(18) Income Taxes

Income tax (benefit) expense based on the Company's income before income taxes consists of the following for the years ended December 31, 2011, 2010, and 2009:


	2011			2010			2009
	(In thousands)
Current:
U.S. federal	$	(86	)	$	15		$	265
State and local		1,774			1,583			251
Total current	$	1,688		$	1,598		$	516
Deferred:
U.S. federal	$	(12,025	)	$	(18,720	)	$	3,889
State and local		(2,839	)		(17	)		(160	)
Foreign		—			—			—
Total deferred		(14,864	)		(18,737	)		3,729
Total	$	(13,176	)	$	(17,139	)	$	4,245

Income tax (benefit) expense differs from amounts computed by applying the U.S. federal statutory tax rate to income before taxes as follows for the years ended December 31, 2011, 2010, and 2009:


	2011			2010			2009
	(In thousands)
Income tax expense at the statutory rate of 35.0% for 2011 and 2010 and 34.0% for 2009	$	19,940		$	8,397		$	3,405
Provision to return and deferred tax adjustments		(190	)		(3,548	)		—
Change in federal and state effective tax rates		(780	)		(225	)		—
State tax, net of federal benefit		2,418			1,565			938
Permanent adjustments		341			(83	)		180
Uncertain tax position - non-deductible interest of foreign subsidiary		—			—			688
Impact of foreign rate differential		139			454			160
Impact of U.K. Restructuring		(37,019	)		—			—
Foreign subsidiary change in statutory rate		524			—			—
Other		256			(75)			(132)
Subtotal		(14,371	)		6,485			5,239
Change in valuation allowance		1,195			(23,624	)		(994	)
Total tax (benefit) expense	$	(13,176	)	$	(17,139	)	$	4,245

During 2011, the Company implemented a tax reporting change with respect to its U.K. operations whereby the U.K. entities are no longer considered to be controlled foreign corporations (i.e. "CFCs") for U.S. income tax purposes, but are instead, effectively treated as branches of the Company's U.S. operations for U.S. federal income tax purposes. This change in U.S. federal income tax reporting election resulted in the recognition of a tax loss on its net investment in its U.K. operations. The Company also recognized a tax loss on certain long-term debt obligations of its U.K. operations to the parent company in conjunction with the tax reporting change. As a result of these events, the Company recorded an overall tax benefit of $37.0 million in 2011. The Company expects to fully utilize the net operating losses associated with this restructuring within the next 24 months as a result of the combined taxable income expected to be generated by its domestic operations and its U.K. branch during this time frame.

The net current and non-current deferred tax assets and liabilities (by segment) as of December 31, 2011 and 2010 were as follows:


	United States						United Kingdom						Other International						Consolidated
	2011			2010			2011			2010			2011			2010			2011			2010
	(In thousands)
Current deferred tax asset	$	26,928		$	15,013		$	104		$	110		$	122		$	78		$	27,154		$	15,201
Valuation allowance		—			—			(73	)		(72	)		(11	)		(11	)		(84	)		(83	)
Current deferred tax liability		(64	)		(63	)		(1,031	)		(753	)		—			—			(1,095	)		(816	)
Net current deferred tax asset (liability)		26,864			14,950			(1,000	)		(715	)		111			67			25,975			14,302
Non-current deferred tax asset		44,355			11,461			12,163			10,421			2,411			2,107			58,929			23,989
Valuation allowance		—			—			(8,229	)		(6,801	)		(394	)		(291	)		(8,623	)		(7,092	)
Non-current deferred tax liability		(22,143	)		(21,662	)		(2,934	)		(2,905	)		(2,128	)		(1,883	)		(27,205	)		(26,450	)
Net non-current deferred tax asset (liability)		22,212			(10,201	)		1,000			715			(111	)		(67	)		23,101			(9,553	)
Net deferred tax asset	$	49,076		$	4,749		$	—		$	—		$	—		$	—		$	49,076		$	4,749

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2011 and 2010, were as follows:


