XML 33 R16.htm IDEA: XBRL DOCUMENT
v3.3.1.900

Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2015
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES Income before income taxes by geographic area was as follows:
|  | Year Ended December 31,
|  | 2015 |  | 2014 |  | 2013
|  | (In thousands)
Domestic |  | $ | 231,798 |  |  | $ | 174,964 |  |  | $ | 176,156 |
Foreign |  | (49,627 | ) |  | (10,564 | ) |  | 15,739 |
Total income before income taxes |  | $ | 182,171 |  |  | $ | 164,400 |  |  | $ | 191,895 |
Federal, state and foreign income taxes were as follows:
|  | Year Ended December 31,
|  | 2015 |  | 2014 |  | 2013
|  | (In thousands)
Federal: |  |  |  |  |  |
Current |  | $ | 66,973 |  |  | $ | 49,590 |  |  | $ | 44,785 |
Deferred |  | 15,528 |  |  | 22,549 |  |  | 19,773 |
State: |  |  |  |  |  |
Current |  | 5,165 |  |  | 4,849 |  |  | 4,231 |
Deferred |  | 1,768 |  |  | 727 |  |  | 2,026 |
Foreign: |  |  |  |  |  |
Current |  | 4,150 |  |  | 4,638 |  |  | 6,475 |
Deferred |  | (5,412 | ) |  | (10,957 | ) |  | 613 |
Provision for income taxes |  | $ | 88,172 |  |  | $ | 71,396 |  |  | $ | 77,903 |
Actual income tax expense differed from income tax expense computed by applying the U.S. federal statutory corporate tax rate of 35% to income before income taxes in 2015, 2014 and 2013 as follows:
|  | Year Ended December 31,
|  | 2015 |  | 2014 |  | 2013
|  | (In thousands)
Provision at the U.S. federal statutory rate |  | $ | 63,760 |  |  | $ | 57,540 |  |  | $ | 67,163 |
Increase (decrease) resulting from: |  |  |  |  |  |
State income tax, net of benefit for federal deduction |  | 4,448 |  |  | 5,267 |  |  | 4,228 |
Foreign income tax rate differential |  | (2,002 | ) |  | (3,188 | ) |  | (538 | )
Employment credits |  | (407 | ) |  | (481 | ) |  | (421 | )
Changes in valuation allowances |  | 14,667 |  |  | 9,507 |  |  | 2,713 |
Non-deductible goodwill |  | 4,651 |  |  | — |  |  | 1,355 |
Deductible goodwill |  | — |  |  | (10,209 | ) |  | — |
Non-deductible transaction costs |  | — |  |  | — |  |  | 1,064 |
Stock-based compensation |  | 386 |  |  | 245 |  |  | 282 |
Convertible debt redemption |  | — |  |  | 9,727 |  |  | — |
Other |  | 2,669 |  |  | 2,988 |  |  | 2,057 |
Provision for income taxes |  | $ | 88,172 |  |  | $ | 71,396 |  |  | $ | 77,903 |
During 2015, the Company recorded a tax provision of $88.2 million. Certain expenses for stock-based compensation recorded in 2015 in accordance with FASB guidance were non-deductible for income tax purposes. The Company provided additional valuation allowances with respect to goodwill and net operating losses of certain Brazil subsidiaries, as well as state net operating losses in the U.S., based on expectations concerning their realizability. In addition, no substantial deferred tax benefit relative to the impairment of goodwill in the Brazil reporting unit was recognized for U.S. GAAP reporting purposes. As a result of these items, and the impact of the 2014 items discussed below, the effective tax rate for the year ended December 31, 2015 increased to 48.4%, as compared to 43.4% for the year ended December 31, 2014. During 2014, the Company recorded a tax provision of $71.4 million. Certain expenses for stock-based compensation recorded in 2014 in accordance with FASB guidance were non-deductible for income tax purposes. The Company also had non-deductible goodwill from the dispositions of certain domestic dealerships, as well as non-deductible transaction costs related to foreign acquisitions. The Company provided valuation allowances with respect to certain foreign company deferred tax assets, as well as state net operating losses in the U.S., based on expectations concerning their realizability. As a result of these items, and the impact of the items occurring in 2013 discussed below, the effective tax rate for the year ended December 31, 2014 increased to 43.4%, as compared to 40.6% for the year ended December 31, 2013. During 2013, the Company recorded a tax provision of $77.9 million. Certain expenses for stock-based compensation recorded in 2013 in accordance with FASB guidance were non-deductible for income tax purposes. The Company provided valuation allowances with respect to certain state net operating losses in the U.S. based on expectations concerning their realizability. As a result of these items, and the impact of certain items occurring in 2012, the effective tax rate for the year ended December 31, 2013 increased to 40.6%, as compared to 37.7% for the year ended December 31, 2012. Deferred income tax provisions resulted from temporary differences in the recognition of income and expenses for financial reporting purposes and for tax purposes. The tax effects of these temporary differences representing deferred tax assets/liabilities resulted principally from the following:
