Note 8 - Income Taxes

12 Months Ended

Dec. 31, 2014

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

8.     Income Taxes

We recognize deferred tax assets and liabilities for future tax consequences attributable to differences between our financial statement carrying amounts of existing assets and liabilities and their respective tax bases. We measure deferred tax assets and liabilities using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to reverse. We recognize the effect on deferred tax assets and liabilities resulting from a change in tax rates in income in the period that includes the date of the change.

Under certain circumstances, we recognize liabilities in our financial statements for positions taken on uncertain tax issues. When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others may be subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, we believe it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits on the balance sheet along with any associated interest and penalties that would be payable to the taxing authorities upon examination. Interest and penalties associated with unrecognized tax benefits are classified as income tax expense in the statement of operations.

Federal and state and local income tax expense (benefit) is summarized as follows (in thousands):

	Year Ended December 31,
	2014			2013			2012
Current:
Federal	$	-		$	-		$	-
State and local		996			118			974
State and local - reserve for uncertain tax positions		(198	)		(136	)		(1,015	)
Current income tax expense (benefit)		798			(18	)		(41	)
Deferred:
Federal		28,231			12,218			16,854
State and local		2,707			947			2,375
Deferred income tax expense		30,938			13,165			19,229
Total income tax expense	$	31,736		$	13,147		$	19,188

Significant components of our deferred tax liabilities and assets are as follows (in thousands):

	December 31,
	2014			2013
Deferred tax liabilities:
Net book value of property and equipment	$	20,195		$	9,797
Broadcast licenses, goodwill and other intangibles		341,654			285,553
Total deferred tax liabilities		361,849			295,350
Deferred tax assets:
Liability for accrued vacation		1,900			926
Liability for accrued bonus		3,440			2,401
Loan acquisition costs		447			1,664
Allowance for doubtful accounts		572			284
Liability under health and welfare plan		1,111			936
Liability for pension plan		16,900			10,501
Federal operating loss carryforwards		55,425			78,597
State and local operating loss carryforwards		7,102			9,922
Alternative minimum tax carryforwards		386			386
Unearned income		214			396
Network compensation		-			174
Stock options		119			76
Acquisition costs		776			300
Restricted stock		1,479			192
Other		206			49
Total deferred tax assets		90,077			106,804
Valuation allowance for deferred tax assets		(2,052	)		(2,748	)
Net deferred tax assets		88,025			104,056
Deferred tax liabilities, net of deferred tax assets	$	273,824		$	191,294

We have approximately $159.8 million in federal operating loss carryforwards, which expire during the years 2022 through 2031. Additionally, we have an aggregate of approximately $181.8 million of various state operating loss carryforwards. We project to have taxable income in the carryforward periods. Therefore, we believe that it is more likely than not that the federal net operating loss carryforwards will be fully utilized.

A valuation allowance has been provided for a portion of the state net operating loss carryforwards. We believe that we will not meet the more likely than not threshold in certain states due to the uncertainty of generating sufficient income. Therefore, the state valuation allowance at December 31, 2014 and 2013 was $2.1 million and $2.7 million, respectively.

Our total valuation allowance provided for deferred income tax assets decreased $0.7 million for the year ended December 31, 2014 due to changes in estimated utilization of state operating loss carryforwards. Our total valuation allowance provided for deferred income tax assets decreased $0.4 million for the year ended December 31, 2013 due to changes in estimated utilization of state operating loss carryforwards.

A reconciliation of income tax expense at the statutory federal income tax rate and income taxes as reflected in the consolidated financial statements for the years ended December 31, 2014, 2013 and 2012 is as follows (in thousands):

	Year Ended December 31,
	2014			2013			2012
Statutory federal rate applied to income before income tax expense	$	27,929		$	11,002		$	16,561
Current year permanent items		849			669			825
State and local taxes, net of federal tax benefit		4,050			1,432			4,191
Change in valuation allowance		(696	)		(409	)		(1,463	)
Reserve for uncertain tax positions		(198	)		(136	)		(1,015	)
Other items, net		(198	)		589			89
Income tax expense as recorded	$	31,736		$	13,147		$	19,188
Effective income tax rate		39.8	%		41.8	%		40.6	%

As of each year end, we are required to adjust our pension liability to an amount equal to the funded status of our pension plans with a corresponding adjustment to other comprehensive income on a net of tax basis. During 2014, we increased our recorded non-current pension liability by $17.1 million and recognized other comprehensive loss of $10.4 million, net of a $6.7 million tax benefit. During 2013, we decreased our recorded non-current pension liability by $16.0 million and recognized other comprehensive gain of $9.8 million, net of a $6.2 million tax expense. During 2012, we increased our recorded non-current pension liability by $6.2 million and recognized other comprehensive loss of $3.8 million, net of a $2.4 million tax benefit.

In 2014, 2013 and 2012, we made income tax payments (net of refunds) of $0.4 million, $0.5 million and $0.8 million, respectively. At December 31, 2014 and 2013, we had current income taxes payable of approximately $1.9 million and $1.5 million, respectively.

We prescribe a recognition threshold and measurement attribution for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. For benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities.

As of December 31, 2014 and 2013, we had approximately $1.3 million and $1.5 million, respectively, of unrecognized tax benefits. All of these unrecognized tax benefits would impact our effective tax rate if recognized. The liability for unrecognized tax benefits is recorded net of any federal tax benefit that would result from payment.

We have accrued estimates of interest and penalties related to unrecognized tax benefits in income tax expense. As of December 31, 2014 and 2013, we had recorded a liability for potential penalties and interest of approximately $0.6 million and $0.7 million, respectively, related to uncertain tax positions.  

The following table summarizes the activity related to our unrecognized tax benefits, net of federal benefit, excluding interest and penalties for the years ended December 31, 2014, 2013 and 2012 (in thousands):

	Year Ended December 31,
	2014			2013			2012
Balance at beginning of period	$	782		$	880		$	1,597
Reduction in benefit from lapse in statute of limitations		(125	)		(98	)		(717	)
Balance at end of period	$	657		$	782		$	880

While it is difficult to calculate with any certainty, we estimate a decrease of $0.5 million, exclusive of interest and penalties, will be recorded for uncertain tax positions over the next twelve months resulting from expiring statutes of limitations for state tax issues.

We file income tax returns in the U.S. federal and multiple state jurisdictions. With few exceptions, we are no longer subject to U.S. federal, or state and local tax examinations by tax authorities for years prior to 2001. This extended open adjustment period is due to material amounts of net operating loss carryforwards, which exist at the federal level and in multiple-state jurisdictions arising from the 2002 and 2003 tax years.