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INCOME TAXES (Block)

12 Months Ended

Dec. 31, 2014

14. INCOME TAXES

Effective Tax Rate - Overview

The Company’s effective income tax rate may be impacted by: (1) changes in the level of income in any of the Company’s taxing jurisdictions; (2) changes in the statutes and rules applicable to taxable income in the jurisdictions in which the Company operates; (3) changes in the expected outcome of income tax audits; (4) changes in the estimate of expenses that are not deductible for tax purposes; (5) income taxes in certain states where the states’ current taxable income is dependent on factors other than the Company’s consolidated net income; and (6) adding facilities in states that on average have different income tax rates from states in which the Company currently operates and the resulting effect on previously reported temporary differences between the tax and financial reporting bases of the Company’s assets and liabilities. The Company’s annual effective tax rate may also be materially impacted by tax expense associated with non-amortizable assets such as broadcasting licenses and goodwill and changes in the deferred tax valuation allowance.

An impairment loss for financial statement purposes will result in an income tax benefit during the period incurred as the amortization of broadcasting licenses and goodwill is deductible for income tax purposes.

Expected And Reported Income Taxes (Benefit)

Income tax expense (benefit) computed using the United States federal statutory rates is reconciled to the reported income tax expense (benefit) as follows:

		Years Ended December 31,
			2014	2013		2012
			(amounts in thousands)

Federal statutory income tax rate			35%		35%		35%

Computed tax expense at federal statutory rates on income
	before income taxes	$	16,357	$	16,975	$	8,310
State income tax expense, net of federal benefit			2,491		3,399		2,274
Non-recognition of expense due to full valuation allowance			-		54		203
Tax benefit shortfall associated with share-based awards			62		997		412
Nondeductible expenses and other			1,001		1,051		1,275
Income taxes		$	19,911	$	22,476	$	12,474

For 2014

The effective income tax rate was 42.6%. This rate was higher than the federal statutory rate of 35% primarily due to the combination of: (1) an increase in net deferred tax liabilities associated with non-amortizable assets such as broadcasting licenses and goodwill; (2) an adjustment for expenses that are not deductible for tax purposes; and (3) a tax benefit shortfall associated with share-based awards. In addition, the Company recorded a discrete tax benefit from legislatively reduced income tax rates in certain states.

For 2013

The effective income tax rate was 46.3%. This rate was higher than the federal statutory rate of 35% primarily due to the combination of: (1) an increase in net deferred tax liabilities associated with non-amortizable assets such as broadcasting licenses and goodwill; and (2) an adjustment for expenses that are not deductible for tax purposes. In addition, the effective tax rate increased due to a tax benefit shortfall associated with share-based awards.

For 2012

The effective income tax rate was 52.5%. This rate was higher than the federal statutory rate of 35% primarily due to the combination of: (1) a reduction in income before income taxes as a result of the impairment loss of $22.3 million recorded in the second quarter of 2012; (2) an increase in net deferred tax liabilities associated with non-amortizable assets such as broadcasting licenses and goodwill; and (3) an adjustment for expenses that are not deductible for tax purposes. The rate was reduced by a tax benefit associated with a reduction in liabilities for uncertain tax positions due to the expiration of the statute of limitations in certain jurisdictions.

Income Tax Expense

Income tax expense (benefit) for 2014, 2013 and 2012 is summarized as follows:

				Years Ended December 31,
				2014		2013		2012

	Current:
		Federal		$	-	$	-	$	-
		State			100		54		(822)
			Total current		100		54		(822)

	Deferred:
		Federal			17,373		19,051		10,481
		State			2,438		3,371		2,815
			Total deferred		19,811		22,422		13,296

Total income taxes (benefit)				$	19,911	$	22,476	$	12,474

Deferred Tax Assets And Deferred Tax Liabilities

The income tax accounting process to determine the Company’s deferred tax assets and liabilities involves estimating all temporary differences between the tax and financial reporting bases of the Company’s assets and liabilities based on tax laws and statutory tax rates applicable to the period in which the differences are expected to affect taxable income. These estimates include assessing the likely future tax consequences of events that have been recognized in the Company’s financial statements or tax returns. Changes to these estimates could have a future impact on the Company’s financial position or results of operations.

