XML 30 R14.htm IDEA: XBRL DOCUMENT
v3.8.0.1

Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2017
Income Tax Disclosure [Abstract] |
Income Taxes | 6) INCOME TAXES Components of income tax expense/(benefit) are as follows (amounts in thousands):
|  | Year Ended December 31, |
|  | 2017 |  |  | 2016 |  |  | 2015 |
Current |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 352,433 |  |  | $ | 368,957 |  |  | $ | 363,734 |
Foreign |  |  | 10,625 |  |  |  | 8,513 |  |  |  | 3,151 |
State |  |  | 37,421 |  |  |  | 42,166 |  |  |  | 38,987 |
|  |  | 400,479 |  |  |  | 419,636 |  |  |  | 405,872 |
Deferred |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | (36,998 | ) |  |  | (12,092 | ) |  |  | (15,912 | )
Foreign |  |  | 24 |  |  |  | 2,463 |  |  |  | 5,545 |
State |  |  | 192 |  |  |  | (820 | ) |  |  | (302 | )
|  |  | (36,782 | ) |  |  | (10,449 | ) |  |  | (10,669 | )
Total |  | $ | 363,697 |  |  | $ | 409,187 |  |  | $ | 395,203 |
On December 22, 2017, the President of the United States signed into law comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act of 2017 (the “TCJA-17”). The TCJA-17 makes broad and complex changes to the U.S. tax code, including, but not limited to, (1) reducing the U.S. federal corporate tax rate from 35 percent to 21 percent; (2) requiring companies to pay a one-time transition tax on certain unrepatriated earnings of foreign subsidiaries; (3) generally eliminating U.S. federal income taxes on dividends from foreign subsidiaries; (4) requiring a current inclusion in U.S. federal taxable income of certain earnings of controlled foreign corporations through the implementation of a territorial tax system; and (5) creating a new limitation on deductible interest expense. The SEC staff issued Staff Accounting Bulletin No. 118 (“SAB 118”) to address the application of U.S. GAAP in situations when a registrant has not obtained, prepared, or analyzed (including computations) all of the information needed in order to complete the accounting for certain income tax effects of the TCJA-17. To the extent that a company’s accounting for certain income tax effects of the TCJA-17 is incomplete, a reasonable estimate should be recorded as a provisional amount in the financial statements. We were able to make reasonable estimates of the effects of elements for which our analysis is not yet complete. We recorded the following provisional adjustments: Reduction of U.S. federal corporate tax rate: The TCJA-17 reduces the corporate tax rate to 21 percent, effective January 1, 2018. Deferred income taxes are based on the estimated future tax effects of differences between the financial statement carrying amounts and the tax bases of assets and liabilities under the provisions of the enacted tax laws. For certain of our deferred tax assets and deferred tax liabilities, we have recorded a provisional decrease of $97 million and $127 million, respectively, with a corresponding net adjustment to deferred tax benefit of $30 million for the year ended December 31, 2017. While we are able to make a reasonable estimate of the impact of the reduction in corporate rate, it may be affected by other analyses related to the TCJA-17, including, but not limited to, our calculation of deemed repatriation of deferred foreign income and the state tax effect of adjustments made to federal temporary differences. Deemed Repatriation Transition Tax: The Deemed Repatriation Transition Tax (“Transition Tax”) is a tax on previously untaxed accumulated and current earnings and profits (“E&P”) of certain of our foreign subsidiaries. To determine the amount of the Transition Tax, we must determine, in addition to other factors, the amount of post-1986 E&P of the relevant subsidiaries, as well as the amount of non-U.S. income taxes paid on such earnings. We are able to make a reasonable estimate of the Transition Tax and recorded a provisional Transition Tax obligation of $11.3 million. However, we are continuing to gather additional information to more precisely compute the amount of the Transition Tax. Valuation allowances: We must assess whether valuation allowance analyses are affected by various aspects of the TCJA-17 (e.g., deemed repatriation of deferred foreign income). Since, as discussed herein, we have recorded provisional amounts related to certain portions of the TCJA-17, any corresponding determination of the need for a change in valuation allowance is also provisional. The accounting for the above provisional amounts is expected to be complete when our 2017 U.S. Corporate Income Tax return is filed in 2018. The TCJA-17 contains two new anti-base erosion tax provisions, (1) the global intangible low-taxed income (“GILTI”) provisions and (2) the base erosion and anti-abuse tax (“BEAT”) provisions: GILTI: The GILTI provisions require the inclusion of the