Annual report pursuant to Section 13 and 15(d)

Income Taxes

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Income Taxes
 12 Months Ended
Dec. 31, 2011
Income Taxes [Abstract]  
Income Taxes [Text Block]

(7)       Income Taxes

Total income tax expense of $7.5 million, $9.5 million and $3.9 million for the years ended December 31, 2011, 2010 and 2009, respectively, was allocated to income in each year.

 

Income tax expense consists of the following (amounts in thousands):

 

      Years Ended December 31,
      2011   2010   2009
  Deferred tax expense:            
  Federal taxes $ 6,344   8,086   3,494
  State taxes   1,141   1,402   442
    $ 7,485   9,488   3,936

Total income tax expense differed from the “expected” income tax expense determined by applying the statutory federal income tax rate of 35% as follows (amounts in thousands):

 

      Years Ended December 31,
      2011   2010   2009
  “Expected” statutory tax expense $ 4,580   6,455   2,608
  State income taxes, net of federal expense   1,141   1,129   456
  Income tax effect of nondeductible entertainment expenses   737   775   703
  Income tax effect of nondeductible lobbying expenses   327   405   380
  Income tax effect of nondeductible officer compensation   758   722   761
  Other, net   (58)   2   (972)
    $ 7,485   9,488   3,936

The tax effects of temporary differences that give rise to significant portions of deferred tax assets and liabilities at December 31, 2011 and 2010 are summarized below (amounts in thousands):

 

        2011   2010
  Current deferred tax assets, net of current deferred tax liability:        
    Net operating loss carryforwards $ 7,796   -
    Compensated absences, accrued for financial reporting purposes   2,664   2,115
    Workers compensation and self insurance health reserves, principally due to accrual for financial reporting purposes   1,068   810
    Accounts receivable, principally due to allowance for doubtful receivables   2,379   3,770
    Deferred compensation expense for tax purposes in excess of amounts recognized for financial reporting purposes   131   92
    Other   1,517   3,358
    Total current deferred tax assets $ 15,555   10,145
             
  Long-term deferred tax assets:        
    Net operating loss carryforwards $ 119,762   88,967
    Deferred revenue for financial reporting purposes   18,097   19,481
    Alternative minimum tax credits   1,895   1,895
    Deferred compensation expense for tax purposes in excess of amounts recognized for financial reporting purposes   2,581   2,908
    Asset retirement obligations in excess of amounts recognized for tax purposes   6,248   1,885
    Share-based compensation expense for financial reporting purposes in excess of amounts recognized for tax purposes   4,394   8,647
    Other   469   1,168
    Total long-term deferred tax assets   153,446   124,951
             
  Long-term deferred tax liabilities:        
    Plant and equipment, principally due to differences in depreciation   212,234   182,490
    Intangible assets   56,508   44,862
    Total long-term deferred tax liabilities   268,742   227,352
    Net long-term deferred tax liabilities $ 115,296   102,401

At December 31, 2011, we have tax net operating loss carryforwards of $311.3 million that will begin expiring in 2019 if not utilized, and alternative minimum tax credit carryforwards of $1.9 million available to offset regular income taxes payable in future years. Our utilization of remaining acquired net operating loss carryforwards is subject to annual limitations pursuant to Internal Revenue Code section 382 which could reduce or defer the utilization of these losses.

 

Our tax net operating loss carryforwards are summarized below by year of expiration (amounts in thousands):

 

  Years ending December 31,   Federal   State
  2019   17,047   16,474
  2020   44,744   43,797
  2021   29,614   28,987
  2022   14,081   13,788
  2023   3,968   3,903
  2024   722   -
  2025   737   -
  2026   150   -
  2027   1,010   -
  2028   39,879   39,715
  2029   48,370   47,558
  2031   110,933   109,376
  Total tax net operating loss carryforwards $ 311,255   303,598

Tax benefits associated with recorded deferred tax assets are considered to be more likely than not realizable through taxable income earned in carryback years, future reversals of existing taxable temporary differences, and future taxable income exclusive of reversing temporary differences and carryforwards. The amount of deferred tax asset considered realizable, however, could be reduced if estimates of future taxable income during the carryforward period are reduced.

 

We file federal income tax returns in the U.S. and in various state jurisdictions. We are no longer subject to U.S. or state tax examinations by tax authorities for years 2007 and earlier except that certain U.S. federal income tax returns for years after 1997 are not closed by relevant statutes of limitations due to unused net operating losses reported on those income tax returns.

 

We recognize accrued interest on unrecognized tax benefits in interest expense and penalties in selling, general and administrative expenses. We did not have any unrecognized tax benefits as of December 31, 2011, 2010 and 2009, and accordingly, we did not recognize any interest expense. Additionally, we recorded no penalties during the years ended December 31, 2011, 2010 and 2009.

 

We did not record any excess tax benefit generated from stock options exercised during the years ended December 31, 2011, 2010 and 2009, since we are in a net operating loss carryforward position and the income tax deduction will not yet reduce income taxes payable. The cumulative excess tax benefits generated for stock options exercised that have not been recognized is $3.6 million at December 31, 2011.