The tax effects of significant temporary differences that comprise the net deferred tax assets and liabilities are as follows:

			December 31,
			2014		2013
			(amounts in thousands)
Deferred tax assets:
	Employee benefits		$	678	$	857
	Deferred compensation			588		476
	Provision for doubtful accounts			959		947
	Deferred gain on tower transaction			236		236
	Other			505		567
	Total current deferred tax assets before valuation allowance			2,966		3,083
	Valuation allowance			(620)		(195)
	Total current deferred tax assets - net			2,346		2,888
	Federal and state income tax loss carryforwards			130,074		115,130
	Share-based compensation			2,648		2,136
	Investments - impairments			498		490
	Lease rental obligations			2,289		2,058
	Deferred compensation			4,322		4,112
	Deferred gain on tower transaction			3,281		3,525
	Other non-current			1,154		1,086
	Total non-current deferred tax assets before valuation allowance			144,266		128,537
	Valuation allowance			(20,146)		(20,043)
	Total non-current deferred tax assets - net			124,120		108,494
	Total deferred tax assets		$	126,466	$	111,382

Deferred tax liabilities:
	Advertiser broadcasting obligations		$	(98)	$	(38)
	Total current deferred tax liabilities			(98)		(38)
	Deferral of gain recognition on the extinguishment of debt			(6,119)		(7,657)
	Property, equipment and certain intangibles (other
		than broadcasting licenses and goodwill)		5,579		4,318
	Broadcasting licenses and goodwill			(187,050)		(149,427)
	Total non-current deferred tax liabilities			(187,590)		(152,766)
	Total deferred tax liabilities		$	(187,688)	$	(152,804)

	Total net deferred tax liabilities		$	(61,222)	$	(41,422)

Valuation Allowance For Deferred Tax Assets

Judgment is required in estimating valuation allowances for deferred tax assets. Deferred tax assets are reduced by a valuation allowance if an assessment of their components indicates that it is more likely than not that all or some portion of these assets will not be realized. The realization of a deferred tax asset ultimately depends on the existence of sufficient taxable income in the carryforward periods under tax law. The Company periodically assesses the need for valuation allowances for deferred tax assets based on more-likely-than-not realization threshold criteria. In the Company’s assessment, appropriate consideration is given to all positive and negative evidence related to the realization of the deferred tax assets. This assessment considers, among other matters, forecasts of future profitability, the duration of statutory carryforward periods and any ownership change limitations under Internal Revenue Code Section 382 on the Company’s future income that can be used to offset historic losses.

As changes occur in the Company’s assessments regarding its ability to recover its deferred tax assets, the Company’s tax provision is increased in any period in which the Company determines that the recovery is not probable.

The following table presents the changes in the deferred tax asset valuation allowance for the periods indicated:

			Increase
			(Decrease)		Increase
			Charged		(Decrease)
			(Credited)		Charged
	Balance At		To Income		(Credited)		Balance At
	Beginning		Taxes		To		End Of
Year Ended	Of Year		(Benefit)		OCI		Year
		(amounts in thousands)
December 31, 2014	$	20,238	$	528	$	-	$	20,766
December 31, 2013		18,333		1,905		-		20,238
December 31, 2012		9,633		8,700		-		18,333

Liabilities For Uncertain Tax Positions

The Company recognizes liabilities for uncertain tax positions based on whether evidence indicates that it is more likely than not that the position will be sustained on audit. It is inherently difficult and subjective to estimate such amounts, as this requires the Company to estimate the probability of various possible outcomes. The Company reevaluates these uncertain tax positions on a quarterly basis. Changes in assumptions may result in the recognition of a tax benefit or an additional charge to the tax provision.

The Company classifies interest related to income tax liabilities as income tax expense, and penalties are recognized as a component of income tax expense. The income tax liabilities and accrued interest and penalties are presented as non-current liabilities, as payments are not anticipated within one year of the balance sheet date. These non-current income tax liabilities are recorded in other long-term liabilities in the consolidated balance sheets.

The Company’s liabilities for uncertain tax positions are reflected in the following table:

		December 31,
		2014		2013
		(amounts in thousands)
Liabilities for uncertain tax positions
	Tax	$	67	$	67
	Interest and penalties		150		132
	Total	$	217	$	199

The amounts for interest and penalties expense reflected in the statements of operations were eliminated in the statements of cash flows under net deferred taxes (benefit) and other as no cash payments were made during these periods.

