Earthlink 2012 Annual Report Download - page 103

Table of Contents EARTHLINK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
As of December 31, 2011 and 2012 , the Company had alternative minimum tax credits of approximately $14.8 million and
$15.0
million . These credits do not have an expiration date.
Uncertain tax positions.
The Company has identified its federal tax return and its state tax returns in Alabama, California, Florida,
Georgia, Massachusetts, New York and North Carolina as material tax jurisdictions for purposes of calculating its uncertain tax positions.
Periods extending back to 1997 are still subject to examination for all material jurisdictions. The Company believes that its income tax filing
positions and deductions through the period ended December 31, 2012 will not result in a material adverse effect on the Company’
s financial
condition, results of operations or cash flow. The Company’
s policy for recording interest and penalties associated with audits is to record such
items as a component of income tax expense. As of December 31, 2011 and 2012 , $0.6 million and $0.7 million
, respectively, of interest and
$1.1 million and $0.8 million of penalties, respectively, had been accrued.
A reconciliation of changes in the amount of unrecognized tax benefits for the years ended December 31, 2010, 2011 and 2012 is as
follows:
During the year ended December 31, 2012 , $0.4 million
of uncertain tax positions resulting from the acquisition of One
Communications were recorded through acquisition accounting.
As of December 31, 2011 , it was reasonably possible that approximately $1.3 million
of the total uncertain tax positions recorded
would reverse within the next twelve months. As of December 31, 2012, it is reasonably possible that approximately $1.0 million
of the total
uncertain tax positions recorded will reverse within the next twelve months, primarily due to the expiration of statutes of limitation in various
jurisdictions. Of the total uncertain tax positions recorded on the balance sheet,
$7.5 million would impact the effective tax rate once settled.
15. Commitments and Contingencies
Leases
The Company leases certain of its facilities under various non-
cancelable operating leases. The facility leases generally require the
Company to pay operating costs, including property taxes, insurance and maintenance, and generally contain annual escalation provisions as well
as renewal options. Total rent expense (including operating expenses) during the years ended December 31, 2010, 2011 and 2012
for all
operating leases, excluding rent and operating expenses associated with facilities exited as part of the Company's restructuring plans, was
$4.5
million , $13.7 million and $14.2 million , respectively.
92
Year Ended December 31,
2010 2011 2012
(in thousands)
Balance as of January 1
$
1,315
$
18,367
$
24,560
Additions for tax positions of prior years
185
192
19
Adjustments to tax positions under purchase accounting
17,630
7,812
399
Decreases for tax positions related to prior years
(763
)
(1,811
)
(1,578
)
Balance as of December 31
$
18,367
$
24,560
$
23,400