earnings of certain foreign subsidiaries in excess of an acceptable rate of return on certain assets of the respective subsidiaries in our U.S. tax return for tax years beginning after December 31, 2017. Due to complexities around the calculation we have not recorded any provisional deferred tax effects related to the GILTI tax and will not make an accounting policy election at this time with respect to GILTI for our consolidated financial statements for the year ended December 31, 2017. BEAT: The BEAT provisions limit the deduction for U.S. tax base erosion related payments made by U.S. operations to related foreign affiliates. We do not expect any BEAT tax for our U.S. operations; therefore, we have not recorded any tax expense related to BEAT tax in our consolidated financial statements. The foreign provision for income taxes is based on foreign pre-tax earnings of $70 million in 2017, $58 million in 2016 and $41 million in 2015. Previously, in 2016 and 2015, we had provided no deferred taxes related to unremitted earnings from foreign subsidiaries. As a result of the mandatory repatriation tax provisions in the TCJA-17, we recorded an accrued tax provision of $11.3 million as of December 31, 2017. Going forward, we anticipate repatriating only previously taxed foreign income subject to the mandatory repatriation tax and any future earnings that would qualify for a full dividend received deduction permitted under the TCJA-17 for distributions after December 31, 2017. At this time, there are no material tax effects related to future cash repatriation of our previously taxed foreign income. As such, we have not recognized a deferred tax liability related to existing undistributed earnings. Our provision for income taxes for the year ended December 31, 2017 included tax benefits of $22 million related to the adoption of ASU 2016-09, which changes how companies account for certain aspects of share-based payments to employees. Under ASU 2016-09, we no longer record excess tax benefits (when the deductible amount related to the settlement of employee equity awards for tax purposes exceeds the cumulative compensation cost recognized for financial reporting purposes) in equity. Instead, we recognize these tax benefits (and deficiencies, if applicable) as a component of our tax provision. This reporting change is applied prospectively and prior period amounts are not restated (the excess tax benefit for the years ending December 31, 2016 and 2015, related to the settlement of employee equity awards, were $45 million and $47 million, respectively, and were recorded in equity). ASU 2016-09 requires companies to present excess tax benefits as an operating activity on the Consolidated Statement of Cash Flows rather than as a financing activity, as previously required. We have elected to apply the change to the Consolidated Statement of Cash Flows on a modified retrospective basis resulting in a reclassification of the 2016 and 2015 excess income tax benefits related to stock-based compensation from financing activities to operating activities. A reconciliation between the federal statutory rate and the effective tax rate is as follows:
|  | Year Ended December 31, |
|  | 2017 |  |  | 2016 |  |  | 2015 |
Federal statutory rate |  |  | 35.0 | % |  |  | 35.0 | % |  |  | 35.0 | %
State taxes, net of federal income tax benefit |  |  | 2.2 | % |  |  | 2.4 | % |  |  | 2.3 | %
Tax effects of foreign operations |  |  | -1.2 | % |  |  | -0.8 | % |  |  | -0.9 | %
Tax benefit from settlement of employee equity awards |  |  | -1.9 | % |  |  | 0.0 | % |  |  | 0.0 | %
Enactment of the TCJA-17 |  |  | -1.7 | % |  |  | 0.0 | % |  |  | 0.0 | %
Other items |  |  | 0.2 | % |  |  | 0.2 | % |  |  | 0.3 | %
Impact of income attributable to noncontrolling interests |  |  | -0.6 | % |  |  | -1.4 | % |  |  | -2.2 | %
Effective tax rate |  |  | 32.0 | % |  |  | 35.4 | % |  |  | 34.5 | %
Our effective tax rates were 32.0%, 35.4% and 34.5% for the years ended December 31, 2017, 2016 and 2015, respectively. The decrease in our effective tax rate for the year ended December 31, 2017, as compared to 2016 and 2015, is due to the tax benefit resulting from our January 1, 2017 adoption of ASU 2016-09, the net favorable impact of the enactment of the TCJA-17 as discussed above, and the tax effects of our foreign operations in connection with our acquisition of Cambian Group, PLC's adult services division (acquired in late December, 2016). The increase in our effective tax rate for the year ended December 31, 2016 is primarily impacted by the decrease in net income attributable to noncontrolling interests due to our purchase of the minority ownership interests held by a third-party in our six acute care hospitals located in Las Vegas, Nevada, which is not tax effected in the statement of income. Including