INCOME TAXES

12 Months Ended

Dec. 31, 2015

8. INCOME TAXES

Income taxes attributable to continuing operations consist of the following (amounts in millions):

			For the Years Ended December 31,
			2015		2014		2013
	Current income tax expense/(benefit):
		Federal	$	2.2	$	(13.9)	$	(2.0)
		State and local		0.5		(1.1)		0.3
				2.7		(15.0)		(1.7)

	Deferred income tax expense/(benefit):
		Federal		(0.5)		21.0		(43.2)
		State and local		(0.1)		1.6		(13.9)
		Foreign		(0.1)		0.1		0.0
				(0.7)		22.7		(57.1)
	Income tax expense/(benefit) from continuing operations		$	2.0	$	7.7	$	(58.8)

Total income tax expense for the years ended December 31, 2015, 2014 and 2013 was allocated as follows (amounts in millions):


			For the Years Ended December 31,
			2015		2014		2013
	Income from continuing operations		$	2.0	$	7.7	$	(58.8)
	Income from discontinued operations			0.0		(0.1)		(2.2)
	Interest expense			0.2		(0.1)		0.1
	Goodwill			(0.1)		0.0		0.0
	Stockholders' equity			(2.1)		0.6		2.2
			$	0.0	$	8.1	$	(58.7)

A reconciliation of significant differences between the reported amount of income tax expense and the expected amount of income tax expense that would result from applying the U.S. federal statutory income tax rate of 35 percent to income before taxes from continuing operations is as follows:

	For the Years Ended December 31,
	2015 (1)		2014		2013

Income tax expense/(benefit) at U.S. federal statutory rate	35.0	%	35.0	%	(35.0)	%
State and local income taxes, net of federal income tax benefit	(7.1)		5.8		(4.4)
Valuation allowance	79.1		1.5		0.0
Tax credits	136.0		(8.4)		(1.2)
Uncertain tax positions	(230.3)		0.6		2.3
Other items, net (2)	(663.3)		2.1		0.0
Income tax expense/(benefit)	(650.6)	%	36.6	%	(38.3)	%

The information provided for the year ended December 31, 2015 does not provide a meaningful reconciliation of the effective tax rate or comparable to other periods. The effective tax rate for the year is influenced by the relationship of the amount of “effective tax rate drivers” (i.e. non-deductible expenses, non-taxable income, tax credits, valuation allowance, uncertain tax positions, etc.) to income or loss before taxes. A significant asset impairment was recorded in the first quarter, resulting in a scenario where the company's loss before tax for the year was near zero. Consequently, for 2015, the relationship between the “effective tax rate drivers” and loss before taxes is distorted.
Includes various items such as, non-deductible expenses, non-taxable income, return-to-accrual adjustments, and foreign tax rate differential.

As of December 31, 2015 and 2014, the Company had income taxes receivable of $0.5 million and $15.0 million, respectively, included in other current assets. The $15.0 million receivable at December 31, 2014, primarily includes a U.S. federal tax receivable of $14.3 million from the carry back of U.S. federal net operating losses to December 31, 2012 and 2011. During 2015, the Company received the $14.3 million U.S. federal refund from the carry back claims.

Deferred tax assets (liabilities) consist of the following components (amounts in millions):
		As of December 31,
			2015		2014
	Deferred tax assets:
	Allowance for doubtful accounts	$	6.4	$	5.6
	Accrued expenses		0.0		1.2
	Accrued bonus		4.0		0.0
	Workers' compensation		9.8		8.1
	Amortization of intangible assets		72.2		89.2
	Share-based compensation		5.0		3.3
	Net operating loss carryforwards (1)		48.5		59.3
	Tax credit carryforwards (2)		4.7		2.6
	Other		5.1		1.8
	Gross deferred tax assets		155.7		171.1
	Less: valuation allowance		(0.3)		(0.6)
	Net deferred tax assets		155.4		170.5

	Deferred tax (liabilities):
	Property and equipment		(9.5)		(31.3)
	Deferred revenue		(18.5)		(16.8)
	Other liabilities		(2.2)		0.0
	Gross deferred tax (liabilities)		(30.2)		(48.1)

	Net deferred tax assets (liabilities)	$	125.2	$	122.4

(1)	The net operating loss ("NOL") carry forwards in the income tax returns include unrecognized tax benefits resulting from uncertain tax positions. Accordingly, the deferred tax assets recognized for the NOL carry forwards, as of December 31, 2015 and 2014, are presented net of unrecognized tax benefits of $3.1 million.




