INCOME TAXES

12 Months Ended

Dec. 31, 2022

INCOME TAXES [Abstract]

INCOME TAXES

NOTE 9: INCOME TAXES

The components of earnings from continuing operations before income taxes are as follows:

in millions	2022	2021	2020
Earnings from Continuing Operations
before Income Taxes
Domestic	$          788.7	$        871.6	$        733.0
Foreign	(0.6)	2.2	10.8
Total	$          788.1	$        873.8	$        743.8

Income tax expense (benefit) from continuing operations consists of the following:

in millions	2022	2021	2020
Income Tax Expense (Benefit) from
Continuing Operations
Current
Federal	$           85.2	$        103.9	$          69.2
State and local	43.6	34.6	23.8
Foreign	4.6	(5.0)	0.9
Total	$         133.4	$        133.5	$          93.9
Deferred
Federal	$           43.4	$          39.2	$          50.9
State and local	3.3	26.5	10.8
Foreign	12.9	0.9	0.2
Total	$           59.6	$          66.6	$          61.9
Total expense	$         193.0	$        200.1	$        155.8

Income tax expense (benefit) differs from the amount computed by applying the federal statutory income tax rate to earnings from continuing operations before income taxes. The sources and tax effects of the differences are as follows:

dollars in millions	2022		2021		2020
Income tax expense at the federal
statutory tax rate	$       165.5	21.0%	$       183.5	21.0%	$       156.2	21.0%
Expense (Benefit) from
Income Tax Differences
Statutory depletion	(30.6)	-3.9%	(28.3)	-3.2%	(24.7)	-3.3%
State and local income taxes, net of federal
income tax benefit	37.5	4.8%	34.7	4.0%	27.4	3.7%
Share-based compensation	(4.9)	-0.6%	(6.1)	-0.7%	(6.9)	-0.9%
Uncertain tax positions	5.1	0.7%	2.5	0.3%	1.4	0.2%
Valuation allowance	14.5	1.8%	13.7	1.6%	0.0	0.0%
Research and development credit	(4.3)	-0.6%	(2.7)	-0.3%	(2.7)	-0.4%
Impairment	10.7	1.4%	0.0	0.0%	0.0	0.0%
Other, net	(0.5)	-0.1%	2.8	0.2%	5.1	0.6%
Total income tax expense/
Effective tax rate	$       193.0	24.5%	$       200.1	22.9%	$       155.8	20.9%

Deferred taxes on the balance sheet result from temporary differences between the amount of assets and liabilities recognized for financial reporting and tax purposes. The components of the net deferred income tax liability at December 31 are as follows:

in millions	2022	2021
Deferred Tax Assets Related to
Employee benefits	$           14.2	$          11.8
Incentive compensation	62.1	62.5
Asset retirement obligations & other reserves	82.5	77.9
State net operating losses	86.3	95.0
State bonus depreciation	41.4	30.1
Operating lease liabilities	149.7	176.7
Other	72.0	59.1
Total gross deferred tax assets	$         508.2	$        513.1
Valuation allowance	(76.8)	(65.7)
Total net deferred tax asset	$         431.4	$        447.4
Deferred Tax Liabilities Related to
Property, plant & equipment	$         889.4	$        824.4
Goodwill/other intangible assets	379.2	380.2
Operating lease right-of-use assets	143.6	176.7
Other	92.0	72.0
Total deferred tax liabilities	$      1,504.2	$     1,453.3
Net deferred tax liability	$      1,072.8	$     1,005.9

In August 2022, the Inflation Reduction Act (IRA) was signed into law. The IRA introduces a corporate alternative minimum tax (CAMT) of 15% applicable to corporations with adjusted financial statement income in excess of $1 billion, as well as certain climate-related tax provisions. The CAMT provision is effective for tax years beginning on or after January 1, 2023. We do not anticipate that the provisions of the IRA will be material to our income taxes.

In February 2021, the Alabama Business Competitiveness Act (ABC Act) was signed into law. The ABC Act contained a provision requiring most taxpayers to change from a three-factor, double-weighted sales method to a single-sales factor method to apportion income to Alabama. This provision had the effect of significantly reducing our apportionment of income to Alabama, thereby further inhibiting our ability to utilize our Alabama net operating loss (NOL) carryforward. As a result, we recorded a charge in the first quarter of 2021 to increase the valuation allowance by $13.7 million. No other material tax impacts resulted from the enactment of the ABC Act.

Each quarter, we analyze the likelihood that our deferred tax assets will be realized. A valuation allowance is recorded if, based on the weight of all available positive and negative evidence, it is more likely than not (a likelihood of more than 50%) that some portion, or all, of a deferred tax asset will not be realized. At December 31, 2022, we have Alabama state NOL carryforward deferred tax assets of $77.8 million, against which we have a valuation allowance of $54.3 million (after considering the ABC Act above). Almost all of the Alabama NOL carryforward would expire between 2023 and 2029 if not utilized.

As discussed in Note 12, in May 2022, Mexican government officials unexpectedly and arbitrarily shut down our Calica operations in Mexico. The impact of the shutdown, combined with recent increased costs (primarily due to underwater mining) has resulted in substantial losses. In 2022, Calica generated a NOL deferred tax asset of $14.5 million. Based on the weight of all available positive and negative evidence, we have concluded that it is more likely than not that Calica will be unable to realize the NOL deferred tax asset during the ten-year carryforward period. Therefore, we recorded a valuation allowance of $14.5 million for 2022. Should the Mexican government lift the shutdown and/or if we are successful in our North American Free Trade Agreement (NAFTA) claim, we will reevaluate the need for a valuation allowance against the NOL deferred tax asset.

We consider the undistributed earnings, if any, related to the investment in our Canadian subsidiaries and Canadian investment in its U.S. subsidiary to be indefinitely reinvested; accordingly, no foreign withholding or other income taxes have been provided thereon. Due to complexities in the tax laws, it is not practicable to estimate the amount of deferred income taxes not recorded that are associated with these earnings. We have not, nor do we currently anticipate in the foreseeable future, the need to repatriate funds (other than for the repayment of intercompany loan obligations) to satisfy domestic liquidity needs arising in the ordinary course of business.

Changes in our liability for unrecognized tax benefits for the years ended December 31 are as follows:

in millions	2022	2021	2020
Unrecognized tax benefits as of January 1	$           10.8	$            6.8	$            5.4
Increases for tax positions related to
Prior years	4.6	0.5	0.4
Current year	6.6	3.9	1.9
Decreases for tax positions related to
Prior years	(0.2)	0.0	0.0
Expiration of applicable statute of limitations	(3.1)	(0.4)	(0.9)
Unrecognized tax benefits as of December 31	$           18.7	$          10.8	$            6.8

We classify interest and penalties recognized on the liability for unrecognized tax benefits as income tax expense. Interest and penalties recognized as income tax expense were $0.8 million in 2022, $0.2 million in 2021 and $0.0 million in 2020. The balance of accrued interest and penalties included in our liability for unrecognized tax benefits as of December 31 was $1.8 million in 2022, $0.8 million in 2021 and $0.3 million in 2020. Our liability for unrecognized tax benefits at December 31 in the table above includes $17.6 million in 2022, $10.3 million in 2021 and $6.6 million in 2020 that would affect the effective tax rate if recognized. We anticipate no single tax position generating a significant increase or decrease in our liability for unrecognized tax benefits within 12 months of this reporting date.

We file income tax returns in U.S. federal, various state and foreign jurisdictions. With the exception of certain states, we are no longer subject to U.S. federal, state or foreign exams by tax authorities for years prior to 2019.

As of December 31, 2022, income tax receivables of $1.3 million and $0.4 million are included in other accounts and notes receivable and other current assets, respectively, in the accompanying Consolidated Balance Sheet. There were similar receivables of $5.0 million and $0.6 million recorded in other accounts and notes receivable and other current assets, respectively, as of December 31, 2021.