Note 13 - Income Taxes

12 Months Ended

Dec. 31, 2012

Income Tax Disclosure [Text Block]

Note 13 - Income Taxes

The provision for income taxes is comprised of the following components:

	Year Ended December 31,
	2012		2011		2010
	(in thousands)
Current Tax Provision
Federal	$	29,147	$	29,311	$	23,734
State		4,010		3,131		2,953
		33,157		32,442		26,687
Deferred Tax Provision
Federal		162		1,220		1,386
State		4		145		199
		166		1,365		1,585
Income Tax Provision	$	33,323	$	33,807	$	28,272

The deferred tax assets and liabilities, consisting of temporary differences tax effected at the respective income tax rates, are as follows:

	December 31,
	2012			2011
	(in thousands)
Current deferred tax asset:
Allowance for doubtful accounts receivable	$	1,022		$	1,174
Accrued expenses		7,490			7,946
		8,512			9,120
Current deferred tax liability:
Unrealized gains on marketable securities		(31,154	)		(22,058	)
Other		(1,832	)		(1,588	)
		(32,986	)		(23,646	)
Net current deferred tax liability	$	(24,474	)	$	(14,526	)
Noncurrent deferred tax asset:
Financial reporting depreciation in excess of tax depreciation	$	4,086		$	968
Deferred gain on sale of assets (net)		(3,135	)		(3,135	)
Tax basis intangible asset in excess of financial reporting basis		663			968
Stock-based compensation		1,682			1,283
Long-term investments		(1,387	)		157
Accrued expenses		2,132			2,129
Deferred revenue		6,523			7,797
Net noncurrent deferred tax asset	$	10,564			10,167

A reconciliation of income tax expense and the amount computed by applying the statutory federal income tax rate to income before income taxes is as follows:

	Year Ended December 31,
	2012			2011			2010
	(in thousands)
Tax provision at federal statutory rate	$	31,948		$	34,258		$	28,338
Increase (decrease) in income taxes resulting from:
State, net of federal benefit		3,173			3,185			2,897
Nondeductible expenses		118			188			169
Insurance expense		39			26			(133	)
Other, net		823			57			62
Unrecognized tax benefits		409			85			660
Expiration of statute of limitations		(3,187	)		(3,992	)		(3,721	)
		1,375			(451	)		(66	)
Effective income tax expense	$	33,323		$	33,807		$	28,272

The exercise of non-qualified stock options results in state and federal income tax benefits to the Company related to the difference between the market price at the date of exercise and the option exercise price.  During 2012, 2011 and 2010, $(267,000), $(52,000), and $154,000, respectively, attributable to the tax benefit of stock options exercised and restricted stock, was credited to additional paid-in capital.

Our deferred tax assets have been evaluated for realization based on historical taxable income, tax planning strategies, the expected timing of reversals of existing temporary differences and future taxable income anticipated.  Our deferred tax assets are more likely than not to be realized in full due to the existence of sufficient taxable income of the appropriate character under the tax law.  As such, there is no need for a valuation allowance.

Uncertain tax positions may arise where tax laws may allow for alternative interpretations or where the timing of recognition of income is subject to judgment.  We believe we have adequate provisions for unrecognized tax benefits related to uncertain tax positions.  However, because of uncertainty of interpretation by various tax authorities and the possibility that there are issues that have not been recognized by management, we cannot guarantee we have accurately estimated our tax liabilities.  We believe that our liabilities reflect the anticipated outcome of known uncertain tax positions in conformity with ASC Topic 740 Income Taxes.  Our liabilities for unrecognized tax benefits are presented in the consolidated balance sheets within other noncurrent liabilities.

Also under ASC Topic 740, tax positions are evaluated for recognition using a more–likely–than–not threshold, and those tax positions requiring recognition are measured at the largest amount of tax benefit that is greater than 50 percent likely of being realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information.

In accordance with current guidance, the Company has established a liability for unrecognized tax benefits, which are differences between a tax position taken or expected to be taken in a tax return and the benefit recognized and measured pursuant to this Interpretation.  Generally a liability is created for an unrecognized tax benefit because it represents a company’s potential future obligation to a taxing authority for a tax position that was not recognized per above.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):

