Annual report pursuant to Section 13 and 15(d)

Income Taxes (Notes)

v2.4.0.6
Income Taxes (Notes)
 12 Months Ended
Dec. 31, 2012
Income Tax Disclosure [Abstract]  
Income Taxes
Income Taxes

The provision for income taxes consists of the following:
 
2012
 
2011
 
2010
Current:
 
 
 
 
 
Federal
$
24,981

 
$
20,841

 
$
16,816

State
3,462

 
3,175

 
2,811

 
28,443

 
24,016

 
19,627

Deferred:
 

 
 

 
 

Federal
2,452

 
4,640

 
1,566

State
(408
)
 
710

 
(130
)
 
2,044

 
5,350

 
1,436

 
$
30,487

 
$
29,366

 
$
21,063



The tax benefit associated with the exercise of stock options and the vesting of non-vested shares during the years ended December 31, 2012, 2011 and 2010 were $385, $747 and $194, 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:
 
2012
 
2011
 
2010
Tax expense at the statutory rate
$
29,125

 
$
26,798

 
$
18,585

State income taxes, net of federal benefit
1,842

 
2,542

 
1,790

Qualified stock options
274

 
472

 
516

Meals and entertainment
172

 
207

 
186

Deferred tax asset valuation allowance
(39
)
 
(17
)
 
(124
)
Federal income tax credits
(619
)
 
(675
)
 
—

Other
(268
)
 
39

 
110

 
$
30,487

 
$
29,366

 
$
21,063



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,
2012
 
December 31,
2011
Deferred tax assets:
 
 
 
Accrued expenses
$
4,374

 
$
5,711

Allowance for doubtful accounts
565

 
588

Non-compete agreements
3,288

 
2,779

Share-based compensation
6,471

 
6,326

Accruals for income tax contingencies
56

 
56

Impairment of goodwill and other intangible assets
1,170

 
1,501

Net operating loss carryforwards
319

 
343

Total deferred tax assets
16,243

 
17,304

Valuation allowance
(319
)
 
(348
)
Total deferred tax assets, net of valuation allowance
15,924

 
16,956

Deferred tax liabilities:
 
 
 
Tax over book depreciation
16,907

 
17,289

Prepaid expenses deductible when paid
2,202

 
1,868

Goodwill
7,973

 
6,914

Total deferred tax liabilities
27,082

 
26,071

Net deferred tax liabilities
$
(11,158
)
 
$
(9,115
)
 
The balance sheet classification of deferred income taxes is as follows:
 
December 31,
2012
 
December 31,
2011
Current assets
$
1,282

 
$
2,011

Noncurrent liabilities
(12,440
)
 
(11,126
)
 
$
(11,158
)
 
$
(9,115
)


Total income tax payments, net of refunds, during fiscal years 2012, 2011 and 2010 were $32,214, $19,891 and $20,944, respectively.

At December 31, 2012 and 2011, the Company had state net operating loss carryforwards of $7,376 and $8,163, respectively, that will expire between 2013 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 these state loss carryforwards. The valuation allowance on these state loss carryforwards increased $10 and $30 during 2012 and 2011.

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. During 2012 and 2011, in conjunction with a decline in FASI's net deferred tax assets the related valuation allowance was reduced from $39 to $17, respectively.  

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 2008.
 
A reconciliation of the beginning and ending amount of unrecognized tax benefit is as follows:
 
Liability for
 
Unrecognized Tax
 
Benefits
Balance at December 31, 2009
$
642

Additions for tax positions of current year
41

Additions for tax positions of prior years
190

Reductions for settlement with state taxing authorities
(148
)
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



Included in the liability for unrecognized tax benefits at December 31, 2012 and December 31, 2011 are tax positions of $277 and $481, 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, 2012 and December 31, 2011, are accrued penalties of $57.  The liability for unrecognized tax benefits at December 31, 2012 and December 31, 2011 also included accrued interest of $160 and $169, respectively.