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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2012

Income tax expense (benefit) consists of the following:


	Current			Deferred			Total
Year ended December 31, 2012:
U.S. federal	$	—		$	7,977		$	7,977
State and local		823			826			1,649
Foreign		1,103			(1,253	)		(150	)

	$	1,926		$	7,550		$	9,476

Year ended December 31, 2011:
U.S. federal	$	—		$	2,963		$	2,963
State and local		1,075			1,125			2,200
Foreign		1,847			(387	)		1,460

	$	2,922		$	3,701		$	6,623

Year ended December 31, 2010:
U.S. federal	$	(1,290	)	$	(14,174	)	$	(15,464	)
State and local		477			(3,767	)		(3,290	)
Foreign		1,932			(6,647	)		(4,715	)

	$	1,119		$	(24,588	)	$	(23,469	)

U.S. and Foreign Components of Earnings (Loss) Before Income Taxes

The U.S. and foreign components of earnings (loss) before income taxes are as follows:


	2012			2011			2010
U.S.	$	20,444		$	16,641		$	(59,353	)
Foreign		(1,147	)		(1,468	)		(4,218	)

Total	$	19,297		$	15,173		$	(63,571	)

Schedule of Effective Income Tax Rate Reconciliation

A reconciliation of significant differences between the reported amount of income tax expense (benefit) and the expected amount of income tax expense (benefit) that would result from applying the U.S. federal statutory income tax rate of 35 percent to income before taxes is as follows:


	2012			2011			2010
Income tax expense (benefit) at U.S. federal statutory rate	$	6,754		$	5,310		$	(22,250	)
State and local income taxes, net of federal income tax benefit		1,667			958			(4,945	)
Book expenses not deductible for tax purposes		1,058			746			662
Stock-based compensation		270			464			518
Amortization of non-deductible goodwill		—			1			3
Undistributed earnings of Canadian subsidiaries (a)		—			(4,023	)		1,083
Valuation allowance		(331	)		382			1,487
Rate change (b)		49			1,743			—
Other differences, net		9			1,042			(27	)

Income tax expense (benefit)	$	9,476		$	6,623		$	(23,469	)

(a)

For the period ended December 31, 2011, management asserted that the undistributed earnings of our Canadian subsidiaries were permanently reinvested and a deferred tax benefit of $4,023 was recognized from the release of the December 31, 2010 deferred tax liability. In periods prior to December 31, 2011, the undistributed earnings of our Canadian subsidiaries were not designated as permanently reinvested.

(b)

In 2012, Ontario Bill 114 was signed into law. The enacted legislation freezes the general corporate income tax rate at 11.5%, cancelling the previously enacted rate reductions for 2012 and 2013 to 11% and 10%, respectively. As a result, a non-cash charge of $49 to income tax expense was recorded for the increase of the Canadian net deferred tax liability.

In 2011, the “Internal Revenue Code for a New Puerto Rico” was signed into law. Under the enacted legislation, the Puerto Rico corporate income tax rate was lowered from 39% to 30%. As a result, a non-cash charge of $1,743 to income tax expense was recorded for the reduction of the Puerto Rico net deferred tax asset.

Components of Deferred Taxes

The tax effect of temporary differences that give rise to significant portions of the deferred tax assets and (liabilities) are presented below:


	2012			2011
Deferred tax assets:
Allowance for doubtful accounts	$	2,964		$	2,954
Accrued liabilities not deducted for tax purposes		35,580			33,583
Asset retirement obligation		65,994			61,565
Net operating loss carry forwards		155,154			148,913
Tax credit carry forwards		3,765			3,724
Charitable contributions carry forward		592			469

Gross deferred tax assets		264,049			251,208
Less: valuation allowance		(3,424	)		(3,755	)

Net deferred tax assets		260,625			247,453

Deferred tax liabilities:
Property, plant and equipment		(48,271	)		(36,967	)
Intangibles		(308,266	)		(291,926	)
Investment in partnerships		(1,244	)		(1,065	)

Gross deferred tax liabilities		(357,781	)		(329,958	)

Net deferred tax liabilities	$	(97,156	)	$	(82,505	)

Classification in the consolidated balance sheets:
Current deferred tax assets	$	10,817		$	9,812
Current deferred tax liabilities		—			—
Noncurrent deferred tax assets		—			—
Noncurrent deferred tax liabilities		(107,973	)		(92,317	)

Net deferred tax liabilities	$	(97,156	)	$	(82,505	)

Reconciliation of Beginning and Ending Amount of Unrecognized Tax Benefits

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:


Balance as of December 31, 2010	$	322
Additions for tax positions related to current year		7
Additions for tax positions related to prior years		—
Reductions for tax positions related to prior years		—
Lapse of statute of limitations		(194	)
Settlements		—

Balance as of December 31, 2011	$	135
Additions for tax positions related to current year		3
Additions for tax positions related to prior years		—
Reductions for tax positions related to prior years		—
Lapse of statute of limitations		(63	)
Settlements		—

Balance as of December 31, 2012	$	75

LAMAR MEDIA CORP [Member]

Income Tax Expense (Benefit)