Income Taxes

The composition of our income tax (expense) benefit from continuing operations for the years ended December 31, 2012, 2011 and 2010 was as follows:



	Current			Deferred			Total
	(in millions)
Year ended December 31, 2012:
U.S. Federal	$	—		$	(0.9	)	$	(0.9	)
State	(4.0		)	0.2			(3.8		)
	$	(4.0	)	$	(0.7	)	$	(4.7	)
Year ended December 31, 2011:
U.S. Federal	$	—		$	1.5		$	1.5
State	(3.5		)	(0.3		)	(3.8		)
	$	(3.5	)	$	1.2		$	(2.3	)
Year ended December 31, 2010:
U.S. Federal	$	21.2		$	(14.9	)	$	6.3
State	2.3			3.1			5.4
	$	23.5		$	(11.8	)	$	11.7

The following table reconciles our effective income tax rate from continuing operations to the federal statutory tax rate of 35%:



	2012					2011					2010
	Percent		Amount			Percent		Amount			Percent		Amount
	(dollars in millions)
Federal income tax (expense) benefit at the statutory rate	35.0	%	$	6.3		(35.0	)%	$	(11.4	)	35.0	%	$	18.4
State income taxes, net of federal tax benefits	(24.2	)%	(4.3		)	(14.9	)%	(4.8		)	5.8	%	3.0
Non-deductible expenses and other	(4.7	)%	(0.8		)	(2.7	)%	(0.8		)	(1.4	)%	(0.7		)
Cancellation of stock options	(11.5	)%	(2.1		)	(3.7	)%	(1.2		)	—	%	—
Non-deductible donation of land	—	%	—			(3.5	)%	(1.2		)	—	%	—
Dividend income from foreign subsidiary	—	%	—			—	%	—			(3.5	)%	(1.8		)
Reserves for unrecognized tax benefits	(0.7	)%	(0.1		)	1.7	%	0.5			4.1	%	2.1
Credits	3.3	%	0.5			3.7	%	1.2			13.7	%	7.2
Change in valuation allowance/reserve of deferred tax assets	(23.2	)%	(4.2		)	47.2	%	15.4			(31.4	)%	(16.5		)
Income tax (expense) benefit from continuing operations	(26.0	)%	$	(4.7	)	(7.2	)%	$	(2.3	)	22.3	%	$	11.7

The following table shows the allocation of income tax (expense) benefit between continuing operations, discontinued operations and equity:



	For the year ended December 31,
	2012			2011			2010
	(in millions)
Income (loss) from continuing operations before income taxes	$	(17.9	)	$	32.5		$	(52.5	)
Income tax (expense) benefit allocated to continuing operations	(4.7		)	(2.3		)	11.7
Income (loss) from continuing operations	(22.6		)	30.2			(40.8		)
Income (loss) from discontinued operations before income taxes	(9.4		)	(32.9		)	27.1
Income tax (expense) benefit allocated to discontinued operations	0.2			0.2			(9.7		)
Income (loss) from discontinued operations	(9.2		)	(32.7		)	17.4
Net loss	$	(31.8	)	$	(2.5	)	$	(23.4	)
Income tax (expense) benefit allocated to other comprehensive income	$	—		$	0.2		$	—

At December 31, 2012 and 2011, the tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and deferred tax liabilities were:



	December 31,
	2012			2011
	(in millions)
Deferred tax assets—current:
Workers’ compensation insurance reserve	$	2.7		$	2.6
Allowance for doubtful accounts	3.1			3.0
Legal and merger costs	3.6			2.7
Other	7.7			7.5
Less valuation allowance	(16.4		)	(15.1		)
Total deferred tax assets—current	0.7			0.7
Deferred tax liabilities—current:
Prepaid expenses	(3.9		)	(3.2		)
Total deferred tax liabilities—current	(3.9		)	(3.2		)
Net current deferred tax liabilities	$	(3.2	)	$	(2.5	)
Deferred tax assets—non-current:
Federal tax credit carry-forwards	$	28.9		$	28.3
Federal net operating loss carry-forwards	91.4			77.3
State net operating loss carry-forwards	9.8			11.7
Capital loss carry-forward	6.3			6.4
Deferred compensation	2.6			2.9
Pre-opening expenses capitalized for tax purposes	11.6			10.9
ACDL investment write-down	9.1			—
Share-based compensation expense—book cost	11.9			12.1
Land, building, vessels and equipment, net	—			31.6
Other	18.6			10.8
Less valuation allowance	(184.7		)	(190.3		)
Total deferred tax assets—non-current	5.5			1.7
Deferred tax liabilities—non-current:
Land, building, vessels and equipment, net	(2.9		)	—
Intangible assets	(6.1		)	(5.1		)
Total deferred tax liabilities—non-current:	(9.0		)	(5.1		)
Net non-current deferred tax liabilities	$	(3.5	)	$	(3.4	)

The following table summarizes the total deferred tax assets and total deferred tax liabilities provided in the previous table:



	December 31,
	2012			2011
	(in millions)
Total deferred tax assets	$	207.3		$	207.7
Less valuation allowances	(201.1		)	(205.4		)
Less total deferred tax liabilities	(12.9		)	(8.2		)
Net deferred tax liabilities	$	(6.7	)	$	(5.9	)

As of December 31, 2012, we provided a full valuation allowance against deferred tax assets for all jurisdictions except for certain states that are more likely than not to be realized. In evaluating the need for a valuation allowance, we consider all sources of taxable income available to realize the deferred tax asset, including the future reversal of existing temporary differences, forecasts of future taxable income, and tax planning strategies. We have a cumulative U.S. pretax accounting loss for the years 2010 through 2012. Considering all available evidence both positive and negative, and in light of the cumulative losses in recent years, we determined that a full valuation allowance was appropriate.

As of December 31, 2012, our tax filings reflected available Alternative Minimum Tax (“AMT”) credit carry-forwards of $3.1 million, General Business Credit (“GBC”) carry-forwards of $15.3 million and Foreign Tax Credit (“FTC”) carry-forwards of $10.4 million. The FTC and GBC carry-forwards will begin to expire in 2020 through 2032, while the AMT credits can be carried forward indefinitely to reduce future regular tax liabilities. As of December 31, 2012, we had $271 million of federal net operating losses, which can be carried forward 20 years and will expire in 2028. We also have $214 million of state net operating loss carry-forwards, predominantly in Louisiana and Missouri, which expire on various dates beginning in 2013. Our net operating loss carry-forwards include a $9.2 million excess tax benefit from stock option deductions, which have not been recognized for financial statement purposes. The excess tax benefit will be credited to additional paid-in capital when the net operating loss is utilized and reduces current-year income tax payable.

We file income tax returns in federal and state jurisdictions and are no longer subject to federal income tax examinations for tax years prior to 2011 and state income tax examinations for tax years prior to 2000. In 2010, our federal tax return was examined by the Internal Revenue Service for the years 2006 through 2008, and the audit was concluded with no adjustment. In 2012, our federal tax return was examined by the Internal Revenue Service for tax years 2009 and 2010. The examination concluded in January 2013 with adjustments to certain timing items that resulted in an immaterial impact in our 2012 income tax expense. In June 2012, the California Franchise Tax Board began examination of our franchise tax return for the years 2007, 2008, and 2009. In April 2012, we received a supplemental letter of findings from the Indiana Department of Revenue upholding the prior audit assessment on our Indiana income tax filings for the years 2005, 2006, and 2007. We filed an appeal in June 2012 with the Indiana Tax Court to set aside the entire audit assessment. Our appeal is currently pending Court review. For further discussion, see Note 11, Commitments and Contingencies.

As of December 31, 2012, we had $4.0 million of uncertain tax benefits that, if recognized, would impact the effective tax rate. Authoritative guidance requires companies to accrue interest and related penalties, if applicable, on all tax positions for which reserves have been established consistent with jurisdictional tax laws. We recognize accrued interest and penalties related to uncertain tax benefits as a component of income tax expense. During 2012, we accrued approximately $0.1 million of interest related to unrecognized tax benefits which consists of current year accrual for uncertain tax benefits offset by the write-offs of previously accrued interest for uncertain tax benefits. We had $0.8 million of cumulative interest accrued as of the end of the year. No penalties were accrued for in any years. It is reasonably possible that the total amount of unrecognized tax benefits may increase by up to approximately $4.0 million during the next twelve months.

The following table summarizes the activity related to uncertain tax benefits for 2012 and 2011, excluding any interest or penalties:



	2012		2011
	(in millions)
Balance as of January 1	$	7.7	$	8.2
Gross increases - tax positions in prior periods	1.5		1.0
Gross decreases - tax positions in prior periods	—		(0.1		)
Gross increases - tax positions in current period	0.2		0.2
Statute of limitation expirations	—		(1.6		)
Balance as of December 31	$	9.4	$	7.7