Income Taxes (Tables)

12 Months Ended

Dec. 31, 2012

Income Taxes

Components of income tax expense

Income tax (benefit) expense consisted of the following components (dollars in thousands):

	2012			2011			2010
Current:
Federal	$	416		$	(1,160	)	$	18,524
State		782			1,282			5,026
Foreign		3,362			5,632			6,118
		4,560			5,754			29,668
Deferred:
Federal		(19,423	)		(25,146	)		(4,289	)
State		(7,565	)		(8,409	)		(766	)
Foreign		(168	)		962			740
		(27,156	)		(32,593	)		(4,315	)
Total	$	(22,596	)	$	(26,839	)	$	25,353

Summary of income before income taxes

 Income before income taxes consisted of the following (dollars in thousands):

	2012			2011			2010
U.S.	$	(248,101	)	$	(222,337	)	$	45,000
Foreign		(22,354	)		15,709			4,333
Total	$	(270,455	)	$	(206,628	)	$	49,333

Significant components of deferred income tax assets and liabilities

The tax effects of temporary differences that gave rise to the net deferred tax assets (liabilities) at December 31 were as follows (dollars in thousands):

	2012			2011
Deferred tax assets:
Compensation and benefits	$	9,474		$	9,565
Net operating loss and capital loss carry forward		19,012			15,810
Share-based compensation		8,506			12,430
Allowance for doubtful accounts		1,149			663
Tax benefits on uncertain tax positions		2,696			2,846
Goodwill and other intangibles		24,746			2,370
Depreciation		649			—
Other		9,203			8,914
Total deferred tax assets		75,435			52,598
Less: valuation allowance		20,774			16,279
Total deferred tax assets, net of valuation allowance		54,661			36,319
Deferred tax liabilities:
Depreciation		—			(2,038	)
Capitalized software		(15,226	)		(17,769	)
Other		(573	)		(738	)
Total deferred tax liabilities		(15,799	)		(20,545	)
Net deferred tax assets (liabilities)	$	38,862		$	15,774

Summary of net operating loss carry forwards and respective expiration period

Net operating loss carry forwards expire as follows (dollars in thousands):

	Amount		Years remaining
Hong Kong, Australia, U.K. and Ireland operating losses	$	77,068	Indefinite
United States		3,909	17 years
	$	80,977

Reconciliation of the U.S. federal statutory income tax rate and actual effective tax rate on earnings

	2012			2011			2010
U.S. federal statutory income tax rate		35.0	%		35.0	%		35.0	%
State and local income taxes, net of U.S. federal income tax effect		1.8			2.2			6.0
Foreign tax impact, net		(3.6	)		(0.9	)		9.8
Non-deductible costs *		(24.3	)		(23.7	)		1.1
Other, net		(0.5	)		0.4			(0.5	)
Effective income tax rate		8.4	%		13.0	%		51.4	%

*

Non-deductible costs reflect the goodwill impairment charges incurred in 2012 and 2011 and a portion of Majestic acquisition costs incurred in 2010.

Reconciliation of the beginning and ending balances of unrecognized tax benefits

A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows (dollars in thousands):

Uncertain Tax Benefits	2012			2011			2010
Balance, January 1	$	14,542		$	12,380		$	10,999
Additions based on tax positions related to the current year		568			2,402			2,088
Additions based on tax positions of prior years		857			647			897
Reductions for tax positions of prior years		(2,024	)		(42	)		(35	)
Reductions due to settlements with taxing authorities		(217	)		(516	)		(758	)
Reductions due to expiration of statute of limitations		—			(329	)		(811	)
Balance, December 31	$	13,726		$	14,542		$	12,380