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Note 10 - Income Taxes
 12 Months Ended
Dec. 31, 2011
Income Tax Disclosure [Text Block]
10.           INCOME TAXES

Income tax expense (benefit) for the years ended December 31, 2011, 2010, and 2009 is comprised of:

(in thousands)
 
2011
   
2010
   
2009
 
                   
Federal, current
  $ (198 )   $ (11,377 )   $ 3,680  
Federal, deferred
    (1,688 )     16,739       (8,038 )
State, current
    184       130       (34 )
State, deferred
    (470 )     683       (626 )
    $ (2,172 )   $ 6,175     $ (5,018 )

Income tax expense varies from the amount computed by applying the federal corporate income tax rate of 35% to income before income taxes for the years ended December 31, 2011, 2010, and 2009 as follows:

(in thousands)
 
2011
   
2010
   
2009
 
                   
Computed "expected" income tax expense
  $ (5,754 )   $ 3,312     $ (10,517 )
State income taxes, net of federal income tax effect
    (559 )     322       (1,050 )
Per diem allowances
    3,015       3,350       3,320  
Tax contingency accruals
    (70 )     145       (216 )
Nondeductible foreign operating income
    -       (133 )     (504 )
Nondeductible goodwill impairment
    2,275       -       -  
Realization of outside basis difference related to Transplace
    -       -       2,599  
Valuation allowance (release), net
    (708 )     (638 )     1,896  
Disallowed interest release
    -       (48 )     (189 )
Tax credits
    (61 )     (182 )     (44 )
Other, net
    (310 )     47       (313 )
Actual income tax expense
  $ (2,172 )   $ 6,175     $ (5,018 )

Income tax expense varies from the amount computed by applying the federal corporate income tax rate of 35% to income (loss) before income taxes primarily due to state income taxes, net of federal income tax effect, adjusted for permanent differences, the most significant of which is the effect of the per diem pay structure for drivers. Drivers who meet the requirements to receive per diem are generally required to receive non-taxable per diem pay in lieu of a portion of their taxable wages. This per diem program increases our drivers' net pay per mile, after taxes, while decreasing gross pay, before taxes. As a result, salaries, wages, and employee benefits are slightly lower and our effective income tax rate is higher than the statutory rate. Generally, as pre-tax income increases, the impact of the driver per diem program on our effective tax rate decreases, because aggregate per diem pay becomes smaller in relation to pre-tax income, while in periods where earnings are at or near breakeven the impact of the per diem program on our effective tax rate is significant. Due to the partially nondeductible effect of per diem pay, our tax rate will fluctuate in future periods based on fluctuations in earnings. Our effective tax rate is also significantly impacted in the 2011 period by the tax deductibility of the $11.5 million goodwill impairment recorded in the third quarter of 2011, whereby $2.1 million of the goodwill impaired related to tax deductible goodwill, while the remaining $9.4 million was nondeductible and in the 2009 period by the $11.5 million loss on the sale of our investment in Transplace and the related note receivable, of which none as deductible.

The temporary differences and the approximate tax effects that give rise to our net deferred tax liability at December 31, 2011 and 2010 are as follows:

(in thousands)
 
2011
   
2010
 
             
Net deferred tax assets:
           
Allowance for doubtful accounts
  $ 657     $ 539  
Insurance and claims
    10,766       9,533  
Net operating loss carryovers
    31,031       34,343  
Capital loss carryover related to Transplace
    251       1,670  
Other accrued liabilities
    1,094       445  
Other
    4,991       6,189  
Valuation allowance
    (550 )     (1,258 )
Total net deferred tax assets
    48,240       51,461  
                 
Net deferred tax liabilities:
               
Property and equipment
    (83,651 )     (87,009 )
Other
    (34 )     (1,990 )
Prepaid expenses
    (2,842 )     (3,606 )
Total net deferred tax liabilities
    (86,527 )     (92,605 )
                 
Net deferred tax liability
  $ (38,287 )   $ (41,144 )