|  | December 31,
|  | 2015 |  | 2014
|  | (In thousands)
Deferred tax assets: |  |  |  |
Loss reserves and accruals |  | $ | 53,747 |  |  | $ | 50,158 |
Interest rate swaps |  | 11,671 |  |  | 10,745 |
Goodwill and intangible franchise rights |  | 7,621 |  |  | — |
U.S. state net operating loss (“NOL”) carryforwards |  | 17,413 |  |  | 16,592 |
Foreign NOL carryforwards |  | 20,408 |  |  | 21,770 |
Deferred tax assets |  | 110,860 |  |  | 99,265 |
Valuation allowance on deferred tax assets |  | (46,547 | ) |  | (40,486 | )
Net deferred tax assets |  | $ | 64,313 |  |  | $ | 58,779 |
Deferred tax liabilities: |  |  |  |
Goodwill and intangible franchise rights |  | $ | (143,509 | ) |  | $ | (138,992 | )
Depreciation expense |  | (53,619 | ) |  | (43,070 | )
Deferred gain on bond redemption |  | (1,535 | ) |  | (2,046 | )
Other |  | (1,060 | ) |  | (1,936 | )
Deferred tax liabilities |  | (199,723 | ) |  | (186,044 | )
Net deferred tax liability |  | $ | (135,410 | ) |  | $ | (127,265 | )
As of December 31, 2015, the Company had state NOL carryforwards in the U.S. of $258.0 million that will expire between 2016 and 2035, and foreign NOL carryforwards of $62.4 million that may be carried forward indefinitely. To the extent that the Company expects that net income will not be sufficient to realize these NOLs in certain jurisdictions, a valuation allowance has been established. The Company had gross long-term deferred tax liabilities of $215.3 million and $202.1 million, including $2.1 million and $9.6 million related to long-term foreign deferred tax liabilities, as of December 31, 2015 and 2014, respectively. The Company had gross long-term deferred tax assets of $65.8 million and $63.7 million as of December 31, 2015 and 2014, respectively. The Company believes it is more likely than not, that its deferred tax assets, net of valuation allowances provided, will be realized, based primarily on our expectation of future taxable income, considering future reversals of existing taxable temporary differences, as well as the availability of taxable income in prior years to carry back losses to recover taxes previously paid. As of December 31, 2015, the Company has not provided for U.S. deferred taxes on $31.7 million of undistributed earnings and associated withholding taxes of its foreign subsidiaries, as the Company has taken the position that its foreign earnings will be permanently reinvested outside the U.S. If a distribution of those earnings were to be made, the Company may be subject to both foreign withholding taxes and U.S. income taxes, net of any allowable foreign tax credits or deductions, of up to approximately $7.7 million. The Company is subject to income tax in U.S. federal and numerous state jurisdictions, as well as in the U.K. and Brazil. Based on applicable statutes of limitations, the Company is generally no longer subject to examinations by U.S. tax authorities in years prior to 2011, by U.K. tax authorities in years prior to 2011 and by Brazil tax authorities in years prior to 2010. The Company had no unrecognized tax benefits as of December 31, 2015 and 2014. The Company did not incur any interest and penalties nor accrue any interest for the years ended December 31, 2015 and 2014. When applicable, consistent with prior practices, the Company recognizes interest and penalties related to uncertain tax positions in income tax expense.

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=6907707&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=6907707&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=6907707&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=6907707&loc=d3e32537-109319 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration