|12 Months Ended|
Dec. 31, 2013
|Income Tax Disclosure [Abstract]|
Significant components of the provision for income tax expense (benefit) are as follows:
Current income tax expense increased $6.1 million for the year ended December 31, 2013 as compared to the prior year due principally to results attributable to the 2012 acquisitions of foreign entities. Current income tax expense increased $21.3 million for the year ended December 31, 2012 as compared to the prior year due principally to the carryback of domestic net operating losses in 2011 which generated $24.2 million of federal tax refunds.
Deferred income tax benefit increased $4.9 million for the year ended December 31, 2013 as compared to the prior year due principally to an increase in the blended state tax rate. Deferred income tax benefit decreased $34.6 million for the year ended December 31, 2012 as compared to the prior year due principally to the reversal of valuation allowances recorded against United States federal and state deferred tax assets driven primarily by deferred tax attributes relating to the acquisition of the remaining interests in Front Line in the first quarter of 2011 and an increase in the blended state tax rate in 2012.
The domestic net loss before income taxes was $103.9 million, $232.3 million and $200.4 million for 2013, 2012 and 2011, respectively. Non-United States income before income taxes was $98.8 million, $100.1 million and $103.8 million for 2013, 2012 and 2011, respectively.
Significant components of the Company’s deferred tax liabilities and assets are as follows:
The valuation allowance was recorded due to the uncertainty of the ability to generate sufficient taxable income necessary to realize certain deferred tax assets in future years. If, at a later date, it is determined that due to a change in circumstances, the Company will utilize all or a portion of those deferred tax assets, the Company will reverse the corresponding valuation allowance with the offset to income tax benefit. In the first quarter of 2011, the Company recognized an income tax benefit of $39.5 million due to the partial release of its valuation allowance. This release was related to the Company’s ability to consider Front Line’s net deferred tax liabilities as a source of future taxable income within the consolidated federal tax provision as a result of the acquisition of the remaining Front Line equity interests in 2011. For further discussion of events involving Front Line, see Note 3—Acquisitions.
During 2013 and 2012, the Company recorded net deferred tax liabilities of $15.1 million and $21.3 million, respectively, due principally to differences in financial reporting and tax bases in assets acquired in business combinations.
Deferred tax assets related to intangibles and fixed assets principally relate to differences in book and tax basis of tax-deductible goodwill created from the Company’s various stock acquisitions. As of December 31, 2013, the Company has United States federal and state deferred tax assets related to net operating loss carryforwards of $289.8 million and $70.5 million, respectively. Based on current statutory carryforward periods, these losses will expire on various dates between the years 2016 and 2033. The amount of United States net operating loss carryforwards that will expire if not utilized in 2016, 2017 and 2018 is $18.3 million, $14.6 million and $40.0 million, respectively. The Company’s federal net operating loss is partially subject to statutory limitations on the amount that can be used in any given year.
The reconciliation of income tax computed at the United States federal statutory tax rates to income tax expense (benefit) is:
During 2013 and 2012, the Company recorded income tax expense of approximately $30.9 million and $29.7 million, respectively, on losses before tax of $5.1 million and $132.2 million, respectively. Income tax expense is principally attributable to the Company’s earnings in foreign tax jurisdictions.
In 2013 and 2012, there were no significant income tax benefits recognized from valuation allowance reversals attributable to acquisitions. During 2011, the Company recorded an income tax benefit of approximately $26.2 million on a loss before income tax of $96.6 million. This income tax benefit was principally attributable to the reversal of valuation allowances recorded against United States federal and state deferred tax assets driven primarily by deferred tax attributes of $39.5 million relating to the acquisition of the remaining interests in Front Line in the first quarter of 2011 and the carryback of the Front Line tax loss for the short period January 1, 2011 to February 4, 2011 caused by the acquisition.
Differences between foreign and United States statutory rates of $21.2 million, $25.6 million and $25.2 million for the years ended December 31, 2013, 2012 and 2011, respectively, are primarily attributable to the Company’s Luxembourg holding company structure and tax rulings received from the Luxembourg tax authorities.
The Company regularly assesses the likelihood of additional assessments in each taxing jurisdiction resulting from current and subsequent years’ examinations. Liabilities for income taxes are established for future income tax assessments when it is probable there will be future assessments and the amount thereof can be reasonably estimated. Once established, liabilities for uncertain tax positions are adjusted only when there is more information available or when an event occurs necessitating a change to the liabilities. The Company believes that the resolution of income tax matters for open years will not have a material effect on its consolidated financial statements although the resolution of income tax matters could impact the Company’s effective tax rate for a particular future period.
The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. For the years ended December 31, 2013, 2012 and 2011, the Company has recognized $0.1 million, $0.7 million and $0.7 million, respectively, of interest and penalties related to uncertain tax positions. As of December 31, 2013 and 2012, the Company has accrued interest related to uncertain tax positions of $1.2 million and $1.6 million, respectively.
The tax years 2005 through 2013 remain open to examination by the major tax jurisdictions to which the Company is subject.
At December 31, 2013 and 2012, the Company had $12.9 million and $16.0 million, respectively, of unrecognized tax benefits. All of these unrecognized tax benefits would favorably impact the effective tax rate if recognized at some point in the future. The following table summarizes the activity related to the Company’s unrecognized tax benefits for the years ended December 31, 2013, 2012 and 2011:
The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.
Reference 1: http://www.xbrl.org/2003/role/presentationRef