Note 13 - Income Taxes

9 Months Ended

Sep. 30, 2017

Notes to Financial Statements

Income Tax Disclosure [Text Block]

1 3 . Income Taxes

At the end of each interim period, we are required to estimate our annual effective tax rate for the fiscal year and use that rate to provide for income taxes for the current year-to-date reporting period. Our overall effective income tax rates were

31.8%

and

34.1%

for the

three

and

nine

months ended

September 30, 2017,

respectively, compared to

30.7%

and

32.3%

for the

three

and

nine

months ended

September 30, 2016,

respectively. The rates for the

three

and

nine

months ended

September 30, 2017

resulted in income tax expense of

$28.5

million and

$60.7

million, respectively, compared to income tax expense of

$11.7

million and

$29.9

million for the same periods in

2016.

The year-over-year increase in our effective tax rate for the

three

months ended

September 30, 2017

was primarily the result of our estimate of the full year effective tax rate for

2016

including an estimate for energy credits whereas our estimate for the

2017

full year includes

no

such energy credit as the credit has

not

been approved by the U.S. Congress. Additionally, our

2016

third

quarter benefited from certain positive return-to-provision adjustments as a result of filing our

2015

tax returns, whereas our

2017

third

quarter included

no

such adjustments.

However, the impact of these items were substantially offset by the release of a valuation allowance on our Metro Bonds as a result of the gain on the sale of those securities at the end of the

2017

third

quarter enabling us to utilize the full deferred tax asset recorded on the Metro Bonds. For the

nine

months ended

September 30, 2017,

the year-over-year increase in our effective tax rate was due to the foregoing energy credits matter coupled with the establishment of a valuation allowance in the

2017

first

quarter against certain state net operating loss carryforwards where realization was more uncertain at the time. These items were somewhat offset by the release of the Metro Bonds valuation allowance discussed above.

At

September 30, 2017

and

December 31, 2016

we had deferred tax assets, net of valuation allowances and deferred tax liabilities, of

$64.2

million and

$74.9

million, respectively. The valuation allowances were primarily related to various state net operating loss carryforwards where realization is more uncertain at this time due to the limited carryforward periods that exist in certain states.