

NOTE 5:	INCOME TAXES

The provision (benefit) for income taxes from continuing operations is composed of the following:



	Year Ended December 31,
	2014			2013
Current:
Federal	$	—		$	(16	)
State	229			29
	229			13
Deferred:
Federal	5,010			(642		)
State	(2,974		)	(85		)
	2,036			(727		)
Total	$	2,265		$	(714	)

A reconciliation of the provision for income taxes from continuing operations at the normal statutory federal rate to the provision included in the accompanying Consolidated Statements of Operations is shown below:



	Year Ended December 31,
	2014			2013
"Expected" provision at federal statutory rate	$	9,116		$	(2,282	)
State income taxes	709			(705		)
Change in valuation allowance	(7,618		)	2,222
Other	58			51
Provision (benefit) for income taxes	$	2,265		$	(714	)
Effective tax rate	8.7		%	(11.0		)%

The tax effects of temporary differences giving rise to deferred income taxes shown on the consolidated balance sheets are as follows:



	December 31,
	2014			2013
Deferred income tax assets:
Post-retirement liability	$	1,968		$	1,928
Deferred income	1,637			1,568
Stock based compensation	2,108			2,106
Federal operating loss carryforwards	5,029			12,938
Capital loss carryforward	1,311			926
State tax credits	2,423			3,022
State operating loss carryforwards	4,574			8,277
Other	3,405			4,049
Less: valuation allowance	(3,829		)	(11,275		)
Gross deferred income tax assets	18,626			23,539
Deferred income tax liabilities:
Fixed assets	(18,823		)	(17,919		)
Equity method investment	(1,176		)	(391		)
Other	—			(5,229		)
Gross deferred income tax liabilities	(19,999		)	(23,539		)
Net deferred income tax liability	$	(1,373	)	$	—

A schedule of the change in valuation allowance is as follows:



	Valuation allowance
Balance at January 1, 2013	$	9,053
Additions:
Charges to costs and expenses	2,070
Charges to other accounts	152
Balance at December 31, 2013	$	11,275
Reductions	7,446
Balance at December 31, 2014	$	3,829

During the year ended December 31, 2014, the Company determined that it is more likely than not that it will realize a portion of its deferred tax assets. This determination was based on the Company's evaluation of the available evidence, both positive and negative, such as historical levels of income and future forecasts of taxable income, among other items. The Company's evaluation of the available evidence was significantly influenced by the fact that the Company is currently in a positive cumulative earnings position for the three year period ended December 31, 2014. The Company recorded an income tax benefit of $7,618 in 2014 due to the reduction of a portion of its valuation allowance in 2014. The remaining valuation allowance is associated with certain state operating loss carryforwards, state income tax credits, and federal capital loss carryforwards. The Company determined that utilization of these tax attributes was not more likely than not as of December 31, 2014.

As of December 31, 2014, the Company had approximately $14,367 and $79,966 of federal and various state net operating loss carryforwards, respectively. As of December 31, 2013, the Company had approximately $36,969 and $99,496 of federal and state net operating loss carryforwards, respectively. The federal net operating loss carryforward will expire if not used in varying periods between 2028 and 2031. Due to varying state carryforward periods, the state net operating losses and credit carryforwards will expire between calendar years 2015 and 2034. The Company has a federal capital loss carryforward of $3,282 as of December 31, 2014, which will expire if not used in varying periods between 2016 and 2019.

The Company treats accrued interest and penalties related to tax liabilities, if any, as a component of income tax expense. During the years ended December 31, 2014 and 2013, the Company’s activity in accrued interest and penalties was not significant.

The following is a reconciliation of the total amount of unrecognized tax benefits (excluding interest and penalties) for the years ended December 31, 2014 and 2013:



	Years Ended December 31,
	2014		2013
Beginning of year balance	$	566	$	445
Additions for tax positions of prior years	8		62
Additions for tax positions of the current year	39		59
End of year balance	$	613	$	566

For each period presented, the amount of unrecognized benefits (excluding interest and penalties) that would impact the effective tax rate, if recognized, is approximately $29. The Company does not expect a significant change in the amount of unrecognized tax benefits in the next twelve months.

The Company’s federal and state income tax returns for the fiscal years ended June 30, 2011 and forward are open to examination. The amount of income taxes that the Company pays is subject to potential future audits by federal and state taxing authorities.