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Income Taxes | 12 Months Ended
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Dec. 31, 2012
Income Taxes [Abstract] |
Income Taxes | Note 14. Income Taxes The following represents a reconciliation of income tax expense and the amount that would be computed using the statutory federal income tax rates:
|  | 2012 |  |  | 2011 |  |  | 2010 |
|  | (in thousands) |
Computed income tax expense at statutory federal income tax rate of 35% |  | $ | 9,381 |  |  |  | 35.0 | % |  | $ | 4,613 |  |  |  | 35.0 | % |  | $ | 896 |  |  |  | 35.0 | %
State income taxes, net of federal provision |  |  | 470 |  |  |  | 1.8 | % |  |  | (100 | ) |  |  | (0.8 | %) |  |  | (172 | ) |  |  | (6.7 | %)
Foreign tax rate differentials |  |  | (2,031 | ) |  |  | (7.6 | %) |  |  | (1,679 | ) |  |  | (12.7 | %) |  |  | (1,560 | ) |  |  | (61.0 | %)
U.S. tax on foreign earnings (net of foreign tax credits) |  |  | (595 | ) |  |  | (2.2 | %) |  |  | 1,105 |  |  |  | 8.4 | % |  |  | 629 |  |  |  | 24.6 | %
Tax resolutions, net |  |  | — |  |  |  | 0.0 | % |  |  | (103 | ) |  |  | (0.8 | %) |  |  | (514 | ) |  |  | (20.1 | %)
Change in enacted tax law |  |  | — |  |  |  | 0.0 | % |  |  | — |  |  |  | 0.0 | % |  |  | 1,279 |  |  |  | 50.0 | %
Change in valuation allowance |  |  | 14,220 |  |  |  | 53.1 | % |  |  | (55 | ) |  |  | (0.4 | %) |  |  | 249 |  |  |  | 9.7 | %
Proceeds from life insurance |  |  | (472 | ) |  |  | (1.8 | %) |  |  | — |  |  |  | 0.0 | % |  |  | (460 | ) |  |  | (18.0 | %)
Other, net |  |  | (130 | ) |  |  | (0.5 | %) |  |  | 107 |  |  |  | 0.8 | % |  |  | 1,395 |  |  |  | 54.6 | %
Income tax expense |  | $ | 20,843 |  |  |  | 77.8 | % |  | $ | 3,888 |  |  |  | 29.5 | % |  | $ | 1,742 |  |  |  | 68.1 | %
In March 2010, the Patient Protection and Affordable Care Act and a related measure, the Health Care and Education Reconciliation Act of 2010, were both enacted into law. As a result of this legislation, the tax deductions for the portion of the prescription drug costs for which Viad receives a Medicare Part D subsidy have been eliminated for tax years beginning after December 31, 2012. Accordingly, during 2010, Viad reduced its deferred tax asset related to its postretirement benefit plan liability to reflect the change in the tax law. The reduction in the deferred tax asset resulted in an increase to income tax expense of $1.3 million in 2010. Viad is subject to regular and recurring audits by the taxing authorities in the jurisdictions in which the Company conducts or had previously conducted operations. These include U.S. federal and most state jurisdictions, and certain foreign jurisdictions including Canada, the United Kingdom and Germany. Viad exercises judgment in determining its income tax provision due to transactions, credits and calculations where the ultimate tax determination is uncertain. As of December 31, 2012 and 2011, Viad did not have any accrued gross liabilities associated with uncertain tax positions for continuing operations. As of December 31, 2010, Viad had accrued interest and penalties related to uncertain tax positions for continuing operations of $146,000. Viad classifies interest and penalties related to income tax liabilities as a component of income tax expense. During 2011, Viad recorded tax-related interest expense credits of $146,000. During 2011 and 2010, Viad recorded tax benefits related to the favorable resolution of tax matters in continuing operations of $103,000 and $514,000, respectively. These tax resolutions primarily represent the reversal of amounts accrued for tax and related interest and penalties in connection with uncertain tax positions which were effectively settled or for which there was a lapse of the applicable statute of limitations. In addition to the above, Viad had accrued gross liabilities associated with uncertain tax positions for discontinued operations of $636,000 as of both December 31, 2012 and 2011. In addition, as of December 31, 2012 and 2011, Viad had accrued interest and penalties related to uncertain tax positions for discontinued operations of $418,000 and $386,000, respectively. Future tax resolutions or settlements that may occur related to these uncertain tax positions would be recorded through discontinued operations (net of federal tax effects, if applicable). Viad does not expect any of the unrecognized tax benefits to be recognized during the next 12 months. The following represents a reconciliation of the total amounts of liabilities associated with uncertain tax positions (excluding interest and penalties):
|  | Continuing |  |  | Discontinued |  |  |  |
|  | Operations |  |  | Operations |  |  | Total |
|  | (in thousands) |
Balance at January 1, 2010 |  | $ | — |  |  | $ | 636 |  |  | $ | 636 |
Reductions for tax positions taken in prior years |  |  | — |  |  |  | — |  |  |  | — |
Reductions for tax settlements |  |  | — |  |  |  | — |  |  |  | — |
Reductions for lapse of applicable statutes |  |  | — |  |  |  | — |  |  |  | — |
Balance at December 31, 2010 |  |  | — |  |  |  | 636 |  |  |  | 636 |
Reductions for tax positions taken in prior years |  |  | — |  |  |  | — |  |  |  | — |
Reductions for tax settlements |  |  | — |  |  |  | — |  |  |  | — |
Reductions for lapse of applicable statutes |  |  | — |  |  |  | — |  |  |  | — |
Balance at December 31, 2011 |  |  | — |  |  |  | 636 |  |  |  | 636 |
Reductions for tax positions taken in prior years |  |  | — |  |  |  | — |  |  |  | — |
Reductions for tax settlements |  |  | — |  |  |  | — |  |  |  | — |
Reductions for lapse of applicable statutes |  |  | — |  |  |  | — |  |  |  | — |
Balance at December 31, 2012 |  | $ | — |  |  | $ | 636 |  |  | $ | 636 |
Viad’s 2009 through 2012 U.S. federal tax years and various state tax years from 2008 through 2012 remain subject to income tax examinations by tax authorities. Additionally, 2005 through 2008 remain subject to examination due to net operating loss carryback claims. In addition, tax years from 2008 through 2012 related to Viad’s foreign taxing jurisdictions also remain subject to examination. Viad classifies liabilities associated with uncertain tax positions as non-current liabilities in its consolidated balance sheets unless they are expected to be paid within the next year. As of December 31, 2012 and 2011, liabilities associated with uncertain tax positions (including interest and penalties) of $1.1 million and $1.0 million, respectively, were classified as non-current liabilities. Deferred income tax assets and liabilities included in the consolidated balance sheets as of December 31 related to the following:
|  | 2012 |  |  | 2011 |
|  | (in thousands) |
Deferred tax assets: |  |  |  |  |  |  |  |
Pension, compensation and other employee benefits |  | $ | 26,790 |  |  | $ | 22,103 |
Tax credit carryforwards |  |  | 25,290 |  |  |  | 25,219 |
Provisions for losses |  |  | 15,229 |  |  |  | 16,038 |
State income taxes |  |  | 2,813 |  |  |  | 2,400 |
Net operating loss carryforward |  |  | 1,755 |  |  |  | 3,086 |
Deferred income |  |  | — |  |  |  | 125 |
Other deferred income tax assets |  |  | 5,331 |  |  |  | 1,745 |
Total deferred tax assets |  |  | 77,208 |  |  |  | 70,716 |
Foreign deferred tax assets included above |  |  | (990 | ) |  |  | — |
Valuation allowance |  |  | (14,576 | ) |  |  | (356 | )
Net deferred tax assets |  |  | 61,642 |  |  |  | 70,360 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Property and equipment |  |  | (8,801 | ) |  |  | (7,729 | )
Goodwill and other intangible assets |  |  | (1,306 | ) |  |  | (1,006 | )
Unremitted foreign earnings |  |  | (978 | ) |  |  | — |
Other deferred income tax liabilities |  |  | (176 | ) |  |  | (287 | )
Total deferred tax liabilities |  |  | (11,261 | ) |  |  | (9,022 | )
Foreign deferred tax liabilities included above |  |  | 2,024 |  |  |  | 1,617 |
United States deferred tax assets |  | $ | 52,405 |  |  | $ | 62,955 |
Viad is required to estimate and record provisions for income taxes in each of the jurisdictions in which the Company operates. Accordingly, the Company must estimate its actual current income tax liability, and assess temporary differences arising from the treatment of items for tax purposes, as compared to the treatment for accounting purposes. These differences result in deferred tax assets and liabilities which are included in Viad’s consolidated balance sheets. The Company must assess the likelihood that deferred tax assets will be recovered from future taxable income and to the extent that recovery is not likely, a valuation allowance must be established. The Company uses significant judgment in forming a conclusion regarding the recoverability of its deferred tax assets and evaluates the available positive and negative evidence to determine whether it is more-likely-than-not that its deferred tax assets will be realized in the future. As of December 31, 2012 and 2011, Viad had gross deferred tax assets of $77.2 million and $70.7 million, respectively. These deferred tax assets reflect the expected future tax benefits to be realized upon reversal of deductible temporary differences, and the utilization of net operating loss and tax credit carryforwards. The Company considered all available positive and negative evidence regarding the future recoverability of its deferred tax assets, including the Company’s recent operating history, taxpaying history and future reversals of deferred tax liabilities. The Company also evaluated its ability to utilize its foreign tax credits, given its recent utilization history. These tax credits are subject to a 10-year carryforward period and begin to expire in 2019. Based on the Company’s assessment, it was determined during the fourth quarter of 2012 that the weight of the evidence indicated that certain deferred tax assets associated with foreign tax credit carryforwards no longer met the more-likely-than-not test regarding the realization of those assets. Accordingly, the Company recorded a valuation allowance related to all of its foreign tax credit carryforwards as of December 31, 2012, which resulted in a charge to income tax expense of $13.4 million. As of December 31, 2012 and 2011, Viad had state and foreign net operating loss carryforwards of $82.0 million and $91.9 million, respectively, for which the Company had deferred tax assets of $1.8 million and $2.1 million, respectively. The state and foreign net operating loss carryforwards expire on various dates from 2016 through 2032. During 2012, the Company increased its valuation allowance related to state and foreign net operating loss carryforwards by $805,000. As of December 31, 2012 and 2011, Viad had a valuation allowance of $1.2 million and $356,000, respectively, related to those state and foreign deferred tax assets. With respect to all other deferred tax assets, management believes that recovery from future taxable income is more-likely-than-not. As noted above, Viad uses considerable judgment in forming a conclusion regarding the recoverability of its deferred tax assets. As a result, there are inherent uncertainties regarding the ultimate realization of these assets, which is primarily dependent on Viad’s ability to generate sufficient taxable income in future periods. In future periods, it is reasonably possible that the relative weight of positive and negative evidence regarding the recoverability of Viad’s deferred tax assets may change, which could result in a material increase in the Company’s valuation allowance. If such an increase in the valuation allowance were to occur, it would result in increased income tax expense in the period the assessment was made. As of December 31, 2012, Viad had tax credit carryforwards related to alternative minimum tax of $11.4 million that may be carried forward indefinitely. Additionally, as of December 31, 2012, Viad had foreign tax credit carryforwards of $13.4 million, of which $268,000 expire in 2019, $8.3 million expire in 2020, $4.5 million expire in 2021 and $320,000 expire in 2022. As noted above, the Company recorded a valuation allowance of $13.4 million related to the foreign tax credit carryforwards. Viad also had general business credits of $519,000 as of December 31, 2012, which expire at various dates from 2028 to 2032. Viad has not recorded deferred taxes on certain historical unremitted earnings of its Canadian subsidiaries as management intends to reinvest those earnings in its Canadian operations. As of December 31, 2012, the incremental unrecognized tax liability (net of estimated foreign tax credits) related to those undistributed earnings was approximately $711,000. To the extent that circumstances change and it becomes apparent that some or all of those undistributed earnings will be remitted to the U.S., Viad would accrue income taxes attributable to such remittance. Income tax expense consisted of the following:
|  | 2012 |  |  | 2011 |  |  | 2010 |
|  | (in thousands) |
Current: |  |  |  |  |  |  |  |  |  |  |  |
United States: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | (272 | ) |  | $ | (4,643 | ) |  | $ | (9,286 | )
State |  |  | 2,189 |  |  |  | 1,292 |  |  |  | 677 |
Foreign |  |  | 7,652 |  |  |  | 8,163 |  |  |  | 9,607 |
|  |  | 9,569 |  |  |  | 4,812 |  |  |  | 998 |
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
United States: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | 11,127 |  |  |  | 992 |  |  |  | 3,212 |
State |  |  | 40 |  |  |  | (1,560 | ) |  |  | (939 | )
Foreign |  |  | 107 |  |  |  | (356 | ) |  |  | (1,529 | )
|  |  | 11,274 |  |  |  | (924 | ) |  |  | 744 |
Income tax expense |  | $ | 20,843 |  |  | $ | 3,888 |  |  | $ | 1,742 |
The aggregate tax benefit realized in connection with the vesting of restricted stock and PBRS and the exercise of stock options was $96,000 for 2012, which was recorded as a credit to stockholders’ equity. During 2011 and 2010, the Company recorded tax deficiencies of $325,000 and $524,000, respectively, related to the vesting of restricted stock and PBRS and the exercise of stock options, which were recorded as charges to stockholders’ equity. Eligible subsidiaries (including sold and discontinued businesses up to their respective disposition dates) are included in the consolidated federal and other applicable income tax returns of Viad. United States and foreign income from continuing operations before income taxes was as follows:
|  | 2012 |  |  | 2011 |  |  | 2010 |
|  | (in thousands) |
United States |  | $ | (2,843 | ) |  | $ | (16,227 | ) |  | $ | (22,592 | )
Foreign |  |  | 29,645 |  |  |  | 29,407 |  |  |  | 25,151 |
Income from continuing operations before income taxes |  | $ | 26,802 |  |  | $ | 13,180 |  |  | $ | 2,559 |

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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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