v2.4.0.8
INCOME TAXES
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12 Months Ended |
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Income Tax Disclosure [Abstract] |
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INCOME TAXES |
INCOME TAXES:
Income Tax Provision
The table below sets forth the provision for income taxes attributable to continuing operations for the periods presented. | | | | | | | | | | | | | | | | 2013 | | 2012 | | 2011 | | (In Thousands) | Current: | | | | | | Federal | $ | — |
| | $ | (34,733 | ) | | $ | (201 | ) | Foreign | — |
| | — |
| | 28,921 |
| State | (707 | ) | | (805 | ) | | 1,421 |
| | (707 | ) | | (35,538 | ) | | 30,141 |
| Deferred: | | | | | | Federal | — |
| | 202,552 |
| | 56,482 |
| State | — |
| | 6,423 |
| | 2,512 |
| | — |
| | 208,975 |
| | 58,994 |
| Total income tax | $ | (707 | ) | | $ | 173,437 |
| | $ | 89,135 |
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Earnings (loss) from continuing operations before income taxes consists of the following for the periods presented: | | | | | | | | | | | | | | | | 2013 | | 2012 | | 2011 | | (In Thousands) | United States federal | $ | 65,167 |
| | $ | (1,013,801 | ) | | $ | 188,421 |
| Foreign | 8,050 |
| | (101,693 | ) | | (1,026 | ) | | $ | 73,217 |
| | $ | (1,115,494 | ) | | $ | 187,395 |
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A reconciliation of reported income tax attributable to continuing operations to the amount of income tax that would result from applying the United States federal statutory income tax rate to pretax earnings from continuing operations is as follows: | | | | | | | | | | | | | | | | 2013 | | 2012 | | 2011 | | (In Thousands) | Federal income tax at 35% of earnings from continuing operations before income taxes | $ | 25,626 |
| | $ | (390,423 | ) | | $ | 65,947 |
| State income taxes, net of federal income tax benefits | 740 |
| | (11,211 | ) | | 2,214 |
| Change in valuation allowance | (67,606 | ) | | 575,570 |
| | — |
| Change in non-tax deductible goodwill | 37,937 |
| | — |
| | — |
| Stock-based compensation | 4,002 |
| | 484 |
| | — |
| Canadian dividend tax, net of U.S. tax benefit | — |
| | — |
| | 18,460 |
| Effect of federal, state, and foreign tax on permanent differences | 638 |
| | 3,026 |
| | 4,025 |
| Other | (2,044 | ) | | (4,009 | ) | | (1,511 | ) | Total income tax | $ | (707 | ) | | $ | 173,437 |
| | $ | 89,135 |
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Net Deferred Tax Assets and Liabilities
| | | | | | | | | | | | 2013 | | 2012 | | (In Thousands) | Deferred tax assets: | | | | Property and equipment(1) | $ | 161,450 |
| | $ | 353,352 |
| Accrual for postretirement benefits | 3,193 |
| | 3,134 |
| Stock-based compensation accruals | 9,592 |
| | 10,748 |
| Net operating loss carryforwards | 274,177 |
| | 157,103 |
| Alternative minimum tax credit carryforward | 49,409 |
| | 49,409 |
| Other | 23,721 |
| | 32,278 |
| Total gross deferred tax assets | 521,542 |
| | 606,024 |
| Less valuation allowance | (504,458 | ) | | (575,570 | ) | Net deferred tax assets | 17,084 |
| | 30,454 |
| Deferred tax liabilities: | | | | Unrealized gains on derivative instruments, net | (1,994 | ) | | (17,429 | ) | Amortization of deferred gain on rig sales | (12,724 | ) | | (10,472 | ) | Other | (2,366 | ) | | (2,553 | ) | Total gross deferred tax liabilities | (17,084 | ) | | (30,454 | ) | Net deferred tax assets | $ | — |
| | $ | — |
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____________________________________________ | | (1) | Includes deferred tax assets of $25.5 million and $28.3 million related to Italy and South Africa as of December 31, 2013 and 2012, respectively. |
The net deferred tax assets and liabilities are reflected in the Consolidated Balance Sheets as follows: | | | | | | | | | | | | 2013 | | 2012 | | (In Thousands) | Current deferred tax liabilities | $ | (2,230 | ) | | $ | (14,681 | ) | Non-current deferred tax assets | 2,230 |
| | 14,681 |
| Net deferred tax assets | $ | — |
| | $ | — |
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Tax Attributes
Net Operating Losses
U.S. federal net operating loss carryforwards (“NOLs”) at December 31, 2013 were approximately $765.5 million, with $32.2 million of NOLs limited under Section 382 of the Internal Revenue Code scheduled to expire in 2019 and 2020 and the remaining scheduled to expire after 2029. Forest completed a Section 382 study in 2009. Because of the full valuation allowance placed against its deferred tax assets, Forest has not yet updated this study. Additionally, as of December 31, 2013, the Company had state income tax NOLs of approximately $152.2 million, which, if unused, will expire between 2014 and 2031.
The statute of limitations is closed for the Company’s U.S. federal income tax returns for years ending on or before December 31, 2008. Pre-acquisition returns of acquired businesses are also closed for tax years ending on or before December 31, 2008. However, the Company has utilized, and will continue to utilize, NOLs (including NOLs of acquired businesses) in its open tax years. The earliest available NOLs were generated in the tax year beginning January 1, 1999, but are potentially subject to adjustment by the federal tax authorities in the tax year in which they are utilized. Thus, the Company’s earliest U.S. federal income tax return that is closed to potential audit adjustment is the tax year ending December 31, 1998.
Alternative Minimum Tax Credits
The Alternative Minimum Tax credit carryforward available to reduce future U.S. federal regular taxes equaled an aggregate amount of $49.4 million at December 31, 2013, which can be carried forward indefinitely.
Accounting for Uncertainty in Income Taxes
The table below sets forth the reconciliation of the beginning and ending balances of the total amounts of unrecognized tax benefits. The Company records interest accrued related to unrecognized tax benefits in interest expense and penalties in other expense, to the extent they apply. The Company does not expect a material amount of unrecognized tax benefits to reverse in the next twelve months. | | | | | | | | | | | | | | | | 2013 | | 2012 | | 2011 | | (In Thousands) | Gross unrecognized tax benefits at beginning of period | $ | 859 |
| | $ | 2,829 |
| | $ | 3,345 |
| Increases as a result of tax positions taken during a prior period | 31 |
| | — |
| | — |
| Decreases as a result of tax positions taken during a prior period | — |
| | (1,970 | ) | | (516 | ) | Gross unrecognized tax benefits at end of period | $ | 890 |
| | $ | 859 |
| | $ | 2,829 |
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Income Tax Receivables
As of December 31, 2013 and 2012, Forest had a non-current income tax receivable of $20.7 million which is included in “Other assets” in the Consolidated Balance Sheets. |
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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.
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