Deferred taxes are classified in the accompanying consolidated balance sheet based on the nature of the related asset or liability as current or long-term, such that current deferred tax assets and liabilities provide a net asset of $4.4 million, while long-term deferred tax assets and liabilities provide a net liability of $42.7 million. The net deferred tax liability of $38.3 million primarily relates to differences in cumulative book versus tax depreciation of property and equipment, partially off-set by net operating loss carryovers and insurance claims that have been reserved but not paid. The carrying value of the our deferred tax assets assumes that it will be able to generate, based on certain estimates and assumptions, sufficient future taxable income in certain tax jurisdictions to utilize these deferred tax benefits. If these estimates and related assumptions change in the future, it may be required to establish a valuation allowance against the carrying value of the deferred tax assets, which would result in additional income tax expense. The carrying value of our deferred tax assets assumes that we will be able to generate, based on certain estimates and assumptions, sufficient future taxable income in certain tax jurisdictions to utilize these deferred tax benefits. If these estimates and related assumptions change in the future, we may be required to establish a valuation allowance against the carrying value of the deferred tax assets, which would result in additional income tax expense. On a periodic basis, we assess the need for adjustment of the valuation allowance. Based on forecasted taxable income resulting from the reversal of deferred tax liabilities, primarily generated by accelerated depreciation for tax purposes in prior periods, and tax planning strategies available to us, no valuation allowance has been established at December 31, 2011 or 2010, except for $0.6 million and $1.3 million, respectively, related to certain state net operating loss and capital loss carry-forwards. If these estimates and related assumptions change in the future, we may be required to modify our valuation allowance against the carrying value of the deferred tax assets.

The activity in the valuation allowance on deferred tax assets (in thousands) is as follows:

Years ended December 31:
 
Beginning
balance
January 1,
   
Additional
provisions
to allowance
   
Write-offs
and other
deductions
   
Ending
balance
December 31,
 
2011
  $ 1,258     $ 32     $ (740 )   $ 550  
                                 
2010
  $ 1,896     $ 42     $ (680 )   $ 1,258  

As of December 31, 2011, we had a $3.3 million liability recorded for unrecognized tax benefits, which includes interest and penalties of $1.3 million. We recognize interest and penalties accrued related to unrecognized tax benefits in tax expense. As of December 31, 2010, we had a $3.4 million liability recorded for unrecognized tax benefits, which included interest and penalties of $1.3 million. Interest and penalties recognized for uncertain tax positions were approximately $0.1 million, $0.2 million, and $0.2 million in 2011, 2010, and 2009, respectively.

The following tables summarize the annual activity related to our gross unrecognized tax benefits (in thousands) for the years ended December 31, 2011, 2010, and 2009:

   
2011
   
2010
   
2009
 
Balance as of January 1,
  $ 2,133     $ 2,137     $ 1,971  
Increases related to prior year tax positions
    3       75       67  
Decreases related to prior year positions
    -       (30 )     (3 )
Increases related to current year tax positions
    58       110       279  
Decreases related to settlements with taxing authorities
    -       -       (122 )
Decreases related to lapsing of statute of limitations
    (215 )     (159 )     (55 )
Balance as of December 31,
  $ 1,979     $ 2,133     $ 2,137  

If recognized, $2.0 million and $2.1 million of unrecognized tax benefits would impact our effective tax rate as of December 31, 2011 and 2010 respectively. Any prospective adjustments to our reserves for income taxes will be recorded as an increase or decrease to our provision for income taxes and would impact our effective tax rate.

Our 2008 through 2011 tax years remain subject to examination by the IRS for U.S. federal tax purposes, our major taxing jurisdiction.  In the normal course of business, we are also subject to audits by state and local tax authorities. While it is often difficult to predict the final outcome or the timing of resolution of any particular tax matter, we believe that our reserves reflect the more likely than not outcome of known tax contingencies. We adjust these reserves, as well as the related interest, in light of changing facts and circumstances. Settlement of any particular issue would usually require the use of cash.  Favorable resolution would be recognized as a reduction to our annual tax rate in the year of resolution.  We do not expect any significant increases or decreases for uncertain income tax positions during the next year.

Our federal net operating loss carryforwards are available to offset future federal taxable income, if any, through 2030, while our state net operating loss carryforwards and state tax credits expire over various periods through 2030 based on jurisdiction. The capital loss carryforward related to the loss on the investment in Transplace is available to offset future capital gains through 2014.

We recognized a $0.4 million income tax benefit arising from the exercise of stock options and restricted share vesting in 2011 and 2010. This resulted in a related reduction in taxable income in both years and an offsetting increase to additional paid in capital.