|
NOTE E – INCOME TAXES
Significant components of the provision or benefit for income taxes for the years ended December 31 are as follows:
|
|
|
2011 |
|
2010 |
|
2009 |
|
|
|
|
($ thousands) |
|
|
|
|
|
|
|
|
|
|
|
Current provision (benefit): |
|
|
|
|
|
|
|
|
Federal |
|
$ |
(872 |
) |
$ |
(10,756 |
) |
$ |
(33,163 |
) |
|
State |
|
487 |
|
549 |
|
(402 |
) |
|
Foreign |
|
489 |
|
288 |
|
511 |
|
|
|
|
104 |
|
(9,919 |
) |
(33,054 |
) |
|
|
|
|
|
|
|
|
|
|
Deferred provision (benefit): |
|
|
|
|
|
|
|
|
Federal |
|
2,664 |
|
(7,831 |
) |
(1,333 |
) |
|
State |
|
415 |
|
(3,596 |
) |
(3,614 |
) |
|
Foreign |
|
(23 |
) |
(30 |
) |
5 |
|
|
|
|
3,056 |
|
(11,457 |
) |
(4,942 |
) |
|
Total provision (benefit) for income taxes |
|
$ |
3,160 |
|
$ |
(21,376 |
) |
$ |
(37,996 |
) |
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 deferred tax provision or benefit for the years ended December 31 are as follows:
|
|
|
2011 |
|
2010 |
|
2009 |
|
|
|
|
($ thousands) |
|
|
Amortization, depreciation and basis differences for property, plant and equipment and other long-lived assets |
|
$ |
15,059 |
|
$ |
(11,552 |
) |
$ |
625 |
|
|
Changes in reserves for workers’ compensation and cargo claims |
|
(970 |
) |
1,759 |
|
797 |
|
|
Revenue recognition |
|
654 |
|
1,201 |
|
41 |
|
|
Allowance for doubtful accounts |
|
(705 |
) |
(428 |
) |
73 |
|
|
Foreign tax credit carryforward |
|
(240 |
) |
286 |
|
(1,084 |
) |
|
Nonunion pension and other retirement plans |
|
(4,885 |
) |
(963 |
) |
(2,109 |
) |
|
Deferred compensation plans |
|
853 |
|
696 |
|
1,004 |
|
|
Federal net operating loss carryforwards |
|
(680 |
) |
– |
|
– |
|
|
State net operating loss carryforwards |
|
705 |
|
(302 |
) |
(2,923 |
) |
|
State depreciation adjustments |
|
(1,179 |
) |
74 |
|
(398 |
) |
|
Share-based compensation |
|
(941 |
) |
(971 |
) |
(1,760 |
) |
|
Valuation allowance increase (decrease) |
|
(782 |
) |
(558 |
) |
2,175 |
|
|
Leases |
|
(316 |
) |
(585 |
) |
(96 |
) |
|
Other accrued expenses |
|
(863 |
) |
629 |
|
(1,274 |
) |
|
Other |
|
(2,654 |
) |
(743 |
) |
(13 |
) |
|
Deferred tax provision (benefit) |
|
$ |
3,056 |
|
$ |
(11,457 |
) |
$ |
(4,942 |
) |
Significant components of deferred tax assets and liabilities at December 31 are as follows:
|
|
|
2011 |
|
2010 |
|
|
|
|
($ thousands) |
|
|
Deferred tax assets: |
|
|
|
|
|
|
Accrued expenses |
|
$ |
45,970 |
|
$ |
45,078 |
|
|
Pension liabilities |
|
35,529 |
|
20,363 |
|
|
Postretirement liabilities other than pensions |
|
6,701 |
|
5,410 |
|
|
Share-based compensation |
|
7,138 |
|
6,199 |
|
|
Federal and state net operating loss carryovers |
|
3,799 |
|
4,083 |
|
|
Other |
|
1,223 |
|
– |
|
|
Total deferred tax assets |
|
100,360 |
|
81,133 |
|
|
Valuation allowance |
|
(5,644 |
) |
(2,455 |
) |
|
Total deferred tax assets, net of valuation allowance |
|
94,716 |
|
78,678 |
|
|
|
|
|
|
|
|
|
Deferred tax liabilities: |
|
|
|
|
|
|
Amortization, depreciation and basis differences |
|
|
|
|
|
|
for property, plant and equipment and other long-lived assets |
|
72,709 |
|
58,279 |
|
|
Revenue recognition |
|
3,013 |
|
3,519 |
|
|
Prepaid expenses |
|
3,368 |
|
3,327 |
|
|
Other |
|
– |
|
277 |
|
|
Total deferred tax liabilities |
|
79,090 |
|
65,402 |
|
|
Net deferred tax assets |
|
$ |
15,626 |
|
$ |
13,276 |
|
Reconciliation between the effective income tax rate, as computed on income or loss before income taxes, and the statutory federal income tax rate for the years ended December 31 is presented in the following table:
|
|
|
2011 |
|
2010 |
|
2009 |
|
|
|
|
($ thousands) |
|
|
|
|
|
|
|
|
|
|
|
Income tax provision (benefit) at the statutory federal rate of 35% |
|
$ |
3,323 |
|
$ |
(18,829 |
) |
$ |
(57,931 |
) |
|
Federal income tax effects of: |
|
|
|
|
|
|
|
|
State income taxes |
|
(316 |
) |
976 |
|
1,406 |
|
|
Nondeductible expenses |
|
1,079 |
|
1,179 |
|
915 |
|
|
Nondeductible goodwill impairment (see Note D) |
|
– |
|
– |
|
22,386 |
|
|
Life insurance proceeds and changes in cash surrender value |
|
(906 |
) |
(882 |
) |
(913 |
) |
|
Dividends received deduction |
|
– |
|
(14 |
) |
(18 |
) |
|
Alternative fuel credit |
|
(995 |
) |
(979 |
) |
(931 |
) |
|
Increase (decrease) in valuation allowances |
|
(211 |
) |
(558 |
) |
2,175 |
|
|
Other |
|
(182 |
) |
520 |
|
(1,585 |
) |
|
Federal income tax provision (benefit) |
|
1,792 |
|
(18,587 |
) |
(34,496 |
) |
|
State income tax provision (benefit) |
|
902 |
|
(3,047 |
) |
(4,016 |
) |
|
Foreign income tax provision |
|
466 |
|
258 |
|
516 |
|
|
Total provision (benefit) for income taxes |
|
$ |
3,160 |
|
$ |
(21,376 |
) |
$ |
(37,996 |
) |
|
