10. INCOME TAXES

The provision (benefit) for income taxes from continuing operations for the years ended December 31, 2013, 2012 and 2011 (in millions):


	2013			2012		2011
Current
Federal	$	—		$	—	$	—
State		0.6			0.6		0.4
Foreign		0.2			0.3		0.6

		0.8			0.9		1.0

Deferred
Federal		(121.6	)		4.8		4.4
State		(13.3	)		0.4		0.4

		(134.9	)		5.2		4.8

Total provision for taxes	$	(134.1	)	$	6.1	$	5.8

The income tax provision (benefit) differs from the amount of income tax determined by applying the Company’s federal corporate income tax rate of 34% to pre-tax income for the years ended December 31, 2013, 2012 and 2011 due to the following (in millions):


	2013			2012			2011
Computed “expected” tax provision (benefit)	$	(0.1	)	$	6.7		$	(0.8	)
Change in income tax resulting from:
State taxes, net of federal benefit		(8.4	)		1.2			0.4
Foreign taxes		0.2			0.3			0.6
Change in valuation allowance		(126.0	)		(2.2	)		5.6
Other		0.2			0.1			—

	$	(134.1	)	$	6.1		$	5.8

The components of the deferred tax assets and liabilities at December 31, 2013, 2012 and 2011 consist of the following (in millions):


	2013			2012
Deferred tax assets:
Accrued expenses	$	3.5		$	2.8
Accounts receivable		2.4			2.8
Net operating loss carryforward		125.5			110.5
Stock-based compensation		5.2			4.4
Capital loss in investment in a domestic subsidiary		—			10.2
Intangible assets		16.9			25.8
Credits		1.0			0.8
Other		0.9			3.5

		155.4			160.8
Valuation allowance		(1.4	)		(145.5	)

Net deferred tax assets	$	154.0		$	15.3

Deferred tax liabilities:
Non-long lived intangible assets	$	(4.9	)	$	(4.3	)
Long-lived Intangible assets		(55.4	)		(48.3	)
Property and equipment		(1.2	)		(2.0	)
Deferred state taxes		(2.5	)		(5.5	)

		(64.0	)		(60.1	)

	$	90.0		$	(44.8	)

As of December 31, 2013, the Company has federal and state net operating loss carryforwards of approximately $336.1 and $248.8 million, respectively, available to offset future taxable income. The federal net operating loss carryforwards will expire during the years 2020 through 2033. The state net operating loss carryforwards will expire during the years 2014 through 2033. Of the $248.8 million of state net operating loss carryforwards, $4.2 million will expire in 2014.

Not included in the deferred tax assets attributable to net operating losses as of December 31, 2013 and December 31, 2012 are approximately $3 million and $1.6 million, respectively, of gross deferred tax assets attributable to stock option exercises and vesting of restricted stock units because the benefit of such losses have not reduced income tax payable.

Utilization of the Company’s U.S. federal and certain state net operating loss and tax credit carryovers may be subject to substantial annual limitation due to the ownership change limitations provided by the Internal Revenue Code and similar state provisions. Such an annual limitation could result in the expiration of the net operating loss carryforwards before utilization. As of December 31, 2013, the Company believes that utilization of its federal net operating losses and foreign tax credits are not limited under any ownership change limitations provided under the Internal Revenue Code.

Prior to December 31, 2013, the Company maintained a valuation allowance for the entire deferred tax assets as a result of uncertainties regarding their realization due to historical losses, the variability of operating results, and limited visibility into future projected results. This valuation allowance was maintained since the likelihood of the realization of those assets had not become more likely than not based on the Company’s assessment of available evidence. The Company periodically evaluates the realizability of the deferred tax assets and, if it is determined that it is more likely than not that the deferred tax assets are realizable, adjusts the valuation allowance accordingly. Valuation allowances are established and maintained for deferred tax assets on a “more likely than not” threshold. The process of evaluating the need to maintain a valuation allowance for deferred tax assets is highly subjective and requires significant judgment. The Company has considered the following possible sources of taxable income when assessing the realization of the deferred tax assets: (1) future reversals of existing taxable temporary differences; (2) taxable income in prior carryback years; (3) future taxable income exclusive of reversing temporary differences and carryforwards; and (4) tax planning strategies. Based on the Company’s analysis and a review of all positive and negative evidence such as historical operations, future projections of taxable income and tax planning strategies that are prudent and feasible, the Company determined that it was more likely than not that the deferred tax assets would be realized except for certain expiring state net operating loss carryforwards. Accordingly, the Company reversed a valuation allowance of approximately $144 million and recorded the reduction as a tax benefit for the period. For the years ended December 31, 2013 and 2012, the Company had a valuation allowance of $1.4 million and $145.5 million, respectively.

The Company addresses uncertainty in tax positions according to the provisions of ASC 740, “Income Taxes”, which clarifies the accounting for income taxes by establishing the minimum recognition threshold and a measurement attribute for tax positions taken or expected to be taken in a tax return in order to be recognized in the financial statements.

The following table summarizes the activity related to the Company’s unrecognized tax benefits (in millions):


	Amount
Balance at December 31, 2011	$	6.4
Change in balances related to tax positions		—

Balance at December 31, 2012	$	6.4
Change in balances related to tax positions		—

Balance at December 31, 2013	$	6.4

As of December 31, 2013, the Company had $6.4 million of gross unrecognized tax benefits for uncertain tax positions, of which $0.9 million would affect the effective tax rate if recognized.

The Company does not anticipate that the amount of unrecognized tax benefits as of December 31, 2013 will significantly increase or decrease within the next 12 months.

The Company recognizes interest and penalties related to income tax matters as a component of income tax expense. As of December 31, 2013, the Company had no significant accrued interest and penalties related to uncertain tax positions due to the net operating losses.

The Company is subject to taxation in the United States, various states and Mexico. The tax years 2010 to 2013 and 2009 to 2013 remain open to examination by federal and state taxing jurisdictions, respectively, and the tax years 2003 to 2013 remain open to examination by foreign jurisdiction. Net operating losses from years from which the statute of limitations have expired (2009 and prior for federal and 2008 and prior for state) could be adjusted in the event that the taxing jurisdictions challenge the amounts of net operating loss carryforwards from such years.