	Deferred Tax Asset			Liability For Unrecognized Tax Benefits			Liability For Interest and Penalties			Liability Total
Balance, January 1, 2010	$	11,894		$	17,275		$	5,358		$	22,633
Additions based on tax positions related to the current year		−			1,094			144			1,238
Reductions for tax positions of prior years		(1,510	)		(1,356	)		67			(1,289	)
Reductions for statute of limitation expirations		(295	)		(2,502	)		(1,219	)		(3,721	)
Balance, December 31, 2010		10,089			14,511			4,350			18,861
Additions based on tax positions related to the current year		−			1,452			183			1,635
Additions for tax positions of prior years		(70	)		189			(449	)		(260	)
Reductions for statute of limitation expirations		(93	)		(2,387	)		(1,605	)		(3,992	)
Balance, December 31, 2011		9,926			13,765			2,479			16,244
Additions based on tax positions related to the current year		−			1,695			185			1,880
Additions for tax positions of prior years		728			845			170			1,015
Reductions for statute of limitation expirations		(1,999	)		(4,309	)		(940	)		(5,249	)
Balance, December 31, 2012	$	8,655		$	11,996		$	1,894		$	13,890

During the year ended December 31, 2012, we have recognized a $4,309,000 decrease in unrecognized tax benefits (including $1,999,000 of temporary differences and $2,310,000 of permanent differences) and an accompanying $940,000 decrease of related interest and penalties due to the effect of statute of limitations lapse.  The favorable impact on our tax provision was $3,187,000 composed of $2,310,000 tax and $707,000 interest and penalties on permanent differences and $170,000 interest and penalties on temporary differences.

At December 31, 2012, we had $11,996,000 of unrecognized tax benefits, composed of $8,292,000 of deferred tax assets and $3,704,000 of permanent differences.  Accrued interest and penalties of $1,894,000 related to unrecognized tax benefits at December 31, 2012.  Unrecognized tax benefits of $3,704,000, net of federal benefit, at December 31, 2012, attributable to permanent differences, would favorably impact our effective tax rate if recognized.  Accrued interest and penalties of $1,531,000 relate to these permanent differences at December 31, 2012.  We do not expect to recognize significant increases or decreases in unrecognized tax benefits within the twelve months beginning December 31, 2012, except for the effect of decreases related to the lapse of statute of limitations estimated at $2,707,000, composed of temporary differences of $1,722,000, and permanent differences of $985,000.  Interest and penalties of $602,000 relate to these temporary and permanent difference changes within 12 months beginning December 31, 2012.

During the year ended December 31, 2011, we have recognized a $2,387,000 decrease in unrecognized tax benefits (including $-0- of temporary differences and $2,387,000 of permanent differences) and an accompanying $1,605,000 decrease of related interest and penalties due to the effect of statute of limitations lapse.  The favorable impact on our tax provision was $3,992,000 composed of $2,387,000 tax and $1,605,000 interest and penalties on permanent differences and $-0- interest and penalties on temporary differences.

At December 31, 2011, we had $13,765,000 of unrecognized tax benefits, composed of $9,308,000 of deferred tax assets and $4,457,000 of permanent differences.  Accrued interest and penalties of $2,479,000 related to unrecognized tax benefits at December 31, 2011.  Unrecognized tax benefits of $4,457,000, net of federal benefit, at December 31, 2011, attributable to permanent differences, would favorably impact our effective tax rate if recognized.  Accrued interest and penalties of $1,650,000 relate to these permanent differences at December 31, 2011.

During the year ended December 31, 2010, we have recognized a $2,502,000 decrease in unrecognized tax benefits (including $-0- of temporary differences and $2,502,000 of permanent differences) and an accompanying $1,219,000 decrease of related interest and penalties due to the effect of statute of limitations lapse.  The favorable impact on our tax provision was $3,721,000 composed of $2,502,000 tax and $1,219,000 interest and penalties on permanent differences and $-0- interest and penalties on temporary differences.

At December 31, 2010, we had $14,511,000 of unrecognized tax benefits, composed of $9,048,000 of deferred tax assets and $5,463,000 of permanent differences.  Accrued interest and penalties of $4,350,000 related to unrecognized tax benefits at December 31, 2010.  Unrecognized tax benefits of $5,463,000, net of federal benefit, at December 31, 2010, attributable to permanent differences, would favorably impact our effective tax rate if recognized.  Accrued interest and penalties of $1,931,000 relate to these permanent differences at December 31, 2010.

Interest and penalties expense related to U.S. federal and state income tax returns are included within income tax expense.  Interest and penalties expense (benefit) was $(585,000); $(1,871,000); and $(1,008,000); for the years ended December 31, 2012, 2011, and 2010, respectively.

The Company is no longer subject to U.S. federal and state examinations by tax authorities for years before 2009 (with few state exceptions).  Currently, there are no U.S. federal and state returns under examination.