17. INCOME TAXES

The components of income tax (provision) benefit from continuing operations for the three and six months ended June 30, 2011 and 2010 consisted of the following:


	Three Months Ended					Six Months Ended
	June 30,					June 30,
(In thousands)	2011		2010			2011			2010
Current:
Federal	$	—	$	—		$	—		$	—
State		16		(68	)		50			(130	)
Foreign		7		(12	)		(27	)		(88	)

	$	23	$	(80	)	$	23		$	(218	)

Deferred:
Federal		—		—			—			—
State		—		—			—			—

	$	—	$	—		$	—		$	—

We recorded net prepaid taxes totaling approximately $0.2 million and $0.2 million as of June 30, 2011 and December 31, 2010, respectively, comprised primarily of state tax refunds receivable and state prepaid taxes.

As of December 31, 2010, federal net operating loss carryforwards in the amount of approximately $154.1 million are available to us, translating to a deferred tax asset before valuation allowance of $53.9 million. These NOLs will expire between 2027 and 2030. A significant portion of these NOLs will be transferred to Daymark upon the sale of Daymark.

We also have state net operating loss carryforwards from December 31, 2010 and previous periods totaling $244.1 million, translating to a deferred tax asset of $16.3 million before valuation allowances, which begin to expire in 2017.

We regularly review our deferred tax assets for realizability and have established a valuation allowance based upon historical taxable income, projected future taxable income and the expected timing of the reversals of existing temporary differences to reduce our deferred tax assets to the amount that we believe is more likely than not to be realized. Due to the cumulative pre-tax book loss in the past three years and the inherent volatility of our business in recent years, we believe that this negative evidence supports the position that a valuation allowance is required pursuant to ASC 740, Income Taxes, (“Income Taxes Topic”). Management determined that as of June 30, 2011, $122.7 million of deferred tax assets do not satisfy the recognition criteria set forth in the Income Taxes Topic. Accordingly, a valuation allowance has been recorded for this amount. If released, the entire amount would result in a benefit to continuing operations.

The differences between the total income tax (provision) benefit from continuing operations for financial statement purposes and the income taxes computed using the applicable federal income tax rate of 35.0% for the three and six months ended June 30, 2011 and 2010 were as follows:


	Three Months Ended						Six Months Ended
	June 30,						June 30,
(In thousands)	2011			2010			2011			2010
Federal income taxes at the statutory rate	$	2,378		$	3,813		$	9,215		$	11,234
State income taxes, net of federal benefit		206			345			835			752
Foreign income taxes		7			(12	)		(28	)		(88	)
Other		82			(4	)		208			(4	)
Non-deductible expenses		(550	)		(268	)		(2,081	)		(581	)
Change in valuation allowance		(2,100	)		(3,954	)		(8,126	)		(11,531	)

Provision for income taxes	$	23		$	(80	)	$	23		$	(218	)