	2011			2010
	(In thousands)
Current deferred tax assets:
Reserve for receivables	$	105		$	195
Accrued liabilities and inventory reserves		5,136			3,018
Net operating loss carryforward		13,664			4,493
Unrealized losses on interest rate swap contracts		8,177			7,371
Other		72			124
Subtotal		27,154			15,201
Valuation allowance		(84	)		(83	)
Current deferred tax assets		27,070			15,118
Non-current deferred tax assets:
Net operating loss carryforward		8,349			2,353
Unrealized loss on interest rate swap contracts		18,763			6,879
Stock-based compensation		2,902			2,671
Asset retirement obligations		3,956			1,032
Tangible and intangible assets		23,468			8,732
Deferred revenue		605			1,189
Other		886			1,133
Subtotal		58,929			23,989
Valuation allowance		(8,623	)		(7,092	)
Non-current deferred tax assets		50,306			16,897
Current deferred tax liabilities:
Other		(1,095	)		(816	)
Current deferred tax liabilities		(1,095	)		(816	)
Non-current deferred tax liabilities:
Tangible and intangible assets		(17,633	)		(18,306	)
Deployment costs		(6,580	)		(6,562	)
Asset retirement obligations		(1,997	)		(1,047	)
Other		(995	)		(535	)
Non-current deferred tax liabilities		(27,205	)		(26,450	)

Net deferred tax asset	$	49,076		$	4,749

Based on a positive pre-tax book income trend that began in 2009, continued throughout 2011 and is expected to continue in future periods, management concluded that it is more likely than not that the results of future operations will generate sufficient taxable income to realize its domestic deferred tax assets and expects the majority of Company's domestic net operating loss carryforwards that are not subject to annual utilization limits to be fully utilized in the next 12 to 24 months, which is well before their expiration dates.

The deferred taxes associated with the Company's unrealized gains and losses on derivative instruments have been reflected within accumulated other comprehensive loss balance in the accompanying Consolidated Balance Sheets.

As a result of its 2011 acquisitions, the Company recorded net deferred tax assets totaling $21.6 million. The recorded net deferred tax assets primarily include net operating loss carryforwards and Internal Revenue Code ("IRC") Section 197 intangible assets, both of which are subject to certain limitations under IRC Section 382.

As of December 31, 2011, the Company had approximately $53.6 million in United States federal net operating loss carryforwards that will begin expiring in 2025. Included in this amount are net operating loss carryfowards of $14.9 million acquired in the Company's 2011 acquisitions. The United States federal net operating loss carryfoward amount excludes approximately $34.9 million in gross potential future tax benefits associated with excess tax deductions above previously recognized book expense for employee stock option exercises and restricted stock vesting that occurred from 2006 through 2011. Because the Company is currently in a net operating loss carryforward position, such benefits have not been reflected in the Company's consolidated financial statements, as required by ASC 718, Compensation – Stock Compensation. Finally, the Company had approximately $0.3 million in alternative minimum tax credits in the United States as of December 31, 2011.

As of December 31, 2011, the Company had approximately $6.7 million in net operating loss carryforwards in the United Kingdom not subject to expiration, $2.2 million in net operating loss carryforwards in Mexico that will begin expiring in 2016, and $543 thousand in net operating loss carryforwards in Canada that will begin expiring in 2028. However the deferred tax benefits associated with such carryforwards, to the extent they are not offset by deferred tax liabilities, have been fully reserved for through a valuation allowance. At this time, the Company does not expect that its United Kingdom, Mexico, and Canada operations will be in a position in the near future to be able to more likely than not fully utilize their deferred tax assets in their respective tax jurisdictions, including their net operating loss carryforwards. As a result, the deferred tax benefits associated with the United Kingdom, Mexico, and Canada operations, to the extent they are not offset by deferred tax liabilities, have been fully reserved through a valuation allowance.

The Company currently believes that the unremitted earnings of its international subsidiaries will be reinvested in the corresponding country of origin for an indefinite period of time. Accordingly, no deferred taxes have been provided for on the differences between the Company's book basis and underlying tax basis in those subsidiaries or on the foreign currency translation adjustment amounts related to such operations.

The Company files United States, state, and foreign income tax returns in jurisdictions with varying statutes of limitations. With few exceptions, the Company is not subject to tax examination by tax authorities for years before 2002. The Company has received a notice of intent to audit its 2009 federal tax return from the Internal Revenue Service. The Company does not expect any material adjustments to result from the audit.

In December 2010, President Obama signed into law the "Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010." The legislation permits businesses to expense 100 percent of qualifying capital investments for 2010 and 2011. The Company's 2011 income tax provision reflects the impact of accelerating federal income tax depreciation deductions for qualifying property.