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Income Taxes | 12 Months Ended
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Dec. 31, 2011
Income Taxes [Abstract] |
Income Taxes | (5) Income Taxes The components of income (loss) before provision for income taxes consist of the following (in thousands):
|  | Years ended December 31, |
|  | 2009 |  |  | 2010 |  |  | 2011 |
United States |  | $ | (3,449 | ) |  | $ | (3,518 | ) |  | $ | 5,819 |
Foreign |  |  | (138 | ) |  |  | (142 | ) |  |  | (247 | )
Income (loss) before provision for income taxes |  | $ | (3,587 | ) |  | $ | (3,660 | ) |  | $ | 5,572 |
The provision (benefit) for income taxes for the Company consists of the following (in thousands):
|  | Years ended December 31, |
|  | 2009 |  |  | 2010 |  |  | 2011 |
Current provision (benefit) |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | (3,980 | ) |  | $ | (2,168 | ) |  | $ | (249 | )
State |  |  | 10 |  |  |  | 46 |  |  |  | 16 |
Deferred provision (benefit) |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | 4,198 |  |  |  | 2,004 |  |  |  | 1,895 |
State |  |  | — |  |  |  | — |  |  |  | — |
Foreign |  |  | 34 |  |  |  | — |  |  |  | — |
Tax expense (benefit) of equity adjustment for stock option exercises and restricted stock vesting |  |  | (1,888 | ) |  |  | (605 | ) |  |  | 824 |
Other |  |  | 101 |  |  |  | 106 |  |  |  | 127 |
Total income tax expense (benefit) |  | $ | (1,525 | ) |  | $ | (617 | ) |  | $ | 2,613 |
Income tax expense (benefit) differed from the amounts computed by applying the U.S. federal income tax rates of 34% for 2009, 2010, and 2011, respectively, to income (loss) before provision for income taxes as a result of the following:
|  | Years ended December 31, |
|  | 2009 |  |  | 2010 |  |  | 2011 |
Income tax expense (benefit) at U.S. statutory rate |  | $ | (1,220 | ) |  | $ | (1,244 | ) |  | $ | 1,895 |
State taxes, net of valuation allowance |  |  | (2 | ) |  |  | 30 |  |  |  | 45 |
Non-deductible stock compensation |  |  | 624 |  |  |  | 757 |  |  |  | 645 |
Effect of non-U.S. operations, net of valuation allowance |  |  | 81 |  |  |  | 48 |  |  |  | 84 |
Research tax credits |  |  | (1,333 | ) |  |  | (240 | ) |  |  | (722 | )
Other non-deductible expenses |  |  | 325 |  |  |  | 32 |  |  |  | 666 |
Total income tax expense (benefit) |  | $ | (1,525 | ) |  | $ | (617 | ) |  | $ | 2,613 |
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are presented below:
|  | As of December 31, |
|  | 2010 |  |  | 2011 |
Deferred tax assets: |  |  |  |  |  |  |  |
Accrued liabilities not currently deductible |  | $ | 1,384 |  |  | $ | 1,842 |
Intangible assets-excess of financial statement over tax amortization |  |  | 20,093 |  |  |  | 16,461 |
Goodwill impairment recognized on financial statements not tax |  |  | 24,940 |  |  |  | 21,282 |
Stock-based compensation |  |  | 4,890 |  |  |  | 7,809 |
Federal net operating losses and AMT credit carryforwards |  |  | — |  |  |  | 1,480 |
State and city net operating loss carryforwards |  |  | 3,759 |  |  |  | 4,481 |
Research & experimental tax credit carryforwards |  |  | 323 |  |  |  | 1,302 |
Other |  |  | 127 |  |  |  | 285 |
Gross deferred tax assets |  |  | 55,516 |  |  |  | 54,942 |
Valuation allowance |  |  | (3,826 | ) |  |  | (4,579 | )
Net deferred tax assets |  |  | 51,690 |  |  |  | 50,363 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Excess of tax over financial statement depreciation |  |  | 52 |  |  |  | 1,300 |
Total deferred tax liabilities |  |  | 52 |  |  |  | 1,300 |
Net deferred tax assets |  | $ | 51,638 |  |  | $ | 49,063 |
At December 31, 2010 and 2011, the Company has certain tax effected state, city, and foreign net operating loss (NOL) carryforwards of approximately $3.8 million and $4.6 million, respectively. The Company does not have a history of taxable income in the relevant jurisdictions and the state, city, and foreign net operating loss carryforwards will more likely than not expire unutilized. Therefore, the Company has recorded a 100% valuation allowance on the state, city, and foreign net operating loss carryforwards as of December 31, 2010 and 2011. The change in the valuation allowance in 2011 was approximately $753,000. The Company has certain research and experimental tax credits which will begin to expire in 2029. In connection with the purchase accounting for certain acquisitions, the Company has recorded approximately $152.9 million in goodwill and $77.4 million of intangible assets that are deductible over 15 years for federal tax purposes. The Company has recorded a deferred tax asset for stock-based compensation recorded on unexercised non-qualified stock options and certain restricted shares. The ultimate realization of this asset is dependent upon the fair value of the Company's stock when the options are exercised, and generation of sufficient taxable income to realize the benefit of the related tax deduction. Although realization is not assured, the Company believes it is more likely than not, based on its operating performance, existing deferred tax liabilities, projections of future taxable income and tax planning strategies, that the Company's net deferred tax assets, excluding certain state and foreign net operating loss carryforwards, will be realized. In determining that it was more likely than not that the Company would realize the deferred tax assets, factors considered included: historical taxable income, historical trends related to