Income Tax (Tables)

6 Months Ended

12 Months Ended

Jun. 30, 2013

Dec. 31, 2012

Income Tax Disclosure [Abstract]

Components of Income Tax Expense (Benefit)

The components of income tax (benefit) expense for the three and six months ended June 30, 2013 and 2012 consisted of the following:

	Three months ended June 30,						Six months ended June 30,
(Dollar amounts in thousands)	2013			2012			2013			2012
Current tax provision	$	1,005		$	3,452		$	1,290		$	5,470
Deferred tax benefit		(6,017	)		(4,250	)		(6,251	)		(5,212	)
Income tax (benefit) expense	$	(5,012	)	$	(798	)	$	(4,961	)	$	258

The components of income tax benefit consisted of the following:

	Years ended December 31,
(Dollar amounts in thousands)	2012			2011
Current tax provision (benefit)	$	6,910		$	(7,144	)
Deferred tax benefit		(66,568	)		(22,083	)
Income tax benefit	$	(59,658	)	$	(29,227	)

Segregation Income Tax Expense (Benefit) Based on Location of Operations

The following table presents the components of income tax expense (benefit) for the three and six months ended June 30, 2013 and 2012 and its segregation based on location of operations:

	Three months ended June 30,						Six months ended June 30,
(Dollar amounts in thousands)	2013			2012			2013			2012
Current tax provision
Puerto Rico	$	(122	)	$	3,040		$	256		$	4,950
United States		210			159			429			343
Foreign countries		917			253			605			177
Total current tax provision	$	1,005		$	3,452		$	1,290		$	5,470
Deferred tax benefit
Puerto Rico	$	(5,880	)	$	(4,096	)	$	(5,956	)	$	(4,905	)
United States		—			—			(2	)		—
Foreign countries		(137	)		(154	)		(293	)		(307	)
Total deferred tax benefit	$	(6,017	)	$	(4,250	)	$	(6,251	)	$	(5,212	)

The following table presents the segregation of income tax benefit based on location of operations:

	Years ended December 31,
(Dollar amounts in thousands)	2012			2011
Current tax provision (benefit)
Puerto Rico	$	4,661		$	(9,521	)
United States		622			385
Foreign countries		1,627			1,992
Total current tax provision (benefit)	$	6,910		$	(7,144	)
Deferred tax benefit
Puerto Rico	$	(65,822	)	$	(21,479	)
United States		(38	)		—
Foreign countries		(708	)		(604	)
Total deferred tax benefit	$	(66,568	)	$	(22,083	)

Income Tax Expense (benefit) Differs from Computed Income Tax at Statutory Rates

The income tax (benefit) expense differs from the amount computed by applying the Puerto Rico statutory income tax rate to the income before income taxes as a result of the following:

	Three months ended June 30,						Six months ended June 30,
(Dollar amounts in thousands)	2013			2012			2013			2012
Computed income tax at statutory rates	$	(26,782	)	$	(851	)	$	(25,125	)	$	526
Benefit of net tax-exempt interest income		(53	)		(2	)		(94	)		(4	)
Adjustment to deferred taxes due to changes in enacted tax rate		1,441			—			1,441			—
Differences in tax rates due to multiple jurisdictions		102			99			282			251
Effect of income subject to tax-exemption grant		19,983			(479	)		18,982			(605	)
Reversal of tax uncertainties reserve		—			—			(846	)		(640	)
Fair value adjustment of indemnification assets		—			62			—			364
Effect of net operating losses in foreign entities		(57	)		278			—			278
Other		354			95			399			88
Income tax (benefit) expense	$	(5,012	)	$	(798	)	$	(4,961	)	$	258

The income tax benefit differs from the amount computed by applying the Puerto Rico statutory income tax rate to the income before income taxes as a result of the following:

	Years ended December 31,
(Dollar amounts in thousands)	2012			2011
Computed income tax at statutory rates	$	5,313		$	(1,504	)
Benefit of net tax-exempt interest income		(13	)		(23	)
Benefit of net tax-exempt dividend income		—			(620	)
Non taxable loss on settlement of derivative asset		—			420
Tax expense (benefit) due to a change in estimate		320			(2,416	)
Adjustment to DTL due to changes in enacted tax rate and tax grant		(66,423	)		(23,813	)
Effect of net operating losses in effective tax rate		1,012			—
Differences in tax rates due to multiple jurisdictions		720			285
Effect of income subject to tax-exemption grant		(58	)		(1,737	)
Reversal of tax uncertainties reserve		(707	)		—
Fair value adjustment of indemnification assets		340			(288	)
Tax expense of CONTADO dividend		—			81
Tax uncertainties reserve		—			250
Other		(162	)		138
Income tax benefit	$	(59,658	)	$	(29,227	)

Components of Deferred Tax Assets and Liabilities

The following table presents the components of the Company’s deferred tax assets and liabilities:

	December 31,
(Dollar amounts in thousands)	2012			2011
Deferred tax assets
Allowance for doubtful accounts	$	307		$	540
Net operating loss		7,141			10,444
Unfavorable contract liability		—			211
Other temporary assets		399			909
Total gross deferred tax assets		7,847			12,104
Deferred tax liabilities (“DTL”)
Deferred compensation	$	768		$	2,915
Difference between the assigned values and the tax basis of assets and liabilities recognized in purchase		28,871			90,766
Debt issue cost		2,353			8,513
Other temporary liabilities		(333	)		218
Total gross deferred tax liabilities		31,659			102,412
Deferred tax liability, net	$	(23,812	)	$	(90,308	)

Reconciliation of Unrecognized Tax Benefits, Including Accrued Interest

The reconciliation of unrecognized tax benefits, including accrued interest, was as follows:

(Dollar amounts in thousands)
Balance as of December 31, 2010	$	1,222
Accrued estimated interest		281
Balance as of December 31, 2011		1,503
Foreign currency translation adjustment		7
Reversal of tax uncertainties reserve		(707	)
Accrued estimated interest		25
Balance as of December 31, 2012	$	828