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Income Taxes | 12 Months Ended
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Dec. 31, 2012
Income Taxes [Abstract] |
Income Taxes | Note 8 — In come Taxes We and our subsidiaries, including acquired companies from their respective dates of acquisition, file a consolidated U.S. federal income tax return. We believe our recorded assets and liabilities are reasonable; however, tax laws and regulations are subject to interpretation and tax litigation is inherently uncertain, and therefore our assessments can involve a series of complex judgments about future events and rely heavily on estimates and assumptions. Components of income tax provision (benefit) on continuing operations reflected in the consolidated statements of operations consisted of the following (in thousands):
|  | Year Ended December 31, |
|  | 2012 |  | 2011 |  | 2010 |
Current | $ | 6,572 | $ | (78,150) | $ | (22,930) |
Deferred |  | (65,730) |  | 41,344 |  | 42,096 |
| $ | (59,158) | $ | (36,806) | $ | 19,166 |
Domestic | $ | (78,211) | $ | (51,590) | $ | 1,596 |
Foreign |  | 19,053 |  | 14,784 |  | 17,570 |
| $ | (59,158) | $ | (36,806) | $ | 19,166 |
Income taxes have been provided based on the U.S. statutory rat e of 35% and at the local statutory rate for each foreign jurisdiction adjusted for items which are allowed as deductions for federal and foreign income tax reporting purposes, but not for book purposes. The primary differences between the statutory rate and our effective rate from continuing operations are as follows:
| Year Ended December 31, |
| 2012 |  | 2011 |  | 2010 |
Statutory rate | 35.0 | % | 35.0 | % | 35.0 | %
Foreign provision | 11.2 |  | (291.0) |  | 418.2 |
Effect of Australian reorganization | - |  | (2,984.3) |  | - |
Nondeductible goodwill impairment (Note 2) | - |  | - |  | 301.0 |
Valuation allowance on certain deferred tax assets | - |  | - |  | 427.8 |
Other | 0.8 |  | (265.0) |  | (34.3) |
Effective rate | 47.0 | % | (3,505.3) | % | 1,147.7 | %
In 2011, we reorganized our Australian operating companies. The reorganization resulted in a recorded net tax benefit of $31.3 million associated with the impairment of our U.S. investment in the Australian subsidiaries. Deferred income taxes result from the effect of transactions that are recognized in different periods for financial and tax reporting purposes. The nature of these differences and the income tax effect of each as of December 31, 2012 and 2011 are as follows (in thousands):
|  | 2012 |  | 2011 |
Deferred tax liabilities: |  |  |  |  |
Depreciation and depletion | $ | 336,471 | $ | 396,355 |
Original Issue Discount on 2025 and 2032 Notes |  | 13,098 |  | 37,067 |
Equity investments in production facilities |  | 81,082 |  | 76,911 |
Prepaid and other |  | 10,548 |  | 14,779 |
Total deferred tax liabilities | $ | 441,199 | $ | 525,112 |
Deferred tax assets: |  |  |  |  |
Net operating loss carryforward | $ | (36,981) | $ | (34,987) |
Asset retirement obligations |  | (70,085) |  | (88,279) |
Reserves, accrued liabilities and other |  | (35,229) |  | (39,995) |
Total deferred tax assets |  | (142,295) |  | (163,261) |
Valuation allowance |  | 16,391 |  | 14,310 |
Net deferred tax liabilities | $ | 315,295 | $ | 376,161 |
Deferred income tax is presented as: |  |  |  |  |
Current deferred tax assets |  | (43,942) |  | (41,449) |
Noncurrent deferred tax liabilities |  | 359,237 |  | 417,610 |
Net deferred tax liabilities | $ | 315,295 | $ | 376,161 |
At December 31, 2012, our U.S. net operating loss carryforward totaled $17.6 million and our foreign tax credit carryforward totaled $6.7 million. The net operating loss carryforward will expire in 2030, while the foreign tax credit carryforward will expire in 2020. At this time, we anticipate utilizing these tax attributes before the statute of limitations expires. At December 31, 2012, we had a $16.4 m illion valuation allowance related to certain non-U.S. deferred tax assets, primarily net operating losses generated in Australia, as management believed it is more likely than not that we will not be able to utilize the tax benefit. Additional valuation allowances may be made in the future if in management’s opinion it is more likely than not that the tax benefit will not be utilized. Any limitations on our ability to utilize our tax benefit carryforward could result in an increase in our federal income tax liability in future taxable periods. We consider the undistributed earnings of our principal non-U.S. subsidiaries to be permanently reinvested. At December 31, 2012 and 2011, our principal non-U.S. subsidiaries had accumulated earnings and profits of approximately $167.9 million and $113.4 million, respectively. We have not provided deferred U.S. income tax on the accumulated earnings and profits. We had $4.5 m illion related to uncertain tax positions as of December 31, 2012. In 2012, we reversed a $2.8 milli on long-term liability related to an uncertain tax position that was projected to be included on our 2011 tax return. The tax position was not taken when the 2011 tax return was filed. We account for tax-related interest in interest expense and tax penalties in operating expenses. We charged $0.2 million, $0.2 million and $0.7 million to income tax expense for interest and penalties accrued in 2012, 2011 and 2010, respectively, which brought our total liabilities for interest and penalties to $1.1 million and $0.9 million on our accompanying consolidated balance sheets at December 31, 2012 and 2011, respectively. As of December 31, 2012, 2011, and 2010, there were $3.4 million, $6.2 million and $3.4 million of unrecognized tax benefits that if recognized would affect the annual effective rate. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):
|  | 2012 |  | 2011 |  | 2010 |
Balance at January 1, | $ | 7,085 | $ | 4,085 | $ | 3,417 |
Additions based on tax positions related to current year |  | - |  | 2,785 |  | - |
Additions for tax positions of prior years |  | 206 |  | 215 |  | 668 |
Reductions for tax positions of prior years |  | (2,785) |  | - |  | - |
Balance at December 31, | $ | 4,506 | $ | 7,085 | $ | 4,085 |
We file tax returns in the U.S. and in various state, local and non-U.S. jurisdictions. We anticipate that any potential adjustments to our state, local and non-U.S. jurisdiction tax returns by tax authorities would not have a material impact on our financial position. The tax periods ending December 31, 2010, 2009, 2008, 2007 and 2006 are under examination by the U.S. Internal Revenue Service (“IRS”). The tax periods ended December 31, 2012 and 2011 remain open to future review and examination by the IRS. In non-U.S. jurisdictions, the open tax periods include 2012, 2011, 2010, 2009 and 2008.

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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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