Effective tax (benefit) rate |
|
33.3 |
% |
(39.7 |
)% |
(23.0 |
)% |
Income taxes paid totaled $5.2 million, $4.7 million and $3.8 million in 2011, 2010 and 2009, respectively, before income tax refunds of $4.6 million, $35.7 million and $30.1 million in 2011, 2010 and 2009, respectively.
The tax benefit for exercised options and the tax benefit of dividends on share-based payment awards, which were reflected in paid-in capital, were immaterial in amount for 2011, 2010 and 2009.
The Company had state net operating loss carryovers of $58.9 million and state contribution carryovers of $0.7 million at December 31, 2011. These state net operating loss and contribution carryovers expire in five to twenty years, with the majority of state expirations in fifteen or twenty years. As of December 31, 2011, the Company had valuation allowances of $0.7 million for state net operating loss and deferred tax assets related to future state income tax benefits, $0.7 million related to foreign tax credit carryovers and $0.2 million related to foreign net operating loss carryovers, due to the uncertainty of realization of these items. Foreign tax credit carryovers expire in ten years. Valuation allowances were decreased by $0.5 million in 2011 for certain state net operating losses and state deferred tax assets of the Company’s subsidiaries for which realization was determined to be more likely than not due to improved profitability. The valuation allowance was decreased $0.6 million for expired state net operating losses.
In 2011, temporary differences which reduced taxable income exceeded, by $22.4 million, temporary differences which increased taxable income. This resulted in a net reduction in deferred tax assets of $8.8 million before consideration of the increase in the deferred tax asset related to the significant increase in pension liabilities resulting from the December 31, 2011 nonunion defined benefit plan remeasurement. The increase in deferred tax assets for pension liabilities recorded in accumulated other comprehensive loss within stockholders’ equity was $10.8 million before consideration of the need for a valuation allowance. Total net deferred tax assets, including the asset related to the increase in pension liabilities for 2011, totaled $19.6 million before consideration of the need for an additional valuation allowance. Management evaluated the total deferred tax assets and concluded that the asset exceeded the amount for which realization was more likely than not. As a result, the valuation allowance was increased by $4.0 million at December 31, 2011, which reduced the 2011 deferred tax asset related to the increased pension liability, and was recorded in accumulated other comprehensive loss within stockholders’ equity. If it is determined in future periods that this valuation allowance should be reduced, income tax expense will be reduced in the period of the reduction of the valuation allowance.
Federal income tax returns filed for tax years through 2007 are closed by the applicable statute of limitations. During 2010, the U.S. Internal Revenue Service (the “IRS”) completed an examination of the Company’s federal income tax returns for 2009 and 2008. Upon completion of the audit field work, the Company and IRS agreed to certain proposed adjustments relating to the timing of deductions and credits and, in 2010, the Company paid the amounts due for tax of $1.3 million and interest of less than $0.1 million. The Company is under examination by certain other taxing authorities, and a subsidiary of the Company is under examination by the IRS for 2009. Although the outcome of such audits is always uncertain and could result in payment of additional taxes, the Company does not believe the results of any of these audits will have a material effect on its financial position, results of operations or cash flows.
The Company has determined that no reserves for uncertain tax positions were required at December 31, 2011 and 2010 or during the years then ended. The Company is not aware of any matters that would result in a material change in reserves for uncertain tax positions in 2012.
During 2010, settlement of certain state income tax obligations related to amended state income tax returns resulted in a $0.5 million net reduction in interest expense accrued. At December 31, 2011 and 2010, the accrued interest liability, which related to state income taxes to be paid on amended returns, totaled $0.1 million. Interest of less than $0.1 million, $0.2 million and $0.4 million was paid related to federal and state income taxes in 2011, 2010 and 2009, respectively.
|