months however it is anticipated that any such change, if it were to occur, would not have a material impact on our results of operations. The tabular reconciliation of unrecognized tax benefits for the years ended December 31, 2011, 2010 and 2009 is as follows (amounts in thousands).
|  | As of December 31, |
|  | 2011 |  |  | 2010 |  |  | 2009 |
Balance at January 1, |  | $ | 7,923 |  |  | $ | 5,754 |  |  | $ | 3,759 |
Additions based on tax positions related to the current year |  |  | 750 |  |  |  | 1,219 |  |  |  | 750 |
Additions for tax positions of prior years |  |  | 419 |  |  |  | 2,076 |  |  |  | 1,245 |
Reductions for tax positions of prior years |  |  | (1,628 | ) |  |  | (907 | ) |  |  | — |
Settlements |  |  | (61 | ) |  |  | (219 | ) |  |  | — |
Balance at December 31, |  | $ | 7,403 |  |  | $ | 7,923 |  |  | $ | 5,754 |

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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 2 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 136, 172 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 43, 44, 45, 46, 47, 48, 49 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 Reference 5: 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 Reference 6: 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 7: 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 8: 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=6881521&loc=d3e23780-122690 + Details
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