XML 29 R27.htm IDEA: XBRL DOCUMENT
v3.19.3.a.u2

INCOME TAXES | 12 Months Ended
--- | ---
Dec. 31, 2019
Income Tax Disclosure [Abstract] |
INCOME TAXES |
| 18. | INCOME TAXES
On December 22, 2017, the U.S. government enacted comprehensive tax legislation, the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act made changes to the U.S. tax code, which included (1) reduced U.S. corporate tax rate from 35 percent to 21 percent, (2) generally eliminated U.S. federal income taxes on dividends from foreign subsidiaries, (3) a one-time transition tax on certain undistributed earnings of foreign subsidiaries, and (4) created new taxes on certain foreign-sourced earnings. As of December 31, 2018, the amounts recorded for the Tax Act were final for the 2017 transition tax, the remeasurement of deferred taxes and the Company’s reassessment of valuation allowances. The Company’s provision for federal and foreign income tax expense for continuing operations consisted of the following:
|  | Year Ended December 31, |
|  | 2017 |  |  | 2018 |  |  | 2019 |
Income before income taxes: |  |  |  |  |  |  |  |  |  |  |  |
U.S. |  | $ | 280,535 |  |  | $ | 289,727 |  |  | $ | 235,571 |
Foreign |  |  | 64,842 |  |  |  | 21,007 |  |  |  | 38,189 |
Total |  | $ | 345,377 |  |  | $ | 310,734 |  |  | $ | 273,760 |
Current and deferred income taxes were as follows:
|  | Year Ended December 31, |
|  | 2017 |  |  | 2018 |  |  | 2019 |
Current: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 54,435 |  |  | $ | 46,826 |  |  | $ | 45,247 |
Foreign |  |  | 29,306 |  |  |  | 11,822 |  |  |  | 24,022 |
State |  |  | 10,632 |  |  |  | 13,594 |  |  |  | 12,486 |
Total current expense |  | $ | 94,373 |  |  | $ | 72,242 |  |  | $ | 81,755 |
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | (14,046 | ) |  | $ | 27,055 |  |  | $ | (298 | )
Foreign |  |  | (4,270 | ) |  |  | (6,166 | ) |  |  | 5 |
State |  |  | 3,301 |  |  |  | 2,298 |  |  |  | (1,550 | )
Total deferred taxes |  | $ | (15,015 | ) |  | $ | 23,187 |  |  | $ | (1,843 | )
Income taxes |  | $ | 79,358 |  |  | $ | 95,429 |  |  | $ | 79,912 |
A reconciliation between income tax expense and taxes computed by applying the applicable statutory federal income tax rate to income before income taxes follows:
|  | Year Ended December 31, |
|  | 2017 |  |  | 2018 |  |  | 2019 |
Computed statutory tax expense |  | $ | 120,882 |  |  | $ | 65,254 |  |  | $ | 57,490 |
State and local income taxes, net of federal income tax impact |  |  | 12,786 |  |  |  | 12,611 |  |  |  | 8,479 |
Changes in valuation allowance |  |  | 44 |  |  | 131 |  |  | 2,532 |
Foreign tax rate differential |  |  | (245 | ) |  |  | 2,235 |  |  |  | 4,646 |
Foreign dividends |  |  | 13,662 |  |  | — |  |  | — |
Foreign tax credits |  |  | (21,647 | ) |  |  | 3,927 |  |  |  | 4,143 |
Impacts related to 2017 Tax Act (1)(2) |  |  | (44,889 | ) |  |  | 19,180 |  |  | — |
Changes in uncertain tax positions |  |  | 983 |  |  |  | (6,139 | ) |  |  | 197 |
Other — net |  |  | (2,218 | ) |  |  | (1,770 | ) |  |  | 2,425 |
Income taxes |  | $ | 79,358 |  |  | $ | 95,429 |  |  | $ | 79,912 |
(1) | The amount for the year ended December 31, 2018 includes a one-time charge to true-up deferred taxes of $1,913 and a reduction in deferred tax assets with regard to foreign tax credit carryforwards of $17,267.
(2) | The amount for the year ended December 31, 2017 includes a one-time benefit due to re-measurement of net deferred tax liabilities using a lower U.S. corporate tax rate and a reassessment of permanently reinvested earnings of ($79,834), a deemed repatriation tax of $14,512, and a reduction in deferred tax assets with regard to foreign tax credit carryforwards of $20,433.