(2)	The tax credit carry forwards in the income tax returns include unrecognized tax benefits resulting from uncertain tax positions. Accordingly, the deferred tax assets recognized for the tax credit carry forwards, as of December 31, 2015 and 2014, are presented net of unrecognized tax benefits of $0.7 million and $0.3 million, respectively.

Classification in the consolidated balance sheet (amounts in millions):
		As of December 31,
			2015 (1)		2014

	Current deferred tax liabilities		0.0		(2.4)
	Noncurrent deferred tax assets		125.2		124.8
	Net deferred tax assets (liabilities)	$	125.2	$	122.4

(1)	In November 2015, the FASB issued ASU 2015-17, Balance Sheet Classification of Deferred Taxes (Topic 740), which required that deferred tax liabilities and assets be classified as noncurrent. Since early adoption is permitted, the Company has decided to apply ASU 2015-17 to the current period, resulting in a classification of all December 31, 2015 deferred tax assets and liabilities as noncurrent. The Company has not, however, retrospectively adjusted the prior period balances.

As of December 31, 2015, we have U.S. NOL carry forwards of $116.3 million that are available to reduce future taxable income and begins to expire in 2034. In addition, we have research and development tax credits, employment tax credits, and alternative minimum tax credits of $1.9 million, $0.4 million and $1.0 million, respectively, available to reduce future U.S. federal income taxes. The research and development tax credits and employment tax credits begin to expire in 2032, and the alternative minimum tax credits are available indefinitely.

As of December 31, 2015, we have state NOL carry forwards of $254.3 million that are available to reduce future taxable income. In addition, we have $3.1 million of various state tax credits available to reduce future taxable income. The state NOL and tax credit carry forwards begin to expire at various times.

The valuation allowance for deferred tax assets as of December 31, 2015 and 2014 was $0.3 million and $0.6 million, respectively. The net change in the total valuation allowance for the year ended December 31, 2015 and December 31, 2014 was a decrease of $0.3 million and an increase of $0.3 million, respectively. The valuation allowance during 2015 and 2014 was primarily related to certain state NOL and state tax credit carry forwards.

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income in those jurisdictions during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities (including the impact of available carry back and carry forward periods), projected future taxable income, and tax-planning strategies in making this assessment. In order to fully realize the deferred tax assets, the Company will need to generate future taxable income before the expiration of the carry forwards governed by the tax code. Based on the current level of pretax earnings (excluding the significant asset impairment recorded during the three-month period ended March 31, 2015) and estimates of future taxable income, the Company will generate the minimum amount of future taxable income to support the realization of the deferred tax assets. As a result, management believes that it is more likely than not that we will realize the benefits of these deferred tax assets, net of the existing valuation allowances at December 31, 2015. The amount of the deferred tax asset considered realizable, however, could be reduced in the near term if estimates of future taxable income during the carry forward period are reduced.


Uncertain Tax Positions

We account for uncertain tax positions in accordance with the authoritative guidance for uncertain tax positions. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (amounts in millions):

			For the Years Ended December 31,
			2015		2014
	Balance at beginning of period		$	4.0	$	3.9
		Additions for tax positions related to current year		0		0.3
		Additions for tax positions related to prior year		1.0		0
		Reductions for tax positions related to prior years		0		0
		Lapse of statute of limitations		(0.3)		(0.2)
		Settlements		0		0
	Balance at end of period		$	4.7	$	4.0

As of December 31, 2015, there are $0.2 million, $0.7 million and $3.8 million of unrecognized tax benefits recorded in accrued expenses, other long-term obligations and deferred income taxes, respectively, within the consolidated balance sheet.

Included in the balance of unrecognized tax benefits at December 31, 2015 is $4.7 million of tax benefits that, if recognized in future periods, would impact our effective tax rate.

During the years ended December 31, 2015 and 2014, we recognized interest and penalties of $0.2 million and $0.1 million, respectively, as components of penalties or interest expense in connection with our reserve for uncertain tax positions. Interest and penalties, related to uncertain tax positions, included in the consolidated balance sheet at December 31, 2015 and 2014 were less than $0.2 million for each year.

We are subject to income taxes in the U.S. and in many of the 50 individual states, with significant operations in Louisiana, Alabama, Georgia, and Tennessee. We are open to examination in the U.S. and in various individual states for tax years ended December 31, 2012 through December 31, 2015. We are also open to examination in various states for the years ended 2001 – 2015 resulting from net operating losses generated and available for carry forward from those years.

We believe that it is reasonably possible that decreases of up to $0.6 million in unrecognized tax benefits, each of which are individually insignificant, may be recognized by the end of December 31, 2016 as a result of an anticipated settlement and lapse of the statute of limitations.