10. Income Taxes

The components of the provision (benefit) for income taxes are as follows:


	Years Ended December 31,
	2011		2010			2009
Current provision (benefit):
Federal	$	15.9	$	2.9		$	(30.3	)
State		2.6		2.3			1.0

	$	18.5	$	5.2		$	(29.3	)

Deferred provision (benefit):
Federal		13.8		2.8			35.0
State		1.6		(1.7	)		(2.9	)

		15.4		1.1			32.1

Total provision	$	33.9	$	6.3		$	2.8

The components of income before income taxes are as follows:


	Years Ended December 31,
	2011		2010			2009
United States	$	98.5	$	18.8		$	6.8
Foreign		—		(1.0	)		(0.5	)

Income before income taxes	$	98.5	$	17.8		$	6.3

The provision (benefit) differs from an amount computed at the statutory rates as follows:


	Years Ended December 31,
	2011			2010			2009
Federal income tax at statutory rates	$	34.5		$	6.3		$	2.2
State taxes, net of federal income tax benefit		4.2			0.7			(1.9	)
Production activity deduction		(2.0	)		(0.6	)		—
Change in valuation allowance		(0.3	)		(2.8	)		—
Other		(2.5	)		2.7			2.5

Total provision	$	33.9		$	6.3		$	2.8

The significant items giving rise to the deferred tax assets (liabilities) are as follows:


	December 31,
	2011			2010
Deferred tax assets:
Accounts receivable and inventories	$	0.3		$	2.4
Accrued liabilities		8.3			6.5
Tax attributes and carryforwards		12.0			17.5
Intangible assets		—			0.3
Other comprehensive income		(0.3	)		(0.3	)
Other		2.9			10.9

Total deferred tax assets		23.2			37.3

Deferred tax liabilities:
Foreign DISC		—			(0.3	)
Property and equipment		(74.6	)		(76.0	)
Intangible assets		(1.3	)		—
Deferred revenue		(30.3	)		(30.3	)
Other		(0.9	)		(1.4	)

Total deferred tax liabilities		(107.1	)		(108.0	)

Valuation allowance		(5.3	)		(5.8	)

Deferred tax assets (liabilities), net	$	(89.2	)	$	(76.5	)

As of December 31, 2011, we recorded both federal and state current and noncurrent net deferred tax assets/(liabilities) of $7.9 and ($97.1), respectively. As of December 31, 2010, we recorded both federal and state current and noncurrent net deferred tax assets/(liabilities) of $12.0 and ($88.5), respectively.

As of December 31, 2011, our net operating loss (“NOL”) carryforwards for U.S. federal income taxes had been fully utilized. As of December 31, 2011, we have state NOL carryforwards of $212.7 with carryforward periods ranging from five to twenty years depending on the loss jurisdiction. Our state NOL carryforwards expire between 2012 and 2029. In addition, a portion of our state NOL carryforwards are subject to the state equivalent Internal Revenue Code section 382 annual limitation as a result of changes in ownership that occurred in 2002 and 2005. We also have Canadian NOL carryforwards of $2.3 which expire between 2027 and 2029.

ASC Topic 740 “Income Taxes,” (“ASC 740”) requires that deferred tax assets be reduced by a valuation allowance, if based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The valuation allowance is adjusted in the periods that we determine the more likely than not standard will or will not be met. A valuation allowance of $5.3 and $5.8 was recorded at December 31, 2011 and 2010, respectively, against state NOL carryforwards and Canadian net deferred tax assets. In 2011, the state NOL valuation allowance decreased by $0.5.

Our tax returns are subject to periodic examination by the various taxing jurisdictions in which we operate. These examinations can result in adjustments to taxes due or adjustments to NOL carryforwards which are available to offset future income.

In 2005 in conjunction with the Merger, and in 2006 as a result of our acquisition of Port City, our carryover basis in tax deductible goodwill exceeded the corresponding book amounts. In accordance with ASC 740, a deferred tax asset for the excess was not recorded. Instead, the tax benefits from the excess amortization of tax deductible goodwill, as realized, are applied as follows: first to reduce financial statement goodwill related to the Merger/acquisition of Port City to zero, then as a reduction of non-current intangible assets related to the Merger/acquisition of Port City, with any excess tax benefit reducing our provision for income taxes. In the years ended December 31, 2011 and 2010, goodwill was reduced by $2.8 and $2.2, respectively.

Unrecognized Tax Benefits

As of December 31, 2011, 2010, and 2009, the total amount of unrecognized tax benefits that, if recognized, would affect our effective income tax rate was $4.7, $5.6, and $5.1, respectively.

We account for any applicable interest and penalties on uncertain tax positions as a component of income tax expense. During the years ended December 31, 2011, 2010 and 2009 the Company recognized ($0.3), $0.1 and $1.0, respectively, in interest and penalties. The Company had $2.5 and $2.8 of interest and penalties accrued at December 31, 2011 and 2010, respectively.

We believe it is reasonably possible that a decrease of up to $1.0 in the consolidated liability for unrecognized tax benefits related to settlements of federal and state tax uncertainties may occur within the next twelve months. In addition, we believe it is reasonably possible that approximately $1.5 of other remaining unrecognized tax benefits, each of which is individually insignificant, may be recognized within the next twelve months as a result of a lapse of the statute of limitations.

We file numerous consolidated and separate income tax returns in the United States and various foreign jurisdictions. We are no longer subject to U.S. Federal income tax examinations for years before 2002 and are no longer subject to state and local, or foreign income tax examinations for years before 2000.

A reconciliation of the beginning and ending amounts of unrecognized income tax benefits for the years ended December 31, 2011, 2010 and 2009 is as follows:


	Year Ended December 31,
	2011			2010			2009
Balance at beginning of period	$	11.6		$	10.9		$	8.5
Gross increases due to tax positions in prior periods		3.7			1.4			0.1
Gross decreases due to tax positions in prior periods		(4.7	)		(0.3	)		(0.7	)
Gross increases due to tax positions in current period		—			0.4			1.9
Gross decreases due to tax positions in current period		—			—			(0.1	)
Gross increases due to balance sheet reclassifications		—			—			1.2
Decreases due to lapses of statutes of limitations		(3.2	)		(0.8	)		—

Balance at end of period	$	7.4		$	11.6		$	10.9