As of December 31, 2019, the Company had approximately $432,994 of accumulated undistributed earnings and profits, approximately $370,389 of which was subject to the one-time transition tax pursuant to the Tax Act. Any additional tax due on the repatriation of previously taxed earnings would generally be foreign withholding and U.S. state income taxes. The Company does not intend to repatriate these offshore earnings and profits, and therefore has not recorded any deferred taxes on such earnings. The Company considers any excess of the amount for financial reporting over the tax basis of its investment in its foreign subsidiaries to be indefinitely reinvested. At this time, the determination of deferred tax liabilities on this amount is not practicable. Deferred Income Taxes The tax effects of significant temporary differences and tax loss and tax credit carryforwards comprising the net long-term deferred income tax liabilities as of December 31, 2018 and 2019 consisted of the following:
|  | December 31, |
|  | 2018 |  |  | 2019 |
Deferred liabilities: |  |  |  |  |  |  |  |
Theatre properties and equipment |  | $ | 158,797 |  |  | $ | 138,382 |
Operating lease right-of-use assets |  |  | — |  |  |  | 322,750 |
Intangible asset — other |  |  | 33,561 |  |  |  | 39,282 |
Intangible asset — tradenames |  |  | 73,261 |  |  |  | 72,821 |
Investment in partnerships |  |  | 63,217 |  |  |  | 62,914 |
Total deferred liabilities |  |  | 328,836 |  |  |  | 636,149 |
Deferred assets: |  |  |  |  |  |  |  |
Deferred lease expenses |  |  | 13,464 |  |  |  | — |
Deferred revenue - NCM |  |  | 86,035 |  |  |  | 85,362 |
Deferred revenue - Other |  |  | 4,153 |  |  |  | 9,953 |
Gift Cards |  |  | 6,173 |  |  |  | 7,402 |
Operating lease obligations |  |  | — |  |  |  | 336,034 |
Finance lease obligations |  |  | 63,895 |  |  |  | 34,956 |
Tax impact of items in accumulated other comprehensive income |  |  | 2,237 |  |  |  | 5,131 |
Other tax loss carryforwards |  |  | 15,608 |  |  |  | 17,053 |
Other tax credit carryforwards |  |  | 42,989 |  |  |  | 46,577 |
Other expenses, not currently deductible for tax purposes |  |  | 17,755 |  |  |  | 21,573 |
Total deferred assets |  |  | 252,309 |  |  |  | 564,041 |
Net deferred income tax liability before valuation allowance |  |  | 76,527 |  |  |  | 72,108 |
Valuation allowance against deferred assets – non-current |  |  | 54,725 |  |  |  | 60,359 |
Net deferred income tax liability |  | $ | 131,252 |  |  | $ | 132,467 |
Net deferred tax (asset) liability — Foreign |  | $ | (5,449 | ) |  | $ | (4,539 | )
Net deferred tax liability — U.S. |  |  | 136,701 |  |  |  | 137,006 |
Total |  | $ | 131,252 |  |  | $ | 132,467 |
A significant portion of our foreign tax credit carryforwards expire in 2024. Some foreign net operating losses expired in 2019; however, some losses may be carried forward indefinitely. State net operating losses may be carried forward for periods of between five and twenty years with the last expiring year being 2037. The Company’s valuation allowance changed from $54,725 at December 31, 2018 to $60,359 at December 31, 2019 (see Note 22). The change was a result of an increase for foreign tax credit carryovers and certain foreign net operating losses, partially offset by a decrease for state net operating losses. Uncertain Tax Positions The following is a reconciliation of the total amounts of unrecognized tax benefits excluding interest and penalties, for the years ended December 31, 2017, 2018 and 2019:
|  | Year Ended December 31, |
|  | 2017 |  |  | 2018 |  |  | 2019 |
Balance at January 1, |  | $ | 17,403 |  |  | $ | 18,266 |  |  | $ | 10,561 |
Gross increases - tax positions in prior periods |  |  | 92 |  |  | — |  |  | 1 |
Gross decreases - tax positions in prior periods |  |  | (12 | ) |  |  | (143 | ) |  | — |
Gross increases - current period tax positions |  |  | 265 |  |  |  | 424 |  |  |  | 202 |
Settlements |  |  | (177 | ) |  |  | (7,191 | ) |  |  | (522 | )
Foreign currency translation adjustments |  |  | 695 |  |  |  | (795 | ) |  |  | (7 | )
Balance at December 31, |  | $ | 18,266 |  |  | $ | 10,561 |  |  | $ | 10,235 |
The Company had $13,953 and $14,294 of unrecognized tax benefits, including interest and penalties, as of December 31, 2018 and 2019, respectively. Of these amounts, $13,953 and $14,294 represent the amount of unrecognized tax benefits that, if recognized, would impact the effective income tax rate for the years ended December 31, 2018 and 2019, respectively. The Company had $3,390 and $4,058 accrued for interest and penalties as of December 31, 2018 and 2019, respectively. The Company believes that it is reasonably possible that certain tax positions related to its unrecognized tax benefits will be effectively settled within the next twelve months. The Company estimates a potential decrease of $9,494 to its unrecognized tax benefits and a corresponding decrease in accrued interest of $3,952. The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction and in certain state and foreign jurisdictions and are routinely under audit by many different tax authorities. The Company believes that its accrual for tax liabilities is adequate for all open audit years based on its assessment of many factors including past experience and interpretations of tax law. This assessment relies on estimates and assumptions and may involve a series of complex judgments about future events. The Company is no longer subject to income tax audits from the Internal Revenue Service for years before 2017. The Company is no longer subject to state income tax examinations by tax authorities in its major state jurisdictions for years before 2015. The Company is no longer subject to non-U.S. income tax examinations by tax authorities in its major non-U.S. tax jurisdictions for years before 2006. The Company is currently under audit in the non-U.S. tax jurisdiction of Brazil.

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://fasb.org/us-gaap/role/ref/legacyRef -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