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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2013

Income Tax Expense (Benefit)

Income tax expense (benefit) consists of the following:

		Current				Deferred				Total
Year ended December 31, 2013:
U.S. federal		$	930			$	21,681			$	22,611
State and local			1,609				1,165				2,774
Foreign			1,553				(4,097	)			(2,544	)
		$	4,092			$	18,749			$	22,841
Year ended December 31, 2012:
U.S. federal		$	—			$	6,743			$	6,743
State and local			823				826				1,649
Foreign			1,103				(1,253	)			(150	)
		$	1,926			$	6,316			$	8,242
Year ended December 31, 2011:
U.S. federal		$	—			$	1,883			$	1,883
State and local			1,074				1,125				2,199
Foreign			1,847				(387	)			1,460
		$	2,921			$	2,621			$	5,542

U.S. and Foreign Components of Earnings Before Income Taxes

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

		2013				2012				2011
U.S.		$	62,506			$	17,279			$	13,868
Foreign			474				(1,147	)			(1,468	)
Total		$	62,980			$	16,132			$	12,400

Schedule of Effective Income Tax Rate Reconciliation

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

		2013				2012				2011
Income tax expense at U.S. federal statutory rate		$	22,043			$	5,646			$	4,340
State and local income taxes, net of federal income tax benefit			3,585				1,541				847
Book expenses not deductible for tax purposes			1,351				1,058				746
Stock-based compensation			65				270				464
Undistributed earnings of Canadian subsidiaries (a)			—				—				(4,023	)
Valuation allowance			(1,097	)			(331	)			382
Rate change (b)			(2,565	)			49				1,743
Other differences, net			(541	)			9				1,043
Income tax expense		$	22,841			$	8,242			$	5,542

(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 2013, the “Tax Burden Adjustment and Redistribution Act” was signed into law. Under the enacted legislation, the Puerto Rico corporate income tax rate was increased to 39% from 30%. As a result, a non-cash benefit of $2,479 to income tax expense was recorded for the increase of the Puerto Rico net deferred tax asset. Also in 2013, British Columbia Bill 2 was signed into law. The enacted legislation increased the general corporate income tax rate to 11% from 10%. As a result, a non-cash benefit of $86 to income tax expense was recorded for the increase of the Canadian 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:

		2013				2012
Deferred tax assets:
Allowance for doubtful accounts		$	2,972			$	2,964
Accrued liabilities not deducted for tax purposes			37,764				35,580
Asset retirement obligation			70,166				65,994
Net operating loss carry forwards			138,865				163,597
Tax credit carry forwards			4,844				3,765
Charitable contributions carry forward			9				592
Gross deferred tax assets			254,620				272,492
Less: valuation allowance			(2,331	)			(3,424	)
Net deferred tax assets			252,289				269,068
Deferred tax liabilities:
Property, plant and equipment			(45,160	)			(48,271	)
Intangibles			(314,382	)			(308,266	)
Investment in partnerships			(1,519	)			(1,244	)
Gross deferred tax liabilities			(361,061	)			(357,781	)
Net deferred tax liabilities		$	(108,772	)		$	(88,713	)
Classification in the consolidated balance sheets:
Current deferred tax assets		$	10,378			$	10,817
Current deferred tax liabilities			—				—
Noncurrent deferred tax assets			—				—
Noncurrent deferred tax liabilities			(119,150	)			(99,530	)
Net deferred tax liabilities		$	(108,772	)		$	(88,713	)

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, 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
Additions for tax positions related to current year			1
Additions for tax positions related to prior years			—
Reductions for tax positions related to prior years			—
Lapse of statute of limitations			(41	)
Settlements			—
Balance as of December 31, 2013		$	35

LAMAR MEDIA CORP [Member]

Income Tax Expense (Benefit)

Income tax expense (benefit) consists of the following:

		Current				Deferred				Total
Year ended December 31, 2013:
U.S. federal		$	930			$	21,798			$	22,728
State and local			1,609				1,184				2,793
Foreign			1,553				(4,097	)			(2,544	)
		$	4,092			$	18,885			$	22,977
Year ended December 31, 2012:
U.S. federal		$	—			$	6,859			$	6,859
State and local			824				820				1,644
Foreign			1,103				(1,253	)			(150	)
		$	1,927			$	6,426			$	8,353
Year ended December 31, 2011:
U.S. federal		$	—			$	2,007			$	2,007
State and local			1,075				1,295				2,370
Foreign			1,847				(386	)			1,461
		$	2,922			$	2,916			$	5,838

U.S. and Foreign Components of Earnings Before Income Taxes

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

		2013				2012				2011
U.S.		$	62,841			$	17,615			$	14,226
Foreign			474				(1,147	)			(1,468	)
Total		$	63,315			$	16,468			$	12,758

Schedule of Effective Income Tax Rate Reconciliation

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

		2013				2012				2011
Income tax expense at U.S. federal statutory rate		$	22,160			$	5,764			$	4,465
State and local income taxes, net of federal income tax benefit			3,601				1,557				865
Book expenses not deductible for tax purposes			1,351				1,058				746
Stock-based compensation			65				270				464
Amortization of non-deductible goodwill			—				—				1
Undistributed earnings of Canadian subsidiaries (a)			—				—				(4,023	)
Valuation allowance			(1,094	)			(354	)			382
Rate Change (b)			(2,565	)			49				1,743
Other differences, net			(541	)			9				1,195
Income tax expense		$	22,977			$	8,353			$	5,838

(a) In periods prior to December 31, 2011, the undistributed earnings of our Canadian subsidiaries were not designated as permanently reinvested. 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.

(b) In 2013, the “Tax Burden Adjustment and Redistribution Act” was signed into law. Under the enacted legislation, the Puerto Rico corporate income tax rate was increased to 39% from 30%. As a result, a non-cash benefit of $2,479 to income tax expense was recorded for the increase of the Puerto Rico net deferred tax asset. Also in 2013, British Columbia Bill 2 was signed into law. The enacted legislation increased the general corporate income tax rate to 11% from 10%. As a result, a non-cash benefit of $86 to income tax expense was recorded for the increase of the Canadian net deferred tax asset.

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:

		2013				2012
Deferred tax assets:
Allowance for doubtful accounts		$	2,972			$	2,964
Accrued liabilities not deducted for tax purposes			37,764				35,580
Asset retirement obligation			70,166				65,994
Net operating loss carry forwards			89,496				114,361
Tax credit carry forwards			19,615				18,537
Charitable contributions carry forward			9				592
Gross deferred tax assets			220,022				238,028
Less: valuation allowance			(1,760	)			(2,851	)
Net deferred tax assets			218,262				235,177
Deferred tax liabilities:
Property, plant and equipment			(45,160	)			(48,271	)
Intangibles			(313,746	)			(307,630	)
Investment in partnerships			(1,519	)			(1,244	)
Gross deferred tax liabilities			(360,425	)			(357,145	)
Net deferred tax liabilities		$	(142,163	)		$	(121,968	)
Classification in the consolidated balance sheets:
Current deferred tax assets		$	10,378			$	10,817
Current deferred tax liabilities			—				—
Noncurrent deferred tax assets			—				—
Noncurrent deferred tax liabilities			(152,541	)			(132,785	)
Net deferred tax liabilities		$	(142,163	)		$	(121,968	)

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, 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
Additions for tax positions related to current year			1
Additions for tax positions related to prior years			—
Reductions for tax positions related to prior years			—
Lapse of statute of limitations			(41	)
Settlements			—
Balance as of December 31, 2013		$	35

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+ References

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-Publisher FASB

-Name Accounting Standards Codification

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-SubTopic 10

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-Paragraph 12

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-Name Accounting Standards Codification

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-SubTopic 10

-Section S99

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