Income Taxes

12 Months Ended

Dec. 31, 2013

Income Taxes

Income Taxes

11. Income Taxes

Total income taxes expense (benefit) for the years ended December 31, 2013, 2012 and 2011 was included within the following sections of the consolidated financial statements as follows (in thousands):

		2013		2012		2011
Income from continuing operations		$	49,754	$	42,364	$	34,973
Discontinued operations			(1,091)		1,574		3,032
Shareholders’ equity			(7,381)		(1,581)		(649)
Other comprehensive income			-		-		332
	Total	$	41,282	$	42,357	$	37,688

Income tax expense from continuing operations for the years ended December 31, 2013, 2012 and 2011 was comprised of the following (in thousands):

		2013		2012		2011
Current:
	Federal	$	8,437	$	15,326	$	11,671
	State		3,724		4,974		3,541
Deferred:
	Federal		31,909		18,488		17,502
	State		5,684		3,576		2,259
	Income tax expense	$	49,754	$	42,364	$	34,973

Income tax expense from continuing operations for the years ended December 31, 2013, 2012 and 2011 differed from the amount computed by applying the U.S. federal income tax rate of 35% to earnings before income taxes as a result of the following (in thousands):

		2013		2012		2011
Statutory federal income tax		$	107,984	$	92,325	$	78,143
Less federal income tax assumed directly by noncontrolling interests			(65,142)		(55,715)		(48,394)
State income taxes, net of federal income tax benefit			5,539		5,309		3,642
Increase in valuation allowances			924		419		1,622
Interest related to unrecognized tax benefits			(155)		(109)		(83)
Other			604		135		43
	Income tax expense	$	49,754	$	42,364	$	34,973

The Company recognizes interest and penalties related to unrecognized tax benefits in income tax expense. Decreases in interest obligations of $189,000, $132,000 and $109,000 were recognized in the consolidated statement of earnings for the years ended December 31, 2013, 2012 and 2011, respectively, resulting in a total recognition of interest obligations of approximately $943,000 and $1,132,000 in the consolidated balance sheet at December 31, 2013 and 2012, respectively. No amounts for penalties have been recorded.

The Company primarily has unrecognized tax benefits that represent an amortization deduction which is temporary in nature. A reconciliation of the beginning and ending amount of the liability associated with unrecognized tax benefits for the years ended December 31, 2013, 2012 and 2011 is as follows (in thousands):

		2013		2012		2011
Balance at beginning of year		$	9,235	$	7,252	$	7,144
Additions for tax positions of current year			46		119		342
Increases (decreases) for tax positions taken during a prior period			-		1,985		(190)
Lapse of statute of limitations			(2,951)		(121)		(44)
	Balance at end of year	$	6,330	$	9,235	$	7,252

The Company believes that the total amount of increases in unrecognized tax benefits within the next 12 months will not be significant. The total amount of unrecognized tax benefits that would affect the Company's effective tax rate if recognized is approximately $150,000.

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2013 and 2012 were as follows (in thousands):

			2013		2012
Deferred tax assets:
	Allowance for uncollectible accounts		$	897	$	884
	Accrued assets and other			5,292		5,212
	Valuation allowances			(2,021)		(2,084)
		Total current deferred tax assets		4,168		4,012
	Share-based compensation			7,635		9,500
	Interest on unrecognized tax benefits			230		363
	Accrued liabilities and other			3,629		3,077
	Operating and capital loss carryforwards			9,185		9,169
	Valuation allowances			(7,665)		(7,265)
		Total non-current deferred tax assets		13,014		14,844
		Total deferred tax assets		17,182		18,856
Deferred tax liabilities:
	Prepaid expenses			1,071		925
	Property and equipment, principally due to differences in depreciation			4,137		3,997
	Goodwill, principally due to differences in amortization			184,897		148,494
		Total deferred tax liabilities		190,105		153,416
		Net deferred tax liabilities	$	172,923	$	134,560

The net deferred tax liabilities at December 31, 2013 and 2012 were recorded as follows (in thousands):

		2013		2012
Current deferred income tax assets		$	3,097	$	3,088
Non-current deferred income tax liabilities			176,020		137,648
	Net deferred tax liabilities	$	172,923	$	134,560

The Company has provided valuation allowances on its gross deferred tax assets to the extent that management does not believe that it is more likely than not that such asset will be realized. Capital loss carryforwards will begin to expire in 2014, and state net operating losses will begin to expire in 2015.