advertiser usage rates, projected revenues and expenses, macroeconomic conditions, issues facing our industry, existing contracts, our ability to project future results and any appreciation of our other assets. The majority of the deferred tax assets have arisen due to deductions taken in the financial statements related to the impairment of goodwill and the amortization of intangible assets recorded in connection with various acquisitions that are tax-deductible over 15 year periods. Based on projections of future taxable income and tax planning strategies, the Company expects to be able to recover these assets. The amount of the net deferred tax assets considered realizable, however, could be reduced in the near term if the Company's projections of future taxable income are reduced or if the Company does not perform at the levels it is projecting. This could result in increases to the valuation allowance for deferred tax assets and a corresponding increase to income tax expense of up to the entire net amount of deferred tax assets. At December 31, 2010 and 2011, the Company had federal net operating loss carryforwards (excluding Jingle) of approximately $1.7 million which begin to expire in 2019. The Tax Reform Act of 1986 limits the use of net operating loss (NOL) and tax credit carryforwards in certain situations where changes occur in the stock ownership of a company. The Company believes that such a change has occurred, and that the utilization of the approximately $1.7 million in carryforwards is limited such that substantially all of these NOL carryforwards will never be utilized. Accordingly, the Company has not included these federal NOL carryforwards in its deferred tax assets. In connection with the Jingle acquisition, the Company acquired federal net operating loss carryforwards (NOL). Where there is a "change in ownership" within the meaning of Section 382 of the Internal Revenue Code, the acquired federal net operating loss carryforwards are subject to an annual limitation. The Company believes that such an ownership change had occurred at Jingle, and that the utilization of the carryforwards is limited such that the majority of the NOL carryforwards will never be available. Accordingly, the Company has not recorded those amounts the Company believes it will not be able to utilize and has not included those NOL carryforwards in its deferred tax assets. The Company's preliminary estimate of NOL carryforwards that may be utilized is approximately $7.0 million, which will begin to expire in 2026. In 2011, the Company utilized approximately $2.8 million of the acquired NOL carryforwards. During the years ended December 31, 2009, 2010 and 2011, the Company recognized excess tax benefits (shortfall) on stock option exercises, restricted stock vesting, and dividends paid on unvested restricted stock of approximately ($1.8) million, ($537,000), and $913,000, respectively, which were recorded to additional paid in capital. From time to time, various state, federal and other jurisdictional tax authorities undertake audits of the Company and its filings. In evaluating the exposure associated with various tax filing positions, the Company on occasion accrues charges for uncertain positions. The Company adjusts these contingencies in light of changing facts and circumstances, such as the outcome of tax audits. Audits of the Company's federal tax returns for 2005 through 2009, comprising approximately $463,000 of uncertain tax positions, were settled in 2011. Resolution of uncertain tax positions will impact our effective tax rate when settled. The Company does not have any significant interest or penalty accruals. The provision for income taxes includes the impact of contingency provisions and changes to contingencies that are considered appropriate. The reconciliation of our tax contingencies is as follows:
|  | December 31, 2011 |
Gross tax contingencies—January 1, 2010 |  | $ | 463 |
Gross increases to tax positions associated with prior periods |  | $ | — |
Gross increases to current period tax positions |  | $ | 83 |
Settlements |  | $ | — |
Lapse of statute of limitations |  | $ | — |
Gross tax contingencies—December 31, 2010 |  | $ | 546 |
Gross increases to tax positions associated with prior periods |  | $ | 66 |
Gross increases to current period tax positions |  | $ | 156 |
Gross decreases to tax positions associated with prior periods |  | $ | (362 | )
Settlements |  | $ | (101 | )
Lapse of statute of limitations |  | $ | — |
Gross tax contingencies—December 31, 2011 |  | $ | 305 |
The Company files U.S. federal, certain U.S. states, and certain foreign tax returns. Generally, U.S. federal, U.S. state, and foreign tax returns filed for years after 2007 are within the statue of limitations and are under examination or may be subject to examination.

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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 Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319 Reference 2: 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 3: 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 4: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 Reference 5: 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 Reference 6: 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 7: 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 8: 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 + Details
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