Income Taxes

12 Months Ended

Dec. 31, 2012

Income Taxes [Abstract]

Income Taxes

Note 13: Income Taxes

Income tax expense for the years ended December 31, 2012, 2011 and 2010 consists of the following:

	2012		2011		2010
Current:
Federal	$	34,457	$	18,906	$	(5,562	)
State		5,190		2,877		1,920
Total current		39,647		21,783		(3,642	)
Deferred
Federal		16,132		7,237		52,369
State		1,150		878		3,387
Total deferred		17,282		8,115		55,756
Total income tax expense	$	56,929	$	29,898	$	52,114

Income tax expense for the years ended December 31, 2012, 2011 and 2010 differs from amounts computed by applying the applicable U.S. federal income tax rate as follows:

	2012			2011			2010
Computed expected income tax expense	$	54,831		$	30,749		$	48,657
State income tax expense		4,122			2,441			3,478
Domestic Production Activity Deduction		(2,695	)		(1,190	)		(595	)
Settlements of tax matters		–			(2,972	)		–
Other		671			870			574
Total income tax expense	$	56,929		$	29,898		$	52,114
Effective income tax rate		36.3	%		34.0	%		37.5	%

Significant components of Belo’s deferred tax liabilities and assets as of December 31, 2012 and 2011, are as follows:

	2012			2011
Deferred tax liabilities:
Excess tax amortization	$	298,959		$	284,257
Excess tax depreciation		10,159			12,105
Expenses deductible for tax purposes in a year different from the year accrued		22,295			16,507
Total deferred tax liabilities		331,413			312,869
Deferred tax assets:
Accrued pension liability		50,658			47,030
Deferred compensation and benefits		12,409			11,174
State taxes		6,656			6,254
Net operating losses, state		5,614			5,664
Expenses deductible for tax purposes in a year different from the year accrued		3,190			3,383
Other		2,058			2,239
Deferred tax assets		80,585			75,744
Valuation allowance for deferred taxes		(5,614	)		(5,664	)
Total deferred tax assets, net		74,971			70,080
Net deferred tax liability	$	256,442		$	242,789

In 2007, Belo applied for a change in accounting method with the Internal Revenue Service (IRS) related to the deduction of amortization expense associated with certain intangibles. In November of 2010, the Company received a consent letter from the IRS approving the change in accounting method and subsequently filed an amendment to its 2007 federal tax return. The IRS completed its final review in 2011 and the Company received the tax refund of $31,615 in January 2012.

The Company has identified as major tax jurisdictions, as defined in ASC 740-10, its federal income tax return and its state income tax returns in five states. The Company’s federal income tax returns for the years ended December 31, 2007 through December 31, 2008 have been closed, except for certain net operating loss carry-back provisions related to the tax matters agreement with A. H. Belo. The Company’s federal income tax returns for the years subsequent to December 31, 2008, remain subject to examination. During 2011, the Company resolved various refund claims and other matters with tax authorities. The Company’s income tax returns in major state income tax jurisdictions remain subject to examination for various periods subsequent to December 31, 2006.

As of December 31, 2012, the Company has cumulative deferred taxes from state taxable net operating losses of $5,614. These net operating losses can be carried forward to offset future taxable income and are expected to be used and/or will expire between 2013 and 2024.

In the year ended December 31, 2011, the Company received satisfactory resolution of certain tax matters, which resulted in a reduction in tax expense of $2,972.

The table below summarizes the change in reserve for uncertain tax positions, excluding related accrued interest and penalties.

	2012			2011
Balance at January 1	$	888		$	4,248
Increases in tax positions for prior years		–			255
Decreases in tax positions for prior years		(351	)		–
Settlements with taxing authorities		–			(3,615	)
Balance at end of year	$	537		$	888

The entire reserve for uncertain tax positions of $537 and $888 as of December 31, 2012 and 2011, respectively, would affect the Company’s effective tax rate if and when recognized in future years. The Company recognizes interest and penalty charges related to the reserve for uncertain tax positions as interest expense. No interest and penalties were recognized for the years ended December 31, 2012 and 2011. The Company has no accrued interest or penalties as of December 31, 2012 or 2011.