Annual report pursuant to Section 13 and 15(d)

Income Taxes (Notes)

v2.4.0.8
Income Taxes (Notes)
 12 Months Ended
Dec. 31, 2013
Income Tax Disclosure [Abstract]  
Income Taxes
Income Taxes

The provision for income taxes consists of the following:

 
2013

2012

2011
Current:
 

 

 
Federal
$
22,466


$
24,981


$
20,841

State
2,133


3,462


3,175

 
24,599


28,443


24,016

Deferred:
 


 


 

Federal
4,367


2,452


4,640

State
489


(408
)

710

 
4,856


2,044


5,350

 
$
29,455


$
30,487


$
29,366



The tax benefit associated with the exercise of stock options and the vesting of non-vested shares recorded to additional paid in capital during the years ended December 31, 2013, 2012 and 2011 were $3,612, $385 and $747, respectively, and are reflected as an increase in additional paid-in capital in the accompanying consolidated statements of shareholders’ equity.
 
The historical income tax expense differs from the amounts computed by applying the federal statutory rate of 35.0% to income before income taxes as follows:
 
2013
 
2012
 
2011
Tax expense at the statutory rate
$
29,373

 
$
29,125

 
$
26,798

State income taxes, net of federal benefit
1,876

 
1,842

 
2,542

Incentive stock options
(908
)
 
(154
)
 
472

Meals and entertainment
139

 
172

 
207

Deferred tax asset valuation allowance
(85
)
 
(39
)
 
(17
)
Federal income tax credits
(1,023
)
 
(619
)
 
(675
)
Other
83

 
160

 
39

 
$
29,455

 
$
30,487

 
$
29,366



    
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax liabilities and assets are as follows:
December 31,
2013

December 31,
2012
Deferred tax assets:
 

 
Accrued expenses
$
4,287


$
4,374

Allowance for doubtful accounts
745


565

Non-compete agreements
—


3,288

Share-based compensation
6,066


6,471

Accruals for income tax contingencies
547


56

Impairment of goodwill and other intangible assets
854


1,170

Net operating loss carryforwards
253


319

Total deferred tax assets
12,752


16,243

Valuation allowance
(234
)

(319
)
Total deferred tax assets, net of valuation allowance
12,518


15,924

Deferred tax liabilities:
 

 
Tax over book depreciation
21,806


16,907

Non-compete agreements
5,149


—

Prepaid expenses deductible when paid
2,354


2,202

Goodwill
8,914


7,973

Total deferred tax liabilities
38,223


27,082

Net deferred tax liabilities
$
(25,705
)

$
(11,158
)

The balance sheet classification of deferred income taxes is as follows:
 
December 31,
2013
 
December 31,
2012
Current assets
$
1,145

 
$
1,282

Noncurrent liabilities
(26,850
)
 
(12,440
)
 
$
(25,705
)
 
$
(11,158
)


Total income tax payments, net of refunds, during fiscal years 2013, 2012 and 2011 were $25,168, $32,214 and $19,891, respectively.

At December 31, 2013 and 2012, the Company had state net operating loss carryforwards of $5,468 and $7,376, respectively, that will expire between 2014 and 2028. The use of these state net operating losses is limited to the future taxable income of separate legal entities. Based on expectations of future taxable income, management believes that it is more likely than not that the results of operations for these separate legal entities will not generate sufficient taxable income to realize these net operating loss benefits for state loss carryforwards.  As a result, a valuation allowance has been provided for most of these state loss carryforwards. The valuation allowance on these state loss carryforwards decreased $85 and $10 during 2013 and 2012.

The Company had also previously established a valuation allowance on the state portion of FASI’s net deferred tax assets.  This valuation allowance was established based on expectations of future taxable income as management believed that it was more likely than not that the results of FASI operations will not generate sufficient taxable income to realize the state benefit of the net deferred tax assets. During 2012, in conjunction with FASI having a net deferred tax liability the previous valuation allowance of $39 was removed.

Income Tax Contingencies

The Company, or one of its subsidiaries, files income tax returns in the U.S. federal jurisdiction, various states and Canada. With a few exceptions, the Company is no longer subject to U.S. federal, state and local, or Canadian examinations by tax authorities for years before 2009.
 
A reconciliation of the beginning and ending amount of unrecognized tax benefit is as follows:

 
Liability for
 
Unrecognized Tax
 
Benefits
Balance at December 31, 2010
$
725

Additions for tax positions of current year
75

Reductions for tax positions of prior years
(150
)
Reductions for settlement with state taxing authorities
(169
)
Balance at December 31, 2011
481

Reductions for settlement with state taxing authorities
(204
)
Balance at December 31, 2012
277

Additions for tax positions of current year
209

Additions for tax positions of prior years - TQI
853

Balance at December 31, 2013
$
1,339


    
Included in the liability for unrecognized tax benefits at December 31, 2013 and December 31, 2012 are tax positions of $1,339 and $277, respectively, which represents tax positions where the realization of the ultimate benefit is uncertain and the disallowance of which would affect the Company’s annual effective income tax rate.

Included in the liability for unrecognized tax benefits at December 31, 2013 and December 31, 2012, are accrued penalties of $277 and $57, respectively.  The liability for unrecognized tax benefits at December 31, 2013 and December 31, 2012 also included accrued interest of $299 and $160, respectively.