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฀
61
2.฀฀Significant฀Accounting฀Policies฀(continued)฀
฀
Deferred฀Income฀Tax฀Accounts฀and฀Tax฀Reserves฀฀
฀
We฀ are฀ subject฀ to฀ income฀ taxes฀ in฀ the฀ United฀ States฀ and฀ several฀ foreign฀ jurisdictions.฀ Significant฀
judgment฀is฀required฀in฀determining฀our฀provision฀for฀income฀taxes฀and฀the฀related฀assets฀and฀liabilities.฀
The฀ provision฀ for฀ income฀ taxes฀ includes฀ income฀ taxes฀ paid,฀ currently฀ payable฀ or฀ receivable฀ and฀ those฀
deferred.฀
฀
Deferred฀tax฀assets฀and฀liabilities฀are฀determined฀based฀on฀differences฀between฀financial฀reporting฀and฀tax฀
basis฀of฀assets฀and฀liabilities,฀and฀are฀measured฀using฀enacted฀tax฀rates฀and฀laws฀that฀are฀expected฀to฀be฀in฀
effect฀ when฀ the฀ differences฀ reverse.฀ Deferred฀ tax฀ assets฀ are฀ also฀ recognized฀ for฀ the฀ estimated฀ future฀
effects฀of฀tax฀loss฀carryforwards.฀The฀effect฀on฀deferred฀taxes฀of฀changes฀in฀tax฀rates฀is฀recognized฀in฀the฀
period฀ in฀ which฀ the฀ new฀ tax฀ is฀ enacted.฀ Valuation฀ allowances฀ are฀ established฀ when฀ necessary฀ on฀ a฀
jurisdictional฀basis฀to฀reduce฀deferred฀tax฀assets฀to฀the฀amounts฀we฀expect฀to฀realize.฀
฀
Tax฀authorities฀periodically฀audit฀the฀Company.฀We฀record฀reserves฀and฀related฀interest฀and฀penalties฀for฀
identified฀exposures฀as฀income฀tax฀expense.฀We฀evaluate฀these฀issues฀and฀adjust฀for฀events,฀such฀as฀statute฀
of฀limitations฀expirations,฀court฀rulings฀or฀audit฀settlements,฀which฀may฀impact฀our฀ultimate฀payment฀for฀
such฀exposures.฀฀
฀
Insurance฀Reserves฀
฀
Our฀insurance฀programs฀for฀workers’฀compensation,฀general฀liability,฀owned฀and฀non-owned฀automobiles,฀
property,฀ and฀ health฀ insurance฀ coverage฀ provided฀ to฀ our฀ employees฀ are฀ funded฀ by฀ the฀ Company฀ up฀ to฀
certain฀retention฀levels.฀Losses฀are฀accrued฀based฀upon฀undiscounted฀estimates฀of฀the฀aggregate฀retained฀
liability฀for฀claims฀incurred฀using฀certain฀third-party฀actuarial฀projections฀and฀our฀claims฀loss฀experience.฀
The฀ estimated฀ insurance฀ claims฀ losses฀ could฀ be฀ significantly฀ affected฀ should฀ the฀ frequency฀ or฀ ultimate฀
cost฀of฀claims฀differ฀significantly฀from฀historical฀trends฀used฀to฀estimate฀the฀insurance฀reserves฀recorded฀
by฀the฀Company.฀
฀
฀
Derivative฀Financial฀Instruments฀
฀
We฀recognize฀all฀derivatives฀on฀the฀balance฀sheet฀at฀fair฀value.฀At฀inception฀and฀on฀an฀ongoing฀basis,฀we฀
assess฀ whether฀ each฀ derivative฀ that฀ qualifies฀ for฀ hedge฀ accounting฀ continues฀ to฀ be฀ highly฀ effective฀ in฀
offsetting฀ changes฀ in฀the฀ cash฀ flows฀ of฀ the฀ hedged฀ item.฀ If฀ the฀ derivative฀ meets฀ the฀ hedge฀ criteria฀ as฀
defined฀by฀certain฀accounting฀standards,฀depending฀on฀the฀nature฀of฀the฀hedge,฀changes฀in฀the฀fair฀value฀
of฀ the฀ derivative฀ are฀ either฀ offset฀ against฀ the฀ change฀ in฀ fair฀ value฀ of฀ assets,฀ liabilities฀ or฀ firm฀
commitments฀ through฀ earnings฀ or฀ recognized฀ in฀ accumulated฀ other฀ comprehensive฀ income฀ until฀ the฀
hedged฀item฀is฀recognized฀in฀earnings.฀The฀ineffective฀portion฀of฀a฀derivative’s฀change฀in฀fair฀value,฀if฀
any,฀is฀immediately฀recognized฀in฀earnings.฀฀฀
฀
We฀recognized฀a฀loss฀of฀$51,000฀($32,000฀after฀tax)฀in฀2013,฀a฀loss฀of฀$114,000฀($72,000฀after฀tax)฀in฀
2012฀and฀income฀of฀$258,000฀($165,000฀after฀tax)฀in฀2011,฀in฀accumulated฀other฀comprehensive฀income฀
for฀the฀net฀change฀in฀the฀fair฀value฀of฀our฀interest฀rate