Annual report pursuant to Section 13 and 15(d)

Income Taxes (Notes)

v2.4.0.6
Income Taxes (Notes)
 12 Months Ended
Dec. 31, 2011
Income Tax Disclosure [Abstract]  
Income Taxes
Income Taxes

The provision for income taxes consists of the following:
 
2011
 
2010
 
2009
Current:
 
 
 
 
 
Federal
$
20,841

 
$
16,816

 
$
10,711

State
3,175

 
2,811

 
2,017

 
24,016

 
19,627

 
12,728

Deferred:
 

 
 

 
 

Federal
4,640

 
1,566

 
(4,310
)
State
710

 
(130
)
 
(271
)
 
5,350

 
1,436

 
(4,581
)
 
$
29,366

 
$
21,063

 
$
8,147



The tax benefit (expense) associated with the exercise of stock options and the vesting of non-vested shares during the years ended December 31, 2011, 2010 and 2009 were $747, $194 and ($370), respectively, and are reflected as a decrease or 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:
 
2011
 
2010
 
2009
Tax expense at the statutory rate
$
26,798

 
$
18,585

 
$
6,282

State income taxes, net of federal benefit
2,542

 
1,790

 
1,135

Qualified stock options
472

 
516

 
659

Meals and entertainment
207

 
186

 
176

Deferred tax asset valuation allowance
(17
)
 
(124
)
 
183

Federal income tax credits
(675
)
 
—

 
(269
)
Other
39

 
110

 
(19
)
 
$
29,366

 
$
21,063

 
$
8,147



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,
2011
 
December 31,
2010
Deferred tax assets:
 
 
 
Accrued expenses
$
5,711

 
$
4,669

Allowance for doubtful accounts
588

 
772

Non-compete agreements
2,779

 
2,227

Share-based compensation
6,326

 
5,101

Accruals for income tax contingencies
56

 
114

Impairment of goodwill and other intangible assets
1,501

 
1,805

Net operating loss carryforwards
343

 
444

Total deferred tax assets
17,304

 
15,132

Valuation allowance
(348
)
 
(335
)
Total deferred tax assets, net of valuation allowance
16,956

 
14,797

Deferred tax liabilities:
 
 
 
Tax over book depreciation
17,289

 
11,541

Prepaid expenses deductible when paid
1,868

 
1,463

Goodwill
6,914

 
5,760

Total deferred tax liabilities
26,071

 
18,764

Net deferred tax liabilities
$
(9,115
)
 
$
(3,967
)
 
The balance sheet classification of deferred income taxes is as follows:
 
December 31,
2011
 
December 31,
2010
Current assets
$
2,011

 
$
2,149

Noncurrent liabilities
(11,126
)
 
(6,116
)
 
$
(9,115
)
 
$
(3,967
)


Total income tax payments, net of refunds, during fiscal years 2011, 2010 and 2009 were $19,891, $20,944 and $7,888, respectively.

    
At December 31, 2011 and 2010, the Company had state net operating loss carryforwards of $8,163 and $10,084, respectively that will expire between 2013 and 2027. 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 will not generate sufficient taxable income to realize the net operating loss benefits for $7,332 in state loss carryforwards.  As a result, a valuation allowance of $309 has been provided for $7,332 of these state loss carryforwards. The valuation allowance on these certain state loss carryforwards increased $30 during 2011, but was unchanged during 2010.

The Company also 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 believes that it is 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 2011, in conjunction with a decline in FASI’s net deferred tax assets the related valuation allowance was reduced by $17 to $39.

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 2007.
 
A reconciliation of the beginning and ending amount of unrecognized tax benefit is as follows:
 
Liability for
 
Unrecognized Tax
 
Benefits
Balance at December 31, 2008
$
428

Additions for tax positions of current year
71

Additions for tax positions of prior years
143

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
(29
)
Reductions for lapse of statute of limitations
(121
)
Reductions for settlement with state taxing authorities
(169
)
Balance at December 31, 2011
$
481



Included in the liability for unrecognized tax benefits at December 31, 2011 and December 31, 2010 are tax positions of $481 and $725, 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. Based on settlements reached with states in 2011, we expect to reach agreement and pay additional settlements of approximately $200 to $300 on state tax disputes for years 2005 through 2010.

Included in the liability for unrecognized tax benefits at December 31, 2011 and December 31, 2010, are accrued penalties of $57.  The liability for unrecognized tax benefits at December 31, 2011 and December 31, 2010 also included accrued interest of $169 and $113, respectively.