The following table presents the expense (income) for uncertain tax positions, which amounts were reflected in the consolidated statements of operations as an increase (decrease) to income tax expense:

	Years Ended December 31,
	2014		2013		2012
	(amounts in thousands)

Tax expense (income)	$	-	$	-	$	(617)
Interest and penalties (income)		18		11		(309)
Total income taxes (benefit)
from uncertain tax positions	$	18	$	11	$	(926)

The increase in liabilities for uncertain tax positions for 2014 primarily reflects the addition of interest related to existing uncertain tax positions.

For 2012, the liabilities for uncertain tax positions primarily reflect the expiration of statutes of limitation for certain tax jurisdictions.

The following table presents the gross amount of changes in unrecognized tax benefits:

		Years Ended December 31,
		2014		2013		2012
		(amounts in thousands)

Beginning of year balance		$	(7,690)	$	(7,690)	$	(8,180)
Prior year positions
	Gross Increases		-		-		(733)
	Gross Decreases		-		-		858
Current year positions
	Gross Increases		-		-		-
	Gross Decreases		-		-		-
Settlements with tax authorities			-		-		-
Reductions due to statute lapse			-		-		365
End of year balance		$	(7,690)	$	(7,690)	$	(7,690)

Ending liability balance included above that was
	reflected as an offset to deferred tax assets	$	(7,623)	$	(7,623)	$	(7,623)

The gross amount of the Company’s unrecognized tax benefits is reflected in the above table which, if recognized, would impact the Company’s effective income tax rate in the period of recognition. The total amount of unrecognized tax benefits could increase or decrease within the next 12 months for a number of reasons including the expiration of statutes of limitations, audit settlements and tax examination activities.

As of December 31, 2014, there were no significant unrecognized net tax benefits (exclusive of interest and penalties) that over the next 12 months are subject to the expiration of various statutes of limitation. Interest and penalties accrued on uncertain tax positions are released upon the expiration of statutes of limitations.

Federal And State Income Tax Audits

The Company is subject to federal and state income tax audits from time to time that could result in proposed assessments. Management believes that the Company has made sufficient tax provisions for tax periods that are within the statutory period of limitations not previously audited and that are potentially open for examination by the taxing authorities. Potential liabilities associated with these years will be resolved when an event occurs to warrant closure, primarily through the completion of audits by the taxing jurisdictions, or if the statute of limitations expires. To the extent audits or other events result in a material adjustment to the accrued estimates, the effect would be recognized during the period of the event. There can be no assurance, however, that the ultimate outcome of audits will not have a material adverse impact on the Company’s financial position, results of operations or cash flows.

The Company cannot predict with certainty how these audits will be resolved and whether the Company will be required to make additional tax payments, which may include penalties and interest. During 2010, the Company concluded an audit by the IRS with no proposed adjustment for the tax years of 2004 through 2008. For most states where the Company conducts business, the Company is subject to examination for the preceding three to six years. In certain states, the period could be longer.

Income Tax Payments And Refunds

The following table provides the amount of income tax payments and income tax refunds for the periods indicated:

	Years Ended December 31,
	2014		2013		2012
	(amounts in thousands)

State income tax payments	$	79	$	69	$	99
Federal and state income tax refunds	$	10	$	5	$	256

Net Operating Loss Carryforwards

The Company has recorded a valuation allowance for certain of its state net operating loss carryforwards (“NOLs”) as the Company does not expect to obtain a benefit in future periods. In addition, utilization in future years of the NOL carryforwards may be subject to limitations due to the changes in ownership provisions under Section 382 of the Internal Revenue Code and similar state provisions.

Windfall tax benefits will be recognized for book purposes and recorded to paid-in capital only when realized. The Company does not recognize a deferred tax asset for unrealized tax benefits associated with the tax deductions in excess of the compensation recorded (excess tax benefit). The Company applies the “with and without” approach for utilization of tax attributes upon realization of NOLs in the future. This method allocates stock-based compensation benefits last among other tax benefits recognized.

The NOLs reflected in the following table exclude these windfall stock compensation deductions. In addition, the NOLs reflect an estimate of the NOLs for the 2014 tax filing year as these returns will not be filed until later in 2015:

	Net Operating Losses
	December 31, 2014
			Suspended
	NOLs		Windfall		NOL Expiration Period
	(amounts in thousands)					(in years)

Federal NOL carryforwards	$	295,394	$	9,719	2030 to 2035
State NOL carryforwards	$	629,804	$	9,002	2015 to 2034
State income tax credit	$	1,248			to 2018

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

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