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PART II
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY
DATA
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
(All tables in millions, except per share data)
4. INCOME TAXES
The Company and its subsidiaries file consolidated
federal tax returns. The Company accounts for income taxes in
accordance with SFAS No. 109, "Accounting for Income Taxes". Accordingly,
deferred income taxes have been provided to show the effect of
temporary differences between the recognition of revenue and expenses
for financial and income tax reporting purposes and between the
tax basis of assets and liabilities and their reported amounts
in the financial statements.
The components of the provision for income
taxes from continuing operations for the years ended December
31 are as follows:
2000 1999 1998
----------- ----------- -----------
Current:
Federal .............................. $ 101.3 $ 108.4 $ 105.5
State ................................ 4.3 22.8 9.1
Federal and state deferred ............ 91.3 (111.2) 26.7
Change in valuation allowance ......... -- (16.0) (14.5)
-------- -------- --------
Provision for income taxes ............ $ 196.9 $ 4.0 $ 126.8
======== ======== ========
A reconciliation of the provision for income
taxes calculated using the statutory federal income tax rate to
the Company's provision for income taxes from continuing operations
for the years ended December 31 is as follows:
2000 1999 1998
----------- ---------- -----------
Provision (benefit) for income taxes at statutory rate of 35% ......... $ 183.8 $ (9.6) $ 123.4
Non-deductible expenses ............................................... 5.8 28.6 10.3
State income taxes, net of federal benefit ............................ 10.1 1.0 7.6
Change in valuation allowance ......................................... -- (16.0) (14.5)
Other, net ............................................................ (2.8) -- --
-------- ------- --------
Provision for income taxes ............................................ $ 196.9 $ 4.0 $ 126.8
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Components of the net deferred income tax liability
at December 31 are as follows:
2000 1999
----------- -----------
Deferred income tax liabilities:
Book basis in property over tax basis ................. $ 360.8 $ 336.1
Expenses deducted for tax, amortized for book ......... 689.3 705.6
Deferred income tax assets:
Net operating losses .................................. (3.6) (4.2)
Accruals not currently deductible ..................... (278.6) (342.0)
Valuation allowance ................................... 109.3 109.3
-------- --------
Net deferred income tax liability ....................... $ 877.2 $ 804.8
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At December 31, 2000, the Company had available
domestic net operating loss carryforwards primarily related to acquired
businesses of approximately $9.4 million which begin to expire in
the year 2011. In assessing the realizability of deferred tax assets,
management considers whether it is more likely than not that some
portion or all of the deferred tax assets will not be realized.
The Company provides valuation allowances to offset portions of
deferred tax assets due to uncertainty surrounding the future realization
of such deferred tax assets. The Company adjusts the valuation allowance
in the period management determines it is more likely than not that
deferred tax assets will or will not be realized. Future decreases
to the valuation allowance may be allocated to reduce intangible
assets associated with business acquisitions accounted for under
the purchase method of accounting.
Over the past four years, the Company has engaged
in certain transactions that are of a type that the Internal Revenue
Service has recently indicated it intends to challenge. The Company
believes that its tax returns appropriately reflect such transactions.
At the present time, it is impossible to predict the outcome of
any challenge if the IRS determines to challenge the tax reporting
of such transactions.
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Form
10-K 
