Income Taxes

12 Months Ended

Dec. 31, 2011

Income Taxes [Abstract]

Income taxes

NOTE 7

Income taxes. The income tax provision consists of the following:

	2011			2010			2009
	($000 omitted)
Current:
Federal		(678	)		(4,305	)		(24,968	)
State		1,444			1,188			(272	)
Foreign		9,221			337			6,661
Deferred:
Federal		4,450			(1,197	)		215
State		397			—			(1,393	)
Foreign		(5,493	)		12,052			—
Income tax expense (benefit)		9,341			8,075			(19,757	)

The following reconciles federal income taxes computed at the statutory rate with income taxes as reported.

	2011			2010			2009
	($000 omitted)
Expected income tax benefit at 35% (1)		4,091			(1,577	)		(24,756	)
Foreign tax rate differential		(764	)		613			767
Non-taxable income (non-consolidated subsidiaries for tax)		946			832			657
Intercompany dividends		572			738			—
Research and development credit		(74	)		(1,223	)		(616	)
State income tax expense (benefit) — net of taxes		884			(178	)		(1,665	)
Tax-exempt interest		(342	)		(561	)		(1,075	)
Non-deductible expenses		2,624			2,261			1,765
Net operating loss carryback		(1,829	)		—			—
Adjustments to deferred tax liabilities		10,781			8,716			1,251
Dividends received deductions on investments		(500	)		(656	)		(530	)
Valuation allowance		(7,163	)		(1,146	)		4,297
Other — net		115			256			148
Income tax expense (benefit)		9,341			8,075			(19,757	)
Effective income tax rates (%) (1)		79.9			(179.2	)		27.9

⁽¹⁾  Calculated using loss before taxes and after noncontrolling interests.

Deferred income taxes at December 31, 2011 and 2010 were as follows:

	2011			2010
	($000 omitted)
Deferred tax assets:
Accrued expenses		12,684			17,810
Allowance for uncollectible amounts		5,784			5,956
Fixed assets		7,502			11,506
Investments		10,390			7,989
Net operating loss carryforwards		32,122			33,388
Tax credit carryforwards		18,727			14,420
Title loss provisions		11,235			9,416
Other		4,195			3,978
		102,639			104,463
Valuation allowance		(84,771	)		(91,934	)
		17,868			12,529
Deferred tax liabilities:
Amortization — goodwill and other intangibles		(23,701	)		(14,742	)
Unrealized gains on investments		(4,003	)		(2,079	)
Cash surrender value of insurance policies		(4,431	)		(4,710	)
Foreign currency translation adjustments		(4,999	)		(5,626	)
Accrued expenses		(6,592	)		(11,534	)
Fixed assets		(139	)		(139	)
Other		(1,452	)		(1,935	)
		(45,317	)		(40,765	)
Net deferred income taxes		(27,449	)		(28,236	)

The Company has recorded valuation allowances against U.S. deferred tax assets, net of definite-lived deferred tax liabilities, for which realization cannot be assured based on a more-likely-than-not standard. A valuation allowance was initially established in 2008 due to the Company’s then cumulative three-year operating loss history. The Company routinely evaluates the extent to which the valuation allowance may be reversed. The Company has approximately $87.2 million of U.S. federal net operating loss carry forwards (NOL). The NOL will begin to expire in 2030, if not utilized. The Company’s effective income tax rate in 2009 was significantly impacted by a benefit of $24.8 million due to the change in tax law in the fourth quarter 2009, which allowed the Company to carry back net operating losses to prior years.

The Company is routinely subject to income tax examinations by U.S. federal, international and state and local tax authorities. The Company is currently under examination by the Internal Revenue Service for calendar years 2005 through 2008. The Company also is involved in routine examinations by state and local tax jurisdictions for calendar years 2007 and 2008. The Company expects no material adjustment from any examination.