Annual report pursuant to Section 13 and 15(d)

INCOME TAXES

v2.4.0.8
INCOME TAXES
12 Months Ended
Dec. 31, 2013
Income Tax Disclosure [Abstract]  
INCOME TAXES

NOTE 8. INCOME TAXES

We account for income taxes in accordance with FASB ASC Topic 740 “Income Taxes.” Deferred income taxes are determined based on the difference between the consolidated financial statement and income tax bases of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse. Our evaluation was performed for tax years that remain subject to examination by major tax jurisdictions, which range from 2009 through 2012.

The consolidated provision (benefit) for income taxes from continuing operations for Salem consisted of the following:

 

     December 31,  
     2011     2012     2013  
     (Dollars in thousands)  

Current:

      

Federal

   $ (8   $ 8      $ —     

State

     282        198       193   
  

 

 

   

 

 

   

 

 

 
     274        206        193   
  

 

 

   

 

 

   

 

 

 

Deferred:

      

Federal

     4,425        3,649        (1,075

State

     1,411        (3,702 )     (3,310
  

 

 

   

 

 

   

 

 

 
     5,836        (53     (4,385
  

 

 

   

 

 

   

 

 

 

Provision for (benefit from) income taxes

   $ 6,110      $ 153     $ (4,192
  

 

 

   

 

 

   

 

 

 

Discontinued operations are reported net of the tax benefit of $0.5 million in 2011, $(0.06) million in 2012 and $(0.02) million in 2013.

The consolidated deferred tax asset and liability consisted of the following:

 

     December 31,  
     2012     2013  
     (Dollars in thousands)  

Deferred tax assets:

    

Financial statement accruals not currently deductible

   $ 6,146      $ 6,786   

Net operating loss, AMT credit and other carryforwards

     58,702        71,246   

State taxes

     103        90   

Other

     3,014        3,322   
  

 

 

   

 

 

 

Total deferred tax assets

     67,965        81,444   

Valuation allowance for deferred tax assets

     (2,913     (2,868
  

 

 

   

 

 

 

Net deferred tax assets

   $ 65,052      $ 78,576   
  

 

 

   

 

 

 

Deferred tax liabilities:

    

Excess of net book value of property, plant, equipment and software for financial reporting purposes over tax basis

   $ 5,032      $ 3,840   

Excess of net book value of intangible assets for financial reporting purposes over tax basis

     100,040        109,133   

Interest rate swap

     —          1,251   

Unrecognized tax benefits

     1,325        933   
  

 

 

   

 

 

 

Total deferred tax liabilities

     106,397        115,157   
  

 

 

   

 

 

 

Net deferred tax liabilities

   $ (41,345   $ (36,581
  

 

 

   

 

 

 

 

The following table reconciles the above net deferred tax liabilities to the financial statements:

 

     December 31,  
     2012     2013  
     (Dollars in thousands)  

Deferred income tax asset per balance sheet

   $ 6,248     $ 6,876   

Deferred income tax liability per balance sheet

     (47,593     (43,457
  

 

 

   

 

 

 
   $ (41,345 )   $ (36,581
  

 

 

   

 

 

 

A reconciliation of the statutory federal income tax rate to the provision for income tax is as follows:

 

     Year Ended December 31,  
     2011     2012     2013  
     (Dollars in thousands)  

Statutory federal income tax rate (at 35%)

   $ 4,364      $ 1,637      $ (2,411

Effect of state taxes, net of federal

     1,102        (2,278     (2,025

Permanent items

     696        788        270   

ISO benefit

     —          —          —     

Other, net

     (52     6        (26
  

 

 

   

 

 

   

 

 

 

Provision for income taxes

   $ 6,110      $ 153      $ (4,192
  

 

 

   

 

 

   

 

 

 

At December 31, 2013, we had net operating loss carryforwards for federal income tax purposes of approximately $155.6 million that expire in 2020 through 2033 and for state income tax purposes of approximately $974.6 million that expire in years 2014 through 2033. For financial reporting purposes at December 31, 2013, we had a valuation allowance of $2.9 million, net of federal benefit, to offset a portion of the deferred tax assets related to state net operating loss carryforwards that may not be realized.