the expense related to income attributable to noncontrolling interests, the effective tax rate for the years ended December 31, 2017, 2016 and 2015 were 32.6%, 36.8% and 36.7%, respectively. Included in “Other current assets” on our Consolidated Balance Sheet are prepaid federal and state income taxes amounting to approximately $5 million and $10 million as of December 31, 2017 and 2016, respectively. As a result of the reduction in the U.S. corporate income tax rate from 35% to 21% effective January 1, 2018 under the TCJA-17, we revalued our ending deferred tax assets and deferred tax liabilities at December 31, 2017 and we have recorded a provisional decrease of $97 million and $127 million, respectively, with a corresponding net adjustment to deferred tax benefit of $30 million in the consolidated statement of income for the year ended December 31, 2017. The components of deferred taxes are as follows (amounts in thousands):
|  | Year Ended December 31, |
|  | 2017 |  |  |  | 2016 |
|  | Assets |  |  |  | Liabilities |  |  |  | Assets |  |  |  | Liabilities |
Self-insurance reserves | $ |  | 64,181 |  |  | $ |  |  |  |  | $ |  | 85,940 |  |  | $ |  |  |
Compensation accruals |  |  | 63,021 |  |  |  |  |  |  |  |  |  | 83,328 |  |  |  |  |  |
Doubtful accounts and other reserves |  |  | 20,809 |  |  |  |  |  |  |  |  |  | 38,017 |  |  |  |  |  |
Other currently non-deductible accrued liabilities |  |  | 19,759 |  |  |  |  |  |  |  |  |  | 24,058 |  |  |  |  |  |
Depreciable and amortizable assets |  |  |  |  |  |  |  | 226,389 |  |  |  |  |  |  |  |  |  | 332,326 |
State and foreign net operating loss carryforwards and other state and foreign deferred tax assets |  |  | 76,439 |  |  |  |  |  |  |  |  |  | 66,639 |  |  |  |  |  |
Net pension liabilities – OCI only |  |  | 2,825 |  |  |  |  |  |  |  |  |  | 5,926 |  |  |  |  |  |
Other combined items – OCI only |  |  |  |  |  |  |  | 550 |  |  |  |  | 815 |  |  |  |  |  |
Other liabilities |  |  |  |  |  |  |  | 1,824 |  |  |  |  |  |  |  |  |  | 2,949 |
| $ |  | 247,034 |  |  | $ |  | 228,763 |  |  | $ |  | 304,723 |  |  | $ |  | 335,275 |
Valuation Allowance |  |  | (70,227 | ) |  |  |  | 0 |  |  |  |  | (56,333 | ) |  |  |  | 0 |
Total deferred income taxes | $ |  | 176,807 |  |  | $ |  | 228,763 |  |  | $ |  | 248,390 |  |  | $ |  | 335,275 |
At December 31, 2017, state net operating loss carryforwards (expiring in years 2018 through 2037), and credit carryforwards available to offset future taxable income approximated $1.09 billion representing approximately $70 million in deferred state tax benefit (net of the federal benefit). At December 31, 2017, there were foreign net operating losses and credit carryforwards of approximately $26 million, most of which are carried forward indefinitely, representing approximately $6 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 $66 million and $52 million have been reflected as of December 31, 2017 and 2016, respectively. During 2017, the valuation allowance on these state tax benefits increased by $2 million due to additional net operating losses incurred and by $12 million due to the reduction of the federal benefit due to the change in U.S. corporate income tax rates. In addition, valuation allowances of approximately $4 million have been reflected as of December 31, 2017 and 2016 related to foreign net operating losses and credit carryforwards. During 2017 and 2016, the estimated liabilities for uncertain tax positions (including accrued interest and penalties) were increased less than $1 million due to tax positions taken in the current and prior years. The balance at each of December 31, 2017 and 2016, if subsequently recognized, that would favorably affect the effective tax rate and the provision for income taxes is approximately $1 million as of each date. We recognize accrued interest and penalties associated with uncertain tax positions as part of the tax provision. As of December 31, 2017 and 2016, we have accrued interest and penalties of less than $1 million as of each date. The U.S. federal statute of limitations remains open for the 2014 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, 2017, 2016 and 2015 is as follows (amounts in thousands).
|  | As of December 31, |
|  | 2017 |  |  | 2016 |  |  | 2015 |
Balance at January 1, |  | $ | 1,259 |  |  | $ | 1,982 |  |  | $ | 2,402 |
Additions based on tax positions related to the current year |  |  | 500 |  |  |  | 50 |  |  |  | 50 |
Additions for tax positions of prior years |  |  | 47 |  |  |  | 74 |  |  |  | 111 |
Reductions for tax positions of prior years |  |  | 0 |  |  |  | (94 | ) |  |  | (524 | )
Settlements |  |  | (710 | ) |  |  | (753 | ) |  |  | (57 | )
Balance at December 31, |  | $ | 1,096 |  |  | $ | 1,259 |  |  | $ | 1,982 |

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