Income Taxes

12 Months Ended

Dec. 31, 2011

Income Taxes [Abstract]

Income Taxes

6. Income Taxes

We file a consolidated federal income tax return, consolidated unitary returns in certain states, and other separate state income tax returns for certain of our subsidiary companies.

The provision for income taxes consisted of the following:

	For the years ended December 31,
(in thousands)	2011			2010			2009
Current:
Federal	$	(27,918	)	$	(27,710	)	$	(74,053	)
State and local		1,185			(11,033	)		4,774
Total		(26,733	)		(38,743	)		(69,279	)
Tax benefits of compensation plans allocated to additional paid-in capital		6,946			13,992			(4,653	)
Total current income tax provision		(19,787	)		(24,751	)		(73,932	)
Deferred:
Federal		16,637			28,270			68,096
Other		3,110			3,414			(2,585	)
Total		19,747			31,684			65,511
Deferred tax allocated to other comprehensive income		(9,961	)		(6,093	)		(23,942	)
Total deferred income tax provision		9,786			25,591			41,569
Provision (benefit) for income taxes	$	(10,001	)	$	840		$	(32,363	)

The difference between the statutory rate for federal income tax and the effective income tax rate was as follows:

	For the years ended December 31,
	2011			2010			2009
Statutory rate		35.0	%		35.0	%		35.0	%
Effect of:
State and local income taxes, net of federal income tax benefit		(1.8	)		7.3			2.0
Permanent item — Goodwill Impairment		—			—			(22.4	)
Reserve for uncertain tax positions		(1.9	)		(48.9	)		(2.4	)
Miscellaneous		7.6			9.5			1.8
Effective income tax rate		38.9	%		2.9	%		14.0	%

We believe adequate provision has been made for all open tax years.

The approximate effect of the temporary differences giving rise to deferred income tax (liabilities) assets were as follows:

	As of December 31,
(in thousands)	2011			2010
Temporary differences:
Property, plant and equipment	$	(51,174	)	$	(54,410	)
Goodwill and other intangible assets		15,384			31,791
Investments, primarily gains and losses not yet recognized for tax purposes		1,555			1,539
Accrued expenses not deductible until paid		13,357			13,187
Deferred compensation and retiree benefits not deductible until paid		52,398			41,672
Other temporary differences, net		1,463			339
Total temporary differences		32,983			34,118
State net operating loss carryforwards		8,520			6,554
Valuation allowance for state deferred tax assets		(1,570	)		(914	)
Net deferred tax asset	$	39,933		$	39,758

Total state operating loss carryforwards were $241 million at December 31, 2011. Our state tax loss carryforwards expire through 2028. Because we file separate state income tax returns for certain of our subsidiary companies, we are not able to use state tax losses of a subsidiary company to offset state taxable income of another subsidiary company.

Deferred tax assets totaled $39.9 million at December 31, 2011. Almost all of our deferred tax assets reverse in 2012 and 2013. We can use any tax losses resulting from the deferred tax assets reversing in 2012 to claim refunds of taxes paid in prior periods. Management believes that it is more likely than not that we will realize the benefits of our Federal deferred tax assets and therefore has not recorded a valuation allowance for our deferred tax assets. If economic conditions worsen, future estimates of taxable income could be lower than our current estimates, which may require valuation allowances to be recorded in future reporting periods.

We recognize state net operating loss carryforwards as deferred tax assets, subject to valuation allowances. At each balance sheet date, we estimate the amount of carryforwards that are not expected to be used prior to expiration of the carryforward period. The tax effect of the carryforwards that are not expected to be used prior to their expiration is included in the valuation allowance.

A reconciliation of the beginning and ending balances of the total amounts of gross unrecognized tax benefits is as follows:

	For the years ended December 31,
(in thousands)	2011			2010			2009
Gross unrecognized tax benefits at beginning of year	$	20,010		$	27,910		$	22,710
Increases in tax positions for prior years		1,500			400			7,100
Decreases in tax positions for prior years		(270	)		(15,900	)		(2,100	)
Increases in tax positions for current year		—			8,400			1,400
Settlements		—			(800	)		(1,200	)
Gross unrecognized tax benefits at end of year	$	21,240		$	20,010		$	27,910

The total amount of net unrecognized tax benefits that, if recognized, would affect the effective tax rate was $14 million at December 31, 2011. We accrue interest and penalties related to unrecognized tax benefits in our provision for income taxes. At December 31, 2011 and 2010, we had accrued interest related to unrecognized tax benefits of $2.4 million and $2.6 million, respectively.

We file income tax returns in the U.S. and in various state, local and foreign jurisdictions. We are routinely examined by tax authorities in these jurisdictions.

During 2011, we settled the examinations of our 2005 to 2009 Federal income tax returns with the Internal Revenue Service. Our tax benefit was increased $1 million due to the realization of previously unrecognized tax benefits.

During 2010, we settled the examinations of several state and local tax returns for periods through 2008. Our tax provision was reduced by $14.0 million due to the realization of previously unrecognized tax benefits for settlement of issues for state and local jurisdictions.

In 2009, we reached an agreement with the Internal Revenue Service (“IRS”) to settle the examination of our 2005 and 2006 federal income tax returns. Our tax benefit in 2009 was increased by $0.9 million due to the realization of previously unrecognized tax benefits.

Due to the potential for resolution of Federal and state examinations, and the expiration of various statutes of limitation, it is reasonably possible that our gross unrecognized tax benefits balance may change within the next twelve months by as much as $5.0 million.