XML 32 R19.htm IDEA: XBRL DOCUMENT
v3.8.0.1

Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2017
Income Taxes |
Income Taxes | 12. INCOME TAXES
(In thousands) |  | 2017 |  | 2016 |  | 2015
Income from continuing operations before income taxes: |  |  |  |  |  |  |  |  |
U.S. |  | $ | 128,040 |  | $ | 116,273 |  | $ | 74,115
Income tax expense (benefit) on income from continuing operations: |  |  |  |  |  |  |  |  |
Currently payable: |  |  |  |  |  |  |  |  |
U.S. Federal |  | $ | 25,003 |  | $ | 24,594 |  | $ | 9,656
State and local |  |  | 4,438 |  |  | 3,646 |  |  | 1,811
Deferred: |  |  |  |  |  |  |  |  |
U.S. Federal |  |  | (61,024) |  |  | 10,966 |  |  | 12,633
State and local |  |  | 1,490 |  |  | 4,461 |  |  | (29,108)
|  | $ | (30,093) |  | $ | 43,667 |  | $ | (5,008)
Deferred tax assets at December 31: |  |  |  |  |  |  |  |  |
Receivables, net |  | $ | 1,280 |  | $ | 1,830 |  |  |
Inventories, net |  |  | 1,307 |  |  | 1,614 |  |  |
Other assets, principally share-based compensation |  |  | 2,317 |  |  | 2,198 |  |  |
Accrued liabilities |  |  | 5,286 |  |  | 10,514 |  |  |
Long-term liabilities |  |  | 9,020 |  |  | 13,731 |  |  |
Net operating loss carryforward |  |  | 21,381 |  |  | 17,979 |  |  |
|  |  | 40,591 |  |  | 47,866 |  |  |
Valuation allowance |  |  | — |  |  | — |  |  |
|  |  | 40,591 |  |  | 47,866 |  |  |
Deferred tax liabilities at December 31: |  |  |  |  |  |  |  |  |
Property and equipment, net |  |  | 13,008 |  |  | 14,703 |  |  |
Intangibles, net |  |  | 142,118 |  |  | 207,116 |  |  |
Other |  |  | 176 |  |  | 293 |  |  |
|  |  | 155,302 |  |  | 222,112 |  |  |
Net deferred tax liability at December 31 |  | $ | 114,711 |  | $ | 174,246 |  |  |
The Tax Cuts and Jobs Act (Tax Act) was enacted on December 22, 2017 and is effective January 1, 2018. The Tax Act, among other things, reduces the U.S. federal corporate tax rate from 35 percent to 21 percent. In addition, the Tax Act limits certain deductions. Some of the major changes from the Tax Act that will affect the Company’s ETR include the elimination of the Domestic Production Activities Deduction; the elimination of deductions related to entertainment expenses; and increased limitations on the deductibility of officer compensation. ASC 740, “Income Taxes” requires us to adjust deferred tax assets and liabilities for the effect of tax rate changes in the period the rate change is enacted. Accordingly, the deferred tax balances have been adjusted to reflect the change in the federal statutory rate from 35 percent to 21 percent. The adjustment resulted in a $74.1 million tax benefit in the U.S. Federal deferred tax expense. A valuation allowance must be established for deferred tax assets when it is more-likely-than-not that they will not be realized. After review of all available positive and negative evidence, the Company has determined that no valuation allowance was required for the deferred tax assets as of December 31, 2017, or December 31, 2016. The deferred portion of state and local tax expense included $0.8 million and $33.7 million in tax benefits resulting from a change in the valuation allowance against state and local deferred tax assets in the years ending December 31, 2016, and December 31, 2015, respectively. As of December 31, 2017, there are no valuation allowances in place. At December 31, 2017, the net deferred tax liability of $114.7 million consisted of net long-term deferred tax assets of $18.1 million and net long-term deferred tax liabilities of $132.8 million. At December 31, 2016, the net deferred tax liability of $174.2 million consisted of net long-term deferred tax assets of $19.5 million and net long-term deferred tax liabilities of $193.7 million. The deferred assets and deferred liabilities show the State deferreds net of Federal benefit. Of the deferred tax asset related to the net operating loss at December 31, 2017, $21.0 million will expire between 2021 and 2037. Of the deferred tax asset related to the net operating loss at December 31, 2016, $18.0 million will expire between 2021 and 2036. A reconciliation of the U.S. Federal statutory tax rate to the income tax expense (benefit) on income from continuing operations was as follows:
|  | 2017 |  |  | 2016 |  |  | 2015 |
U.S. Federal statutory tax rate |  | 35.0 | % |  | 35.0 | % |  | 35.0 | %
State and local taxes, net of U.S. Federal tax benefit |  | 3.5 |  |  | 5.7 |  |  | (24.4) |
Valuation allowance |  | — |  |  | (0.7) |  |  | (18.2) |
Domestic Production Activities Deduction |  | (1.7) |  |  | (1.7) |  |  | — |
Share based compensation |  | (2.3) |  |  | (0.5) |  |  | — |
Effect of U.S. Federal tax rate change on deferred balances |  | (57.9) |  |  | — |  |  | — |
Other, net |  | (0.6) |  |  | (0.2) |  |  | 0.8 |
Effective tax rate |  | (24.0) | % |  | 37.6 | % |  | (6.8) | %
The negative (beneficial) effective tax rate in 2017 is mostly related to the beneficial adjustment of $74.1 million included in the 2017 Federal deferred tax expense related to the adjustment of the deferred tax balances for the reduction of the Federal tax rate from 35 percent to 21 percent, enacted in December of 2017. The negative (beneficial) effective tax rate in 2015 was the result of a reduction in the valuation allowance. Share based compensation became a material factor in the Company’s effective tax rate for 2017. A tax benefit of $2.9 million and $0.6 million related to share based compensation was recognized in income tax expense for the years ended December 31, 2017, and December 31, 2016, respectively. The Domestic Production Activities Deduction, under IRC §199, became a material factor in the Company’s effective tax rate for 2016. The Company’s lower taxable income limited the Domestic Production Activities Deduction for the year ended December 31, 2015. Income taxes paid were $22.6 million, $39.5 million, and $21.0 million during the years ended December 31, 2017, 2016, and 2015, respectively. We file income tax returns in the U.S. Federal jurisdiction and various state and local jurisdictions. The IRS has completed their examination of the Masco consolidated U.S. Federal tax return, in which we were included, through the year ended December 31, 2015. With few exceptions, we are no longer subject to state income tax examinations on filed returns for years before 2012. At December 31, 2017, there are no liabilities related to uncertain tax positions. We have not incurred any interest related to the underpayment of income taxes or penalties related to uncertain tax positions not meeting the minimum statutory threshold to avoid payment of penalties in the year ended December 31, 2017.

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 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 2: 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=65882285&loc=d3e32559-109319 Reference 3: 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=65882285&loc=d3e32718-109319 Reference 4: 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=65882285&loc=d3e32639-109319 Reference 5: 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=65882285&loc=d3e32537-109319 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration