XML 32 R17.htm IDEA: XBRL DOCUMENT
v3.8.0.1

10. INCOME TAXES | 12 Months Ended
--- | ---
Dec. 31, 2017
Income Tax Disclosure [Abstract] |
INCOME TAXES | On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (“Tax Act”). Among other items, the Tax Act reduced the U.S. federal corporate tax rate to 21%, effective for tax years beginning after December 31, 2017, and established a one-time deemed repatriation transition tax on earnings of certain foreign subsidiaries that were previously tax deferred. Due to the timing of the enactment and the complexity involved in applying the provisions of the Tax Act, the SEC issued guidance on December 22, 2017 to address the application of US GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed in reasonable detail to complete the accounting for certain income tax effects of the Tax Act. In accordance with this guidance, we have made reasonable estimates below of the effects of the Tax Act and recorded provisional amounts in our financial statements as of December 31, 2017. For the items for which we were able to determine a reasonable estimate, we recognized a provisional amount of $13.6 million, which is included as a component of income tax expense from continuing operations. As we collect and prepare necessary data, and interpret the Tax Act and any additional guidance issued by the U.S. Treasury Department, the IRS, and other standard-setting bodies, we may make adjustments to the provisional amounts. Those adjustments may materially impact our provision for income taxes and effective tax rate in the period in which the adjustments are made. The accounting for the tax effects of the Tax Act will be completed in 2018. For the year ended December 31, 2017, the Company recorded a provisional net tax provision of $13.5 million related to the remeasurement of its net deferred tax assets using the new U.S. federal corporate tax rate of 21%, which is estimated to result in significantly lower federal cash taxes for the Company in 2018 and beyond. Although the tax rate reduction is known, we have not collected the necessary data to complete our analysis of the effect of the Tax Act on the underlying deferred taxes and as such, the amounts recorded as of December 31, 2017 are provisional. The Tax Act requires the Company to pay U.S. income taxes on accumulated foreign subsidiary earnings not previously subject to U.S. income tax at a rate of 15.5% to the extent of foreign cash and certain other net current assets and 8% on the remaining earnings. Given that the transition tax analysis requires significant data from our foreign subsidiaries that is not regularly collected or analyzed, we recorded a provisional amount for the one-time transitional tax liability for our foreign subsidiaries of approximately $0.1 million. Additional work is necessary for a more detailed analysis of the Company’s deferred tax assets and liabilities and its historical foreign earnings as well as potential correlative adjustments. If the final tax outcome of these matters is different than the provisional amounts recorded by the Company, then adjustments to the provisional amounts will impact the tax provision and effective tax rate in the period recorded. Tax Act includes new anti-deferral, anti-base erosion, and base broadening provisions. Given the complexity of these provisions, we are still evaluating the effects and impact of these provisions. For the years ended December 31, 2017, 2016 and 2015, we recognized income tax expense comprised of the following (in thousands):
|  | December 31, |
|  | 2017 |  |  | 2016 |  |  | 2015 |
Federal current tax |  | $ | 871 |  |  | $ | 88 |  |  | $ | 237 |
State current tax |  |  | 4,906 |  |  |  | 914 |  |  |  | 1,705 |
Other current tax |  |  | 23 |  |  |  | 28 |  |  |  | 28 |
Federal deferred tax |  |  | 21,389 |  |  |  | 2,539 |  |  |  | 3,625 |
State deferred tax |  |  | (2,879 | ) |  |  | 863 |  |  |  | 412 |
Income tax expense (benefit) |  | $ | 24,310 |  |  | $ | 4,432 |  |  | $ | 6,007 |
A reconciliation of the statutory U.S. federal rate and effective rates is as follows:
|  | Years Ended December 31, |
|  | 2017 |  |  | 2016 |  |  | 2015 |
Federal tax |  | $ | 8,971 |  |  |  | 34.00 | % |  | $ | 4,229 |  |  |  | 34.00 | % |  | $ | 4,979 |  |  |  | 34.00 | %
State franchise tax, net of federal benefit |  |  | 1,799 |  |  |  | 6.82 | % |  |  | 224 |  |  |  | 1.80 | % |  |  | 1,245 |  |  |  | 8.50 | %
Other Non deductible expenses |  |  | 91 |  |  |  | 0.35 | % |  |  | (11 | ) |  |  | -0.09 | % |  |  | (1 | ) |  |  | -0.01 | %
Changes in valuation allowance |  |  | (1,045 | ) |  |  | -3.96 | % |  |  | 585 |  |  |  | 4.70 | % |  |  | (2,536 | ) |  |  | -17.32 | %
Tax Cuts and Jobs Act |  |  | 13,527 |  |  |  | 51.27 | % |  |  | – |  |  |  | 0.00 | % |  |  | – |  |  |  | 0.00 | %
Deferred true-ups and other |  |  | (194 | ) |  |  | -0.74 | % |  |  | (3,142 | ) |  |  | -25.25 | % |  |  | 1,964 |  |  |  | 13.41 | %
Other reconciling items |  |  | 1,161 |  |  |  | 4.39 | % |  |  | 2,547 |  |  |  | 20.47 | % |  |  | 356 |  |  |  | 2.43 | %
Income tax expense (benefit) |  | $ | 24,310 |  |  |  | 92.13 | % |  | $ | 4,432 |  |  |  | 35.64 | % |  | $ | 6,007 |  |  |  | 41.02 | %
Deferred income taxes reflect the net tax effects of temporary differences between carrying amounts of assets and liabilities for financial and income tax reporting purposes and operating loss carryforwards. Our deferred tax assets and liabilities comprise the following (in thousands):
|  | December 31, |
Deferred tax assets: |  | 2017 |  |  | 2016 |
Net operating losses |  | $ | 47,212 |  |  | $ | 84,509 |
Accrued expenses |  |  | 3,242 |  |  |  | 4,400 |
Straight-Line rent adjustment |  |  | 7,749 |  |  |  | 10,750 |
Unfavorable contract liability |  |  | 1,288 |  |  |  | 2,114 |
Equity compensation |  |  | 871 |  |  |  | 950 |
Allowance for doubtful accounts |  |  | 8,720 |  |  |  | 6,033 |
Other |  |  | 2,504 |  |  |  | 1,357 |
Valuation allowance |  |  | (4,049 | ) |  |  | (4,428 | )
Total Deferred Tax Assets |  | $ | 67,537 |  |  | $ | 105,685 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Property and equipment |  |  | (373 | ) |  |  | (6,994 | )
Goodwill |  |  | (17,568 | ) |  |  | (23,350 | )
Intangibles |  |  | (7,839 | ) |  |  | (12,066 | )
Non accrual experience method reserve |  |  | (2,778 | ) |  |  | (8,483 | )
Other |  |  | (8,127 | ) |  |  | (4,436 | )
Total Deferred Tax Liabilities |  | $ | (36,685 | ) |  | $ | (55,329 | )
Net Deferred Tax Asset |  | $ | 30,852 |  |  | $ | 50,356 |
As of December 31, 2017, the Company had federal net operating loss carryforwards of approximately $191.6 million, which expire at various intervals from the years 2018 to 2034 if not utilized. The Company also had state net operating loss carryforwards of approximately $132.3 million, which expire at various intervals from the years 2018 through 2037. As of December 31, 2017, $23.5 million of our federal net operating loss carryforwards acquired in connection with the 2011 acquisition of Raven Holdings U.S., Inc. are subject to limitations related to their utilization under Section 382 of the Internal Revenue Code. Future ownership changes as determined under Section 382 of the Internal Revenue Code could further limit the utilization of net operating loss carryforwards. We considered all evidence available when determining whether deferred tax assets are more likely-than-not to be realized, including projected future taxable income, scheduled reversals of deferred tax liabilities, prudent tax planning strategies, and recent financial operations. The evaluation of this evidence requires significant judgment about the forecasts of future taxable income, based on the plans and estimates we are using to manage the underlying businesses. In evaluating the objective evidence that historical results provide, we consider three years of cumulative operating income. As of December 31, 2017, we have determined that deferred tax assets of $67.5 million are more likely-than-not to be realized. We have also determined that deferred tax liabilities of $17.6 million are required related to book basis in goodwill that has an indefinite life. We file consolidated income tax returns in the U.S. federal jurisdiction and various states and foreign jurisdictions. We continue to reinvest earnings of the non-US entities for the foreseeable future and therefore have not recognized any U.S. tax expense on these earnings. With limited exceptions, we are no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years before 2013. We do not anticipate the results of any open examinations would result in a material change to its financial position. At December 31, 2017, the Company has unrecognized tax benefits of $3.6 million of which $2.9 million will affect the effective tax rate if recognized. A reconciliation of the total gross amounts of unrecognized tax benefits for the years ended as follows (in thousands):
|  | December 31, |
|  | 2017 |  |  | 2016 |  |  | 2015 |
Balance at beginning of year |  | $ | 3,861 |  |  | $ | 94 |  |  | $ | 3,761 |
Increases (Decreases) related to prior year tax positions |  |  | 1 |  |  |  | 3,861 |  |  |  | (3,667 | )
Expiration of the statute of limitations for the assessment of taxes |  |  | – |  |  |  | (94 | ) |  |  | – |
Increase (Decreases) related to change in rate |  |  | (247 | ) |  |  | – |  |  |  | – |
Balance at end of year |  | $ | 3,615 |  |  | $ | 3,861 |  |  | $ | 94 |
The Company believes it is reasonably possible it will not materially reduce its unrecognized tax benefits within the next twelve months. The Company recognizes accrued interest and penalties related to unrecognized tax benefits in income tax expense. During the year ended December 31, 2017 the Company accrued an insignificant amount of interest expense. As of December 31, 2017, accrued interest and penalties were insignificant.

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