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Income Taxes | 12 Months Ended
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Dec. 31, 2013
Income Taxes |
Income Taxes | Note 5: Income Taxes The following table lists the components of the provision (benefit) for income taxes:
Years ended December 31, |  | 2013 |  |  | 2012 |  |  | 2011 |
(in thousands) |  |  |  |  |  |  |  |  |
Current provision: |  |  |  |  |  |  |  |  |
Federal |  | $ | 104,890 |  |  | $ | 147,580 |  |  | $ | 91,415 |
State |  |  | 15,627 |  |  |  | 14,673 |  |  |  | 12,938 |
Foreign |  |  | 1,918 |  |  |  | 1,109 |  |  |  | 1,007 |
Deferred (benefit) provision: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | (12,025 | ) |  |  | 5,027 |  |  |  | 70,599 |
State |  |  | (1,035 | ) |  |  | (206 | ) |  |  | 6,475 |
Total income tax provision |  | $ | 109,375 |  |  | $ | 168,183 |  |  | $ | 182,434 |
Reconciliation between the federal statutory rate and RPC’s effective tax rate is as follows:
Years ended December 31, |  | 2013 |  |  | 2012 |  |  | 2011 |
Federal statutory rate |  |  | 35.0 | % |  |  | 35.0 | % |  |  | 35.0 | %
State income taxes, net of federal benefit |  |  | 3.8 |  |  |  | 3.2 |  |  |  | 3.1 |
Tax credits |  |  | (0.3 | ) |  |  | (0.3 | ) |  |  | (0.2 | )
Non-deductible expenses |  |  | 0.5 |  |  |  | 0.5 |  |  |  | 0.4 |
Other |  |  | 0.6 |  |  |  | (0.4 | ) |  |  | (0.2 | )
Effective tax rate |  |  | 39.6 | % |  |  | 38.0 | % |  |  | 38.1 | %
Significant components of the Company’s deferred tax assets and liabilities are as follows:
December 31, |  | 2013 |  |  | 2012 |
(in thousands) |  |  |  |  |  |
Deferred tax assets: |  |  |  |  |  |
Self-insurance |  | $ | 7,247 |  |  | $ | 7,417 |
Pension |  |  | 8,018 |  |  |  | 9,688 |
State net operating loss carryforwards |  |  | 484 |  |  |  | 1,165 |
Bad debts |  |  | 4,748 |  |  |  | 3,489 |
Accrued payroll |  |  | 2,019 |  |  |  | 2,038 |
Stock-based compensation |  |  | 5,183 |  |  |  | 4,567 |
Tangible property regulations 481(a) |  |  | 7,665 |  |  |  | - |
All others |  |  | 1,541 |  |  |  | 274 |
Valuation allowance |  |  | (83 | ) |  |  | (1,003 | )
Gross deferred tax assets |  |  | 36,822 |  |  |  | 27,635 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Depreciation |  |  | (165,960 | ) |  |  | (168,717 | )
Goodwill amortization |  |  | (7,094 | ) |  |  | (6,394 | )
All Others |  |  | (2,759 | ) |  |  | (1,754 | )
Gross deferred tax liabilities |  |  | (175,813 | ) |  |  | (176,865 | )
Net deferred tax liabilities |  | $ | (138,991 | ) |  | $ | (149,230 | )
As of December 31, 2013, undistributed earnings of the Company’s foreign subsidiaries amounted to $12.0 million. Those earnings are considered to be indefinitely reinvested and, accordingly, no U.S. federal and state income taxes have been provided thereon. Upon distribution of those earnings in the form of dividends or otherwise, the Company would be subject to both U.S. income taxes and withholding taxes payable to the foreign countries. The Company’s current intention is to permanently reinvest funds held in our foreign subsidiaries outside of the U.S., with the possible exception of repatriation of funds that have been previously subject to U.S. federal and state taxation or when it would be tax effective through the utilization of foreign tax credits, or would otherwise create no additional U.S. tax cost. As of December 31, 2013, the Company has net operating loss carry forwards related to state income taxes of approximately $11.8 million that will expire between 2014 and 2033. As of December 31, 2013 the Company has a valuation allowance of approximately $0.1 million, representing the tax affected amount of loss carry forwards that the Company does not expect to utilize, against the corresponding deferred tax asset. Total net income tax payments were $122,916,000 in 2013, $158,700,000 in 2012, and $90,729,000 in 2011. The Company and its subsidiaries are subject to U.S. federal and state income tax in multiple jurisdictions. In many cases our uncertain tax positions are related to tax years that remain open and subject to examination by the relevant taxing authorities. The Company’s 2010 through 2013 tax years remain open to examination. Additional years may be open to the extent attributes are being carried forward to an open year. The Internal Revenue Service (IRS) commenced an examination of the Company’s US federal income tax return for the 2011 tax year during the fourth quarter of 2013 that is anticipated to be completed by the end of 2014. As of December 31, 2013, the IRS has not proposed any adjustments in connection with the examination. In accordance with the accounting guidance relating to the accounting for uncertainty in income tax reporting, which provides criteria for the recognition, measurement, presentation and disclosure of uncertain tax positions, the Company recognized a significant increase in its liability for unrecognized tax benefits in the current year related primarily to refund claims filed for state income taxes. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
|  | 2013 |  |  | 2012 |
Balance at January 1 |  | $ | 38,000 |  |  | $ | 35,000 |
Additions based on tax positions related to the current year |  |  | 3,430,000 |  |  |  | - |
Additions for tax positions of prior years |  |  | 12,877,000 |  |  |  | 3,000 |
Balance at December 31 |  | $ | 16,345,000 |  |  | $ | 38,000 |
The Company’s liability for unrecognized tax benefits as disclosed above, would affect our effective rate if recognized. Additionally, interest and penalties related to the unrecognized tax benefits as disclosed above as of December 31, 2013 and December 31, 2012 amounted to $276,000 and $3,000, respectively. The Company’s policy is to record interest and penalties related to income tax matters as income tax expense. Accrued interest and penalties were immaterial to the financial statements as of December 31, 2013 and 2012. It is reasonably possible that the amount of the unrecognized tax benefits with respect to our unrecognized tax positions will significantly decrease in the next 12 months. These changes may be the result of, among other things, state tax settlements under or conclusions of ongoing examinations or reviews. However, quantification of an estimated range cannot be made at this time. The American Taxpayer Relief Act of 2012 was signed into law on January 2, 2013 and included an extension for one year of the 50% bonus depreciation allowance. The provision specifically applied to qualifying property placed in service before January 1, 2014. The acceleration of deductions on 2013 qualifying capital expenditures resulting from the bonus depreciation provision had no impact on our 2013 effective tax rate. On September 23, 2013, the U.S. Department of the Treasury issued final regulations under Internal Revenue Code Sections 162(a) and 263(a) that provide guidance on the deduction and capitalization of expenditures related to tangible property. These regulations will result in our adoption of certain mandatory and elective accounting methods with respect to property and equipment, inventory and supplies. The regulations are generally effective for taxable years beginning on or after January 1, 2014. In connection with the issuance of the regulations, RPC has assessed and estimated the impact of the method changes on its financial statements. We have estimated favorable IRC Section 481(a) adjustments of approximately $21 million (gross). The tax affected amount of the assessment ($7.7 million) has been separately disclosed in our schedule of deferred tax assets and liabilities. This amount is subject to change as we finalize our analysis and file method changes under the new regulations during 2014.

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- 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 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 2: 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 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 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 Reference 6: 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 + Details
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