Notes to Consolidated Financial Statements: Income Taxes

Previous page | Financial Contents | Next page
Annual Report Contents

5) INCOME TAXES

Components of income tax expense are as follows:

Year Ended December 31 (000s)	1999	1998	1997
Currently payable
Federal	$48,558	$18,731	$23,923
State	4,449	1,738	2,989
	53,007	20,469	26,912
Deferred
Federal	(7,350)	21,122	10,201
State	(649)	1,863	1,534
	(7,999)	22,985	11,735
Total	$45,008	$43,454	$38,647

The Company accounts for income taxes under the provisions of Statement of Financial Accounting Standards No. 109, “Accounting for Income Taxes,” (SFAS 109). Under SFAS 109, deferred taxes are required to be classified based on the financial statement classification of the related assets and liabilities which give rise to temporary differences. Deferred taxes result from temporary differences between the financial statement carrying amounts and the tax bases of assets and liabilities. The components of deferred taxes are as follows:

Year Ended December 31 (000s)	1999	1998
Self-insurance reserves	$30,305	$31,984
Doubtful accounts and other reserves	8,541	(1,699)
State income taxes	(1,354)	766
Other deferred tax assets	10,084	7,532
Depreciable and amortizable assets	(51,427)	(50,997)
Total deferred taxes	$(3,851)	$(12,414)

A reconciliation between the federal statutory rate and the effective tax rate is a follows:

Year Ended December 31	1999	1998	1997
Federal statutory rate	35.0%	35.0%	35.0%
Deductible depreciation, amortization and other	(0.2)	(1.6)	(1.3)
State taxes, net of federal income tax benefit	1.9	1.9	2.8
Effective tax rate	36.7%	35.3%	36.5%

The net deferred tax assets and liabilities are comprised as follows:

Year Ended December 31 (000s)	1999	1998
Current deferred taxes
Assets	$26,768	$12,315
Liabilities	—	(1,477)
Total deferred taxes-current	26,768	10,838
Noncurrent deferred taxes
Assets	22,384	27,967
Liabilities	(53,003)	(51,219)
Total deferred taxes-noncurrent	(30,619)	(23,252)
Total deferred taxes	($3,851)	($12,414)

The assets and liabilities classified as current relate primarily to the allowance for uncollectible patient accounts and the current portion of the temporary differences related to self-insurance reserves. Under SFAS 109, a valuation allowance is required when it is more likely than not that some portion of the deferred tax assets will not be realized. Realization is dependent on generating sufficient future taxable income. Although realization is not assured, management believes it is more likely than not that all the deferred tax assets will be realized. Accordingly, the Company has not provided a valuation allowance. The amount of the deferred tax asset considered realizable, however, could be reduced if estimates of future taxable income during the carry forward period are reduced.

Previous page | Financial Contents | Next page
Annual Report Contents