Income Taxes

6 Months Ended

Jun. 30, 2011

Income Taxes [Abstract]

Income Taxes

(20) Income Taxes  — The Company files its income tax returns as prescribed by the tax laws of the jurisdictions in which it operates. The Internal Revenue Service (“IRS”) has issued a no change report on its audit of the Company’s 2007 and 2008 Federal income tax returns. The IRS Joint Committee Review Staff completed their review of the Company’s 2005 net operating loss carry-back claim of $4.2 million (excluding interest) and submitted their report approving the refund to the Congressional Joint Committee on Taxation.

Amcom has received a no change IRS report on its audit of the fiscal year ended March 31, 2009 Federal income tax return. Since Amcom is now part of the USMO affiliated group, it will change its fiscal year to a calendar year end.

The Company is required to evaluate the recoverability of its deferred income tax assets. The assessment is required to determine whether based on all available evidence, it is more likely than not (i.e., greater than a 50% probability) whether all or some portion of the deferred income tax assets will be realized in the future. Based on the acquisition of Amcom during the first quarter of 2011, and improved results of wireless operations, management concluded that an additional amount of its deferred income tax assets was more likely than not recoverable at June 30, 2011. During the first quarter of 2011, management evaluated the forecasted future taxable income of both software and wireless operations based on a five-year projection and reduced the valuation allowance by $32.4 million through March 31, 2011. During the second quarter of 2011, management revised the 2011 projection based on wireless’ improved performance which resulted in an additional decrease to the valuation allowance of $5.2 million through June 30, 2011.

At June 30, 2011, the Company had deferred income tax assets of $192.4 million and a valuation allowance of $133.9 million resulting in an estimated recoverable amount of deferred income tax assets of $58.5 million. This reflects a net reduction of the valuation allowance of $37.0 million (which excludes other net reductions of $0.2 million) from the December 31, 2010 balance of $170.9 million.

The balances of the valuation allowance as of June 30, 2011 and December 31, 2010 were $133.9 million and $170.9 million, respectively. Included in the valuation allowance were $0.7 million and $0.7 million for foreign operations at June 30, 2011 and December 31, 2010, respectively.

The anticipated effective income tax rate is expected to differ from the Federal statutory rate of 35% due to changes in the deferred income tax asset valuation allowance, the effect of state income taxes, permanent differences between financial and taxable income, and non-recurring discrete items.