Income Taxes

12 Months Ended

Dec. 31, 2011

Income Taxes [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,
	2011			2010
	(In thousands)
Deferred tax liabilities:
Property and equipment	$	9,766		$	8,981
Intangible assets		5,538			255
Prepaid expenses		439			439
Total deferred tax liabilities		15,743			9,675
Deferred tax assets:
Allowance for doubtful accounts		319			321
Compensation		3,060			3,048
Other accrued liabilities		150			192
Loss carry forwards		92			107
		3,621			3,668
Less: valuation allowance		92			107
Total net deferred tax assets		3,529			3,561
Net deferred tax liabilities	$	12,214		$	6,114
Current portion of deferred tax assets	$	1,169		$	991
Non-current portion of deferred tax liabilities		(13,383	)		(7,105	)
Net deferred tax liabilities	$	(12,214	)	$	(6,114	)

At December 31, 2011, we have state and local tax loss carry forwards of approximately $2,108,000, which will expire from 2012 to 2024. During 2011, we utilized approximately $342,000 in state and local tax loss carry forwards and accordingly, the valuation allowances decreased by $15,000. At December 31, 2011, 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, 2011 and 2010, net deferred tax liabilities include a deferred tax asset of $1,236,000 and $1,225,000, 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, 2011 and 2010. 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,
	2011		2010		2009
	(In thousands)
Current:
Federal	$	1,820	$	4,320	$	(60	)
State		510		1,000		44
Total current		2,330		5,320		(16	)
Total deferred		6,100		5,080		(1,145	)
	$	8,430	$	10,400	$	(1,161	)

In addition, we realized tax expense as a result of stock option exercises for the difference between compensation expense for financial statement and income tax purposes. These tax expenses were recorded to additional paid-in capital in the amounts of approximately $0, $0 and $24,000 for the years ended December 31, 2011, 2010 and 2009, 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,
	2011			2010			2009
	(In thousands)
Tax (benefit) expense at U.S. statutory rates	$	7,260		$	8,875		$	(1,264	)
State tax (benefit) expense, net of federal benefit		1,116			1,523			(182	)
Impairment of Indefinite-lived intangibles not deductible for tax		—			—			150
Other, net		69			164			139
Change in valuation allowance on loss carry forwards		(15	)		(162	)		(4	)
	$	8,430		$	10,400		$	(1,161	)

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 2006. The Company is subject to examination for income and non-income tax filings in various states, and during the first quarter of 2012, the IRS commenced an examination of the Company’s 2010 U.S. federal income tax return.

Included in the balance sheets at December 31, 2011 and 2010 are tax accruals of approximately $56,000 and $77,000, 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, 2011 and 2010, we had no tax-related interest or penalties and had $13,000 and $5,000 accrued at December 31, 2011 and 2010, 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 will be nondeductible pursuant to Section 162(m) of the Internal Revenue Code of 1986, as amended.