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INCOME TAXES | 12 Months Ended
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Dec. 31, 2012
INCOME TAXES |
10. | INCOME TAXES:
The components of income from continuing operations before income taxes are as follows (in thousands):
|  | Year Ended December 31, |
|  | 2012 |  |  | 2011 |  |  | 2010 |
Income from continuing operations before income taxes: |  |  |  |  |  |  |  |  |  |  |  |
Domestic |  | $ | 390,734 |  |  | $ | 181,520 |  |  | $ | 215,263 |
Foreign |  |  | 73,846 |  |  |  | 11,988 |  |  |  | 18,695 |
Total |  | $ | 464,580 |  |  | $ | 193,508 |  |  | $ | 233,958 |
The components of the provision for income taxes for continuing operations are as follows (in thousands):
|  | Year Ended December 31, |
|  | 2012 |  |  | 2011 |  |  | 2010 |
Current: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 109,272 |  |  | $ | 42,874 |  |  | $ | 39,818 |
State |  |  | 12,397 |  |  |  | 11,998 |  |  |  | 9,650 |
Foreign |  |  | 14,657 |  |  |  | 7,668 |  |  |  | 6,260 |
Total current tax provision |  |  | 136,326 |  |  |  | 62,540 |  |  |  | 55,728 |
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | 16,134 |  |  |  | 4,487 |  |  |  | 31,539 |
State |  |  | 1,627 |  |  |  | 965 |  |  |  | 2,062 |
Foreign |  |  | 4,772 |  |  |  | (4,896 | ) |  |  | (445 | )
Total deferred tax provision |  |  | 22,533 |  |  |  | 556 |  |  |  | 33,156 |
Total provision for income taxes |  | $ | 158,859 |  |  | $ | 63,096 |  |  | $ | 88,884 |
The actual income tax provision differs from the income tax provision computed by applying the U.S. federal statutory corporate rate to income from continuing operations before provision for income taxes as follows (in thousands):
|  | Year Ended December 31, |
|  | 2012 |  |  | 2011 |  |  | 2010 |
Provision at the statutory rate |  | $ | 162,603 |  |  | $ | 67,727 |  |  | $ | 81,885 |
Increases (decreases) resulting from — |  |  |  |  |  |  |  |  |  |  |  |
State taxes |  |  | 10,980 |  |  |  | 6,375 |  |  |  | 8,058 |
Foreign taxes |  |  | (5,841 | ) |  |  | (2,815 | ) |  |  | 182 |
Contingency reserves, net |  |  | (3,880 | ) |  |  | (7,262 | ) |  |  | (4,184 | )
Production activity deduction |  |  | (7,081 | ) |  |  | (2,394 | ) |  |  | (2,650 | )
Employee per diems, meals and entertainment |  |  | 6,441 |  |  |  | 4,149 |  |  |  | 4,725 |
Taxes on unincorporated joint ventures |  |  | (5,609 | ) |  |  | (4,142 | ) |  |  | (833 | )
Other |  |  | 1,246 |  |  |  | 1,458 |  |  |  | 1,701 |
|  | $ | 158,859 |  |  | $ | 63,096 |  |  | $ | 88,884 |
Deferred income taxes result from temporary differences in the recognition of income and expenses for financial reporting purposes and tax purposes. The tax effects of these temporary differences, representing deferred tax assets and liabilities, result principally from the following (in thousands):
|  | December 31, |
|  | 2012 |  |  | 2011 |
Deferred income tax liabilities — |  |  |  |  |  |  |  |
Property and equipment |  | $ | (205,977 | ) |  | $ | (204,918 | )
Goodwill |  |  | (48,201 | ) |  |  | (43,057 | )
Other intangibles |  |  | (46,661 | ) |  |  | (54,206 | )
Book/tax accounting method difference |  |  | (45,159 | ) |  |  | (27,924 | )
Total deferred income tax liabilities |  |  | (345,998 | ) |  |  | (330,105 | )
Deferred income tax assets — |  |  |  |  |  |  |  |
Accruals and reserves |  |  | 33,357 |  |  |  | 40,619 |
Accrued insurance |  |  | 53,163 |  |  |  | 55,169 |
Deferred revenue |  |  | 16,259 |  |  |  | 14,243 |
Net operating loss carryforwards |  |  | 17,115 |  |  |  | 15,615 |
Other |  |  | 20,540 |  |  |  | 13,140 |
Subtotal |  |  | 140,434 |  |  |  | 138,786 |
Valuation allowance |  |  | (9,344 | ) |  |  | (8,783 | )
Total deferred income tax assets |  |  | 131,090 |  |  |  | 130,003 |
Total net deferred income tax liabilities |  | $ | (214,908 | ) |  | $ | (200,102 | )
The net deferred income tax assets and liabilities are comprised of the following (in thousands):
|  | December 31, |
|  | 2012 |  |  | 2011 |
Current deferred income taxes: |  |  |  |  |  |  |  |
Assets |  | $ | 41,961 |  |  | $ | 51,373 |
Liabilities |  |  | (31,819 | ) |  |  | (17,831 | )
|  |  | 10,142 |  |  |  | 33,542 |
Non-current deferred income taxes: |  |  |  |  |  |  |  |
Assets |  |  | 89,129 |  |  |  | 78,630 |
Liabilities |  |  | (314,179 | ) |  |  | (312,274 | )
|  |  | (225,050 | ) |  |  | (233,644 | )
Total net deferred income tax liabilities |  | $ | (214,908 | ) |  | $ | (200,102 | )
The valuation allowance for deferred income tax assets at December 31, 2012, 2011 and 2010 was $9.3 million, $8.8 million and $11.4 million, respectively. These valuation allowances relate to state net operating loss carryforwards, foreign net operating loss carryforwards and foreign tax credit carryforwards. The net change in the total valuation allowance for each of the years ended December 31, 2012, 2011 and 2010 was an increase of $0.5 million, a decrease of $2.6 million and an increase of $2.8 million, respectively. The valuation allowance was established primarily as a result of uncertainty in Quanta’s outlook as to future taxable income in particular tax jurisdictions. Quanta believes it is more likely than not that it will realize the benefit of its deferred tax assets, net of existing valuation allowances. At December 31, 2012, Quanta had state and foreign net operating loss carryforwards, the tax effect of which is approximately $17.1 million. These carryforwards will expire as follows: 2013, $0.6 million; 2014, $0.8 million; 2015, $0.2 million; 2016, $0.2 million; 2017, $0.5 million and $14.8 million thereafter. A valuation allowance of $4.9 million has been recorded against certain state net operating loss carryforwards. Through December 31, 2012, Quanta has not provided U.S. income taxes on approximately $105.0 million of unremitted foreign earnings because such earnings are intended to be indefinitely reinvested outside the U.S. It is not practicable to determine the amount of any additional U.S. tax liability that may result if Quanta decides to no longer indefinitely reinvest foreign earnings outside the U.S. If management intentions or U.S. tax law changes in the future, there may be a significant negative impact on the provision for income taxes, as a result of recording an incremental tax liability, in the period such change occurs. A reconciliation of unrecognized tax benefit balances is as follows (in thousands):
|  | December 31, |
|  | 2012 |  |  | 2011 |  |  | 2010 |
Balance at beginning of year |  | $ | 47,379 |  |  | $ | 50,632 |  |  | $ | 45,201 |
Additions based on tax positions related to the current year |  |  | 15,411 |  |  |  | 10,133 |  |  |  | 10,602 |
Additions for tax positions of prior years |  |  | 1,607 |  |  |  | 131 |  |  |  | 5,183 |
Reductions for tax positions of prior years |  |  | (293 | ) |  |  | — |  |  |  | — |
Reductions for audit settlements |  |  | (895 | ) |  |  | (4,877 | ) |  |  | (93 | )
Reductions resulting from a lapse of the applicable statutes of limitations |  |  | (11,965 | ) |  |  | (8,640 | ) |  |  | (10,261 | )
Balance at end of year |  | $ | 51,244 |  |  | $ | 47,379 |  |  | $ | 50,632 |
For the year ended December 31, 2012, the $12.0 million reduction is primarily due to the expiration of certain federal and state statutes of limitations for the 2008 tax year. For the year ended December 31, 2011, the $8.6 million reduction is primarily due to the expiration of certain federal and state statutes of limitations for the 2007 tax year and the $4.9 million reduction primarily relates to settlement with tax authorities regarding a foreign tax credit position taken in a pre-acquisition tax return of an acquired business. For the year ended December 31, 2010, the $10.3 million reduction is primarily due to the expiration of certain federal and state statutes of limitations for the 2006 tax year. The balances of unrecognized tax benefits, the amount of related interest and penalties and what Quanta believes to be the range of reasonably possible changes in the next 12 months are as follows (in thousands):
|  | December 31, |
|  | 2012 |  |  | 2011 |  |  | 2010 |
Unrecognized tax benefits |  | $ | 51,244 |  |  | $ | 47,379 |  |  | $ | 50,632 |
Portion that, if recognized, would reduce tax expense and effective tax rate |  |  | 43,910 |  |  |  | 39,824 |  |  |  | 43,077 |
Accrued interest on unrecognized tax benefits |  |  | 6,088 |  |  |  | 7,180 |  |  |  | 6,524 |
Accrued penalties on unrecognized tax benefits |  |  | 127 |  |  |  | 163 |  |  |  | 163 |
Reasonably possible reduction to the balance of unrecognized tax benefits in succeeding 12 months |  | $ | 0 to $11,479 |  |  | $ | 0 to $12,110 |  |  | $ | 0 to $8,786 |
Portion that, if recognized, would reduce tax expense and effective tax rate |  | $ | 0 to $9,645 |  |  | $ | 0 to $10,221 |  |  | $ | 0 to $6,896 |
Quanta classifies interest and penalties within the provision for income taxes. Quanta recognized $1.1 million of interest income, $0.7 million of interest expense and $2.2 million of interest income in the provision for income taxes for the years ended December 31, 2012, 2011 and 2010, respectively. Quanta is subject to income tax in the United States, multiple state jurisdictions and some foreign jurisdictions. Quanta remains open to examination by the IRS for tax years 2009 through 2012 as these statutes of limitations have not yet expired. Quanta does not consider any state in which it does business to be a major tax jurisdiction.

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- Definition 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. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 136, 172 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=6881521&loc=d3e23780-122690 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 43, 44, 45, 46, 47, 48, 49 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319 + Details
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