LabCorp 2014 Annual Report Download - page 106

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F-27
December 31,
2014 December 31,
2013
Deferred tax assets:
Accounts receivable $ 12.9 $ 20.2
Employee compensation and benefits 110.7 83.4
Self insurance reserves 27.6 17.8
Postretirement benefit obligation 10.2 23.2
Acquisition and restructuring reserves 20.1 20.6
Tax loss carryforwards 69.1 58.0
Other 2.4 3.8
253.0 227.0
Less: valuation allowance (17.1)(16.5)
Net deferred tax assets $ 235.9 $ 210.5
Deferred tax liabilities:
Deferred earnings $ (15.8)$ (15.1)
Intangible assets (496.3)(463.4)
Property, plant and equipment (93.5)(86.4)
Zero-coupon subordinated notes (92.8)(106.7)
Currency translation adjustment (48.7)(77.9)
Total gross deferred tax liabilities (747.1)(749.5)
Net deferred tax liabilities $ (511.2)$ (539.0)
The valuation allowance increased from $16.5 in 2013 to $17.1 in 2014. The increase in the valuation allowance is primarily
due to write downs in two investments which will generate a capital loss when realized for tax purposes. The Company does not
project to generate capital gain income to offset the capital losses and therefore has recorded a valuation allowance associated
with these assets.
The Company has foreign tax loss carryovers of $9.0 with a full valuation allowance. Most of the foreign losses have an
indefinite carryover. The Company has federal tax loss carryovers of approximately $58.2 expiring periodically through 2031.
The utilization of the tax loss carryovers is limited due to change of ownership rules. However, at this time the Company expects
to fully utilize substantially all federal tax loss carryovers. In addition to the net operating losses, the Company has a foreign capital
loss carryover of $1.9. The loss has an indefinite life and has a full valuation allowance.
The gross unrecognized income tax benefits were $16.7 and $25.6 at December 31, 2014 and 2013, respectively. It is anticipated
that the amount of the unrecognized income tax benefits will change within the next twelve months; however, these changes are
not expected to have a significant impact on the results of operations, cash flows or the financial position of the Company.
The Company recognizes interest and penalties related to unrecognized income tax benefits in income tax expense. Accrued
interest and penalties related to uncertain tax positions totaled $8.2 and $9.3 as of December 31, 2014 and 2013, respectively.
During the years ended December 31, 2014, 2013 and 2012, the Company recognized $2.2, $2.4 and $3.0, respectively, in interest
and penalties expense, which was offset by a benefit of $3.3, $2.9 and $3.9, respectively.
The following table shows a reconciliation of the unrecognized income tax benefits from uncertain tax positions for the years
ended December 31, 2014, 2013 and 2012:
LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars and shares in millions, except per share data)