Income Taxes

12 Months Ended

Dec. 31, 2011

Income Taxes [Abstract]

INCOME TAXES

(5) INCOME TAXES

Income tax expense (benefit) is composed of the following:

	Year Ended		Year Ended		Year Ended
	December 31,		December 31,		December 31,
	2011		2010		2009
	(Thousands of dollars)
Current
Federal	$	—	$	—	$	—
State		180		185		193
Foreign		—		—		77
Deferred – principally Federal		3,054		7,291		8,603
Total	$	3,234	$	7,476	$	8,873

Income tax expense (benefit) as a percentage of pre-tax earnings varies from the effective Federal statutory rate of 35% as a result of the following:

	Year Ended				Year Ended				Year Ended
	December 31, 2011				December 31, 2010				December 31, 2009
	(Thousands of dollars, except percentage amounts)
	Amount		%		Amount		%		Amount		%
Income taxes at statutory rate	$	2,830		35	$	5,108		35	$	7,644		35
Increase (decrease) in taxes resulting from:
Valuation allowance – foreign tax credit		—		—		1,175		8		—		—
State income taxes, net of federal benefit		385		5		987		7		844		4
Other items – net		19		—		206		1		385		2
Total	$	3,234		40	$	7,476		51	$	8,873		41

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2011 and 2010 are presented below:

	December 31,			December 31,
	2011			2010
	(Thousands of dollars)
Deferred tax assets:
Deferred compensation	$	1,372		$	1,691
Foreign tax credits		4,346			5,423
Vacation accrual		2,448			1,901
Inventory valuation		5,615			5,279
Rental accrual		1,191			1,773
Allowance for uncollectible accounts		19			19
Hurricane relief credit		1,255			1,255
Other		1,887			741
Net operating loss		74,784			61,140
Total deferred tax assets		92,917			79,222
Valuation allowance – state NOL		(541	)		(541	)
Valuation allowance – tax credit carryforwards		(1,175	)		(1,876	)
Total deferred tax assets, net		91,201			76,805
Deferred tax liabilities:
Tax depreciation in excess of book depreciation		(169,005	)		(151,544	)
Total deferred tax liabilities		(169,005	)		(151,544	)
Net deferred tax liabilities	$	(77,804	)	$	(74,739	)

A valuation allowance was recorded in 2010 against foreign tax credits as management believes it is more likely than not that the deferred tax asset related to the foreign tax credit carryforwards will not be realized during their carryforward period. The estimated future U.S. taxable income, after utilization of the available net operating loss carryforwards, will limit the ability of the Company to utilize the foreign tax credit carryforwards during their carryforward period. At December 31, 2011 and 2010, other current assets include $8.1 million and $7.2 million, respectively, of deferred tax assets.

The Company has net operating loss carryforwards (“NOLs”), of approximately $194.1 million that, if not used will expire beginning in 2022 through 2031. Additionally, for state income tax purposes, the Company has NOLs of approximately $162.4 million available to reduce future state taxable income. These NOLs expire in varying amounts beginning in 2012 through 2031, the majority of which expires in 2017 through 2026. A valuation allowance was recorded in 2010 in the amount of $403,000 for certain state NOLs that are set to expire in 2013 through 2015. Most of these NOLs arose from accelerated tax depreciation deductions related to substantial aircraft additions since 2002.

The Company also has foreign tax credits of approximately $4.3 million which expire beginning in 2014 through 2019. In 2010, we recorded a $1.2 million valuation charge in tax expense related to foreign tax credits which will expire before we are able to utilize them.

In determining the allowance estimates for our Air Medical segment’s billing, receivables and revenue we utilize the prior twelve months’ history by each individual payor group and also by each state. A percentage of amounts collected compared to the total invoice is determined from this process and applied to the current month’s billings and receivables. If a receivable related to the self-pay category is outstanding nine months or greater, it is 100% reserved. Other payor categories are scrutinized when they are outstanding for a nine month period and additional allowances are recorded if warranted.

Income taxes paid were approximately $0.2 million for each of the years ended December 31, 2011, 2010, and 2009. The Company received net income tax refunds of approximately $0.4 million, $0.4 million, and $0. 3 million during the years ended December 31, 2011, 2010, and 2009, respectively.