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INCOME TAXES
 12 Months Ended
Dec. 31, 2011
INCOME TAXES  
INCOME TAXES

10. INCOME TAXES

        The components of income before income taxes for the years ended December 31, 2009, 2010 and 2011 are as follows (in thousands):

 
   2009   2010   2011  

Domestic

   $ 41,399   $ 39,958   $ 28,397  

Foreign

     26,344     17,230     14,068  
               

Total

   $ 67,743   $ 57,188   $ 42,465  
               

        The following is a reconciliation from the tax computed at statutory income tax rates to the Company's income tax expense for the years ended December 31, 2009, 2010, and 2011 (in thousands):

 
   2009   2010   2011  

Tax computed at statutory U.S. federal income tax rates

   $ 23,741   $ 20,050   $ 14,863  

Income taxes in excess (below) statutory U.S. tax rates:

                    

Guyana

     4,072     3,351     2,096  

Bermuda and Turks & Caicos

     761     1,535     2,854  

Valuation allowance on foreign tax credits

     —     5,250     —  

Bargain purchase gain

     —     (9,458 )   —  

Foreign tax reserve

     (183 )   (125 )   556  

State taxes

     2,402     (21 )   149  

Other, net

     368     (975 )   51  
               

Income tax expense

   $ 31,160   $ 19,607   $ 20,569  
               

        The components of income tax expense (benefit) for the years ended December 31, 2009, 2010 and 2011 are as follows (in thousands):

 
   2009   2010   2011  

Current:

                    

United States—Federal

   $ 12,297   $ 6,517   $ (19,716 )

United States—State

     2,467     1,654     (16 )

Foreign

     14,776     11,784     12,721  
               

Total current income tax expense (benefit)

     29,540     19,955     (7,011 )
               

Deferred:

                    

United States—Federal

     1,836     2,333     29,553  

United States—State

     1,273     (1,467 )   197  

Foreign

     (1,489 )   (1,214 )   (2,170 )
               

Total deferred income tax expense (benefit)

     1,620     (348 )   27,580  
               

Total income tax expense (benefit)

   $ 31,160   $ 19,607   $ 20,569  
               

Consolidated:

                    

United States—Federal

   $ 14,133   $ 8,850   $ 9,837  

United States—State

     3,740     187     181  

Foreign

     13,287     10,570     10,551  
               

Total income tax expense

   $ 31,160   $ 19,607   $ 20,569  
               

        The significant components of deferred tax assets and liabilities are as follows as of December 31, 2010 and 2011 (in thousands):

 
   2010   2011  

Deferred tax assets:

              

Receivables reserve

   $ 4,435   $ 4,852  

Temporary differences not currently deductible for tax

     11,352     11,348  

Foreign tax credit carryforwards

     16,983     16,755  

Interest rate swap

     4,434     4,535  

Net operating losses

     421     9,719  

Pension benefits

     397     640  

Valuation allowance

     (16,983 )   (17,315 )
           

Total deferred tax asset

   $ 21,039   $ 30,534  
           

Deferred tax liabilities:

              

Property, plant and equipment, net

   $ 24,592   $ 55,762  

Intangible assets, net

     33,913     41,757  
           

Total deferred tax liabilities

     58,505     97,519  
           

Net deferred tax liabilities

   $ 37,466   $ 66,985  
           

        Deferred tax assets and liabilities are reflected in the accompanying consolidated balance sheets as follows (in thousands):

 
   2010   2011  

Deferred tax assets:

              

Current

   $ 15,787   $ 21,921  

Long term

     —     —  
           

Total deferred tax asset

   $ 15,787   $ 21,921  
           

Deferred tax liabilities:

              

Current

   $ —   $ —  

Long term

     53,253     88,906  
           

Total deferred tax liabilities

   $ 53,253   $ 88,906  
           

Net deferred tax liabilities

   $ 37,466   $ 66,985  
           

        As of December 31, 2011, the Company estimated that it had federal net operating loss carryforwards of $22.3 million that begin to expire in 2031 and state net operating loss carryforwards of $29.1 million that begin to expire in 2015.

        As part of the Alltel Acquisition and the associated levels of future debt and interest service, the Company re-examined its projected mix of foreign source and U.S.-source earnings and concluded it is more likely than not that it will not generate enough foreign source income to utilize its existing foreign tax credits prior to their expiration date. As a result, the Company has placed a full valuation allowance against those credits during 2010. As of December 31, 2011, the Company continued to maintain a full valuation allowance against those credits.

        The undistributed earnings of the Company's foreign subsidiaries are considered to be indefinitely reinvested and, accordingly, no U.S. federal and state income taxes have been provided thereon. Determination of the amount of unrecognized deferred U.S. income tax liability is not practical because of the complexities associated with its hypothetical calculation; however, unrecognized foreign tax credits would be available to reduce a portion of the U.S. tax liability.

        The following shows the activity related to unrecognized tax benefits during the three years ended December 31, 2011 (in thousands):

Gross unrecognized tax benefits at December 31, 2008

   $ 5,690  

Lapse in statute of limitations

     (183 )
       

Gross unrecognized tax benefits at December 31, 2009

     5,507  

Increase in tax positions

     1,030  

Lapse in statute of limitations

     (125 )
       

Gross unrecognized tax benefits at December 31, 2010

     6,412  

Increase in tax positions

     590  

Lapse in statute of limitations

     (50 )
       

Gross unrecognized tax benefits at December 31, 2011

   $ 6,952  
       

        All $7.0 million of unrecognized tax benefits would affect the effective tax rate if recognized. The Company accrues interest and penalties related to unrecognized tax benefits in its provision for income taxes, if material.

        The Company and its subsidiaries file income tax returns in the U.S. and in various state and local jurisdictions. The statute of limitations related to the consolidated U.S. federal income tax return is closed for all tax years up to and including 2007. The expiration of the statute of limitations related to the various state income tax returns that the Company and subsidiaries file varies by state. The Company's consolidated federal tax return and any significant state tax returns are not currently under examination. The Company does not expect that the amount of unrecognized tax benefits relating to U.S. tax matters will change significantly within the next 12 months.

        The Company also files an income tax return in Guyana. See Note 12 relating to certain tax matters pertaining to those filings. There is no expected settlement date of those matters and upon settlement, which might not occur in the near future, the payment may vary significantly from the amounts currently recorded. The Company will continue to update amounts recorded as new developments arise.