Income Taxes

12 Months Ended

Dec. 31, 2012

Income Tax Disclosure [Abstract]

Income Taxes

6. Income Taxes

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax liabilities and assets are as follows:

	December 31,
	2012			2011
	(In thousands)
Deferred tax liabilities:
Property and equipment	$	9,205		$	9,766
Intangible assets		10,437			5,538
Prepaid expenses		616			439
Total deferred tax liabilities		20,258			15,743
Deferred tax assets:
Allowance for doubtful accounts		233			319
Compensation		3,195			3,060
Other accrued liabilities		76			150
Loss carry forwards		58			92
		3,562			3,621
Less: valuation allowance		58			92
Total net deferred tax assets		3,504			3,529
Net deferred tax liabilities	$	16,754		$	12,214
Current portion of deferred tax assets	$	892		$	1,169
Non-current portion of deferred tax liabilities		(17,646	)		(13,383	)
Net deferred tax liabilities	$	(16,754	)	$	(12,214	)

At December 31, 2012, we have state and local tax loss carry forwards of approximately $1,334,000, which will expire from 2013 to 2023. During 2012, we utilized approximately $708,000 in state and local tax loss carry forwards, approximately $67,000 in state and local tax loss carry forwards expired and accordingly, the valuation allowances decreased by $34,000. At December 31, 2012, the valuation allowance for net deferred tax assets relates to state loss carry forwards. Deferred tax assets are required to be reduced by a valuation allowance if it is more likely than not that some portion or all of the deferred tax asset will not be realized.

At December 31, 2012 and 2011, net deferred tax liabilities include a deferred tax asset of $1,199,000 and $1,236,000, respectively, relating to stock-based compensation expense. Full realization of this deferred tax asset requires stock options to be exercised at a price equaling or exceeding the sum of the grant price plus the fair value of the option at the grant date and restricted stock to vest at a price equaling or exceeding the fair market value at the grant date. Accounting guidance, however, does not allow a valuation allowance to be recorded unless the company’s future taxable income is expected to be insufficient to recover the asset. Accordingly, there can be no assurance that the price of the Company’s common stock will increase to levels sufficient to realize the entire tax benefit currently reflected in the balance sheet at December 31, 2012 and 2011. See Note7 — Stock-Based Compensation for further discussion of stock-based compensation expense.

The significant components of the provision for income taxes are as follows:

	Years Ended December 31,
	2012			2011			2010
	(In thousands)
Current:
Federal	$	6,160		$	1,820		$	4,320
State		1,150			510			1,000
Total current		7,310			2,330			5,320
Total deferred		4,540			6,100			5,080
	$	11,850		$	8,430		$	10,400
Taxes are allocated as follows:
Continuing operations	$	11,939		$	8,604		$	10,619
Discontinued operations		(89	)		(174	)		(219	)
	$	11,850		$	8,430		$	10,400

In addition, we recognized tax expense of $25,000, $0 and $0 as a result of stock option exercises for the difference between compensation expense for financial statement and income tax purposes for the years ended December 31, 2012, 2011 and 2010, respectively.

The reconciliation of income tax at the U.S. federal statutory tax rates to income tax expense (benefit) is as follows:

	Years Ended December 31,
	2012			2011			2010
	(In thousands)
Tax expense at U.S. statutory rates	$	10,486		$	7,260		$	8,875
State tax expense, net of federal benefit		1,356			1,116			1,523
Other, net		42			69			164
Change in valuation allowance on loss carry forwards		(34	)		(15	)		(162	)
	$	11,850		$	8,430		$	10,400
Discontinued operations		89			174			219
	$	11,939		$	8,604		$	10,619

The Company files income taxes in the U.S. federal jurisdiction, and in various state and local jurisdictions. The Company is no longer subject to U.S. federal examinations by the Internal Revenue Service (IRS) for years prior to 2007. During the first quarter of 2012, the IRS commenced an examination of the Company’s 2010 U.S. federal income tax return which was completed in the third quarter of 2012 and resulted in no changes to the return. The Company is subject to examination for income and non-income tax filings in various states.

Included in the balance sheets at December 31, 2012 and 2011 are tax accruals of approximately $16,000 and $56,000, respectively for uncertain tax positions. Recognition of any of the related unrecognized tax benefits would affect the Company’s effective tax rate.

We classify income tax-related interest and penalties as interest expense and corporate general and administrative expense, respectively. For the years ended December 31, 2012 and 2011, we had no tax-related interest or penalties and had $0 and $13,000 accrued at December 31, 2012 and 2011, respectively.

In March 2012, the Compensation Committee recommended, and the Board approved, a $350,000 discretionary bonus to the CEO for the year ended December 31, 2011. As a result of the CEO’s total gross compensation, approximately $177,000 was nondeductible pursuant to Section 162(m) of the Internal Revenue Code of 1986, as amended.