12. Income Taxes
The provision (benefit) for income taxes consists of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
December 31,
2010 |
|
Year Ended
December 31,
2009 |
|
Year Ended
December 31,
2008 |
|
Current—State |
|
$ |
291 |
|
$ |
221 |
|
$ |
142 |
|
Current—Federal |
|
|
— |
|
|
57 |
|
|
— |
|
Deferred |
|
|
1,401 |
|
|
(11,767 |
) |
|
(15,501 |
) |
|
|
|
|
|
|
|
|
|
|
$ |
1,692 |
|
$ |
(11,489 |
) |
$ |
(15,359 |
) |
|
|
|
|
|
|
|
|
Reconciliations between the Company's effective income tax rate and the U.S. statutory rate follow:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
December 31,
2010 |
|
Year Ended
December 31,
2009 |
|
Year Ended
December 31,
2008 |
|
Statutory U.S. Federal income tax rate |
|
|
(35.0 |
)% |
|
(35.0 |
)% |
|
(35.0 |
)% |
State income taxes, net of U.S. Federal income tax |
|
|
(4.0 |
) |
|
(4.8 |
) |
|
(4.8 |
) |
Valuation allowance |
|
|
42.2 |
|
|
— |
|
|
— |
|
Permanent items |
|
|
1.0 |
|
|
0.7 |
|
|
0.5 |
|
Deferred item adjustments |
|
|
2.0 |
|
|
0.9 |
|
|
(0.2 |
) |
|
|
|
|
|
|
|
|
|
Effective income tax rate |
|
|
6.2 |
% |
|
(38.2 |
)% |
|
(39.5 |
)% |
|
|
|
|
|
|
|
|
The components of the Company's overall deferred tax assets and liabilities at December 31, 2010 and 2009, are as follows:
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
December 31,
2010 |
|
December 31,
2009 |
|
Deferred tax assets |
|
|
|
|
|
|
|
|
Accounts receivable |
|
$ |
780 |
|
$ |
975 |
|
|
Accrued compensation and pension |
|
|
7,701 |
|
|
5,194 |
|
|
Inventories |
|
|
335 |
|
|
327 |
|
|
Other assets |
|
|
3,836 |
|
|
3,867 |
|
|
Unrealized loss on cash flow hedge |
|
|
6,372 |
|
|
8,472 |
|
|
Unrealized loss on pension |
|
|
2,818 |
|
|
2,533 |
|
|
Net operating loss carryforwards |
|
|
50,263 |
|
|
53,094 |
|
|
|
|
|
|
|
|
|
Deferred tax assets |
|
|
72,105 |
|
|
74,462 |
|
|
Valuation Allowance |
|
|
(11,958 |
) |
|
— |
|
|
|
|
|
|
|
|
|
Deferred tax assets |
|
|
60,147 |
|
|
74,462 |
|
|
|
|
|
|
|
Deferred tax liabilities |
|
|
|
|
|
|
|
|
Accelerated depreciation and amortization |
|
|
(118,403 |
) |
|
(129,561 |
) |
|
Prepaid assets |
|
|
(692 |
) |
|
(189 |
) |
|
|
|
|
|
|
|
|
Total deferred tax liabiliites |
|
|
(119,095 |
) |
|
(129,750 |
) |
|
|
|
|
|
|
|
|
Net deferred tax liability |
|
$ |
(58,948 |
) |
$ |
(55,288 |
) |
|
|
|
|
|
|
At December 31, 2010, the Company had available unused federal net operating loss carryforwards of approximately $134.7 million. The net operating loss carryforwards will expire at various dates from 2020 through 2030.
We evaluate the recoverability of our deferred tax assets by scheduling the expected reversals of deferred tax assets and liabilities in order to determine whether net operating loss carry forwards are recoverable prior to expiration. During 2010, we determined that it was no longer more likely than not that all of our net operating loss carry forwards will be recovered prior to their expiration based on the expected reversals of these deferred tax assets and liabilities, future earnings, or other assumptions. Accordingly, we established a valuation allowance of $12.0 million to recognize this uncertainty and, in future reporting periods, will continue to assess the likelihood that deferred tax assets will be realizable.
Under the Code, certain corporate stock transactions into which the Company has entered or may enter in the future could limit the amount of net operating loss carryforwards which may be utilized on an annual basis to offset taxable income in future periods.
ASC Topic 740 clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial statements and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.
Our evaluation was performed for the tax years ended December 31, 2010, 2009 and 2008 the tax years that remain subject to examination by major tax jurisdictions as of December 31, 2010. We do not believe there will be any material changes in our unrecognized tax positions over the next twelve months.
A reconciliation of the beginning and ending amount of unrecognized tax benefit for the years ended December 31, 2010, 2009 and 2008:
|
|
|
|
|
|
(in thousands) |
|
|
|
Unrecognized tax benefits balance at January 1, 2008 |
|
$ |
2,100 |
|
|
Gross increases for tax positions in 2008 |
|
|
— |
|
|
|
|
|
Unrecognized tax benefits balance at December 31, 2008 |
|
$ |
2,100 |
|
|
Gross increases for tax positions in 2009 |
|
|
— |
|
|
|
|
|
Unrecognized tax benefits balance at December 31, 2009 |
|
|
2,100 |
|
|
Gross increases for tax positions in current period |
|
|
— |
|
|
|
|
|
Unrecognized tax benefits balance at December 31, 2010 |
|
$ |
2,100 |
|
|
|
|
|
All of the unrecognized tax benefits at December 31, 2010 would affect the remaining balance attributable to the Transaction in accordance with ASC Topic 740. |