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Income Taxes
12 Months Ended
Dec. 31, 2021
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The Company files a consolidated U.S. federal income tax return with its wholly-owned subsidiaries. The following table presents the components of the Company’s income tax provision:
 Year Ended December 31,
 202120202019
 (In millions)
Current   
   U.S. federal $55.0 $4.8 $45.2 
   State and local14.3 (0.1)11.5 
 69.3 4.7 56.7 
Deferred   
   U.S. federal(17.3)26.1 (8.1)
   State and local(0.7)11.7 2.3 
 (18.0)37.8 (5.8)
Income tax provision$51.3 $42.5 $50.9 
The following table presents the reconciling items between the income tax provision using the U.S. federal statutory rate and the Company's reported income tax provision.
 Year Ended December 31,
 202120202019
(In millions)
Statutory U.S. federal income tax $41.0 $37.9 $40.3 
State income taxes, net of federal benefit11.9 9.1 10.9 
Reserve adjustments0.1 1.2 3.9 
Nondeductible compensation1.6 3.4 1.0 
Tax credits and special deductions0.6 (4.6)(2.7)
Convertible debt(3.4)— — 
Stock-based compensation excess tax benefits(1.0)(4.4)(2.3)
Other0.5 (0.1)(0.2)
Income tax provision $51.3 $42.5 $50.9 
The following table presents a reconciliation of the U.S. federal statutory income tax rate to the Company’s effective income tax rate on earnings in percentages.
 Year Ended December 31,
 202120202019
Statutory U.S. federal income tax rate 21.0 %21.0 %21.0 %
State income taxes, net of federal benefit6.1 5.1 5.7 
Reserve adjustments— 0.7 2.0 
Nondeductible compensation0.8 1.9 0.5 
Tax credits and special deductions0.3 (2.6)(1.4)
Convertible debt(1.8)— — 
Stock-based compensation excess tax benefits(0.5)(2.4)(1.2)
Other0.4 (0.1)(0.1)
Effective income tax rate 26.3 %23.6 %26.5 %
In 2021, the Company’s effective tax rate was 26.3%. The Company's effective tax rate differed from the 21% statutory federal income tax rate primarily due to state income taxes, uncertain tax positions, and certain expenditures which are permanently not deductible for tax purposes, offset by R&D credits, excess tax benefits related to the Company’s stock-based compensation and deductible premiums paid upon the redemption of a portion of the Company’s convertible debt.
In 2020, the Company’s effective tax rate was 23.6%.he Company's effective tax rate differed from the 21% statutory federal income tax rate primarily due to state income taxes, uncertain tax positions, and certain expenditures which are permanently not deductible for tax purposes, offset by R&D credits and excess tax benefits related to the Company's stock-based compensation.
In 2019, the Company’s effective tax rate was 26.5%. The Company’s effective tax rate differed from the 21% statutory federal income tax rate primarily due to state income taxes and uncertain tax positions, offset by R&D credits and excess tax benefits related to the Company’s stock-based compensation.
The Company is routinely examined by domestic tax authorities. While it is difficult to predict the outcome or timing of a particular tax matter, the Company believes it has adequately provided reserves for any reasonable foreseeable outcome related to these matters.
The State of Florida notified the Company they would be opening an income tax audit for the years ended December 31, 2016, through December 31, 2018. The audit began in the first quarter of 2020 and concluded in the third quarter of 2021. The audit resulted in an immaterial favorable adjustment.
U.S. federal tax returns for the years ended December 31, 2018, through December 31, 2020, remain open to examination. Tax returns for the years ended December 31, 2017, through December 31, 2020, remain open to examination for state income tax jurisdictions.
The following table presents a reconciliation of unrecognized tax benefits:
 Year Ended December 31,
 202120202019
 (In millions)
Balances at beginning of year$14.2 $58.0 $7.4 
  Increases based on tax positions in prior years0.3 2.7 40.4 
  Decreases based on tax position in prior years(0.4)(51.5)— 
  Increases based on tax positions in current year6.6 5.6 10.4 
  Lapse of statute of limitations(0.7)(0.6)(0.2)
Balances at end of year$20.0 $14.2 $58.0 
As of December 31, 2021, the total amount of unrecognized tax benefits was $20.0 million which would all affect the effective tax rate. The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. As of December 31, 2021, the Company’s accrued interest and penalties related to uncertain tax positions was $0.6 million. It is reasonably possible that a reduction of up to $2.4 million of unrecognized tax benefits and related interest and penalties may occur within the next 12 months as a result of the expiration of certain statutes of limitations.
Deferred Income Taxes
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of the Company’s assets and liabilities for financial reporting and income tax purposes. Deferred tax assets and liabilities are determined by multiplying such differences by the enacted tax rates expected to be in effect when such differences are recovered or settled.
The following table presents the deferred tax assets and liabilities:
 As of December 31,  
 20212020
 (In millions)
Deferred Tax Assets  
    Accrued estimated costs $49.5 $48.4 
    Basis difference in assets and liabilities58.8 68.5 
    Operating lease liabilities13.7 12.3 
    Tax losses and credit carryforwards0.4 1.7 
    Net cumulative defined benefit pension plan losses58.8 81.5 
    Retiree medical and life insurance benefits4.7 6.0 
        Total deferred tax assets185.9 218.4 
Deferred Tax Liabilities  
     Revenue recognition differences104.8 116.7 
     Basis differences in intangible assets10.7 9.2 
     ROU assets12.9 11.4 
         Total deferred tax liabilities128.4 137.3 
         Total net deferred tax assets $57.5 $81.1 
Realization of deferred tax assets is primarily dependent on generating sufficient taxable income in future periods. The Company believes it is more likely than not its deferred tax assets will be realized. Accordingly, no valuation allowance was recorded for 2021 and 2020.
The Company fully utilized its federal net operating loss carryforwards and income tax credits in 2018. The Company utilized substantially all of its state net operating loss carryforwards in 2019. The Company’s California income tax credit carryovers have been fully utilized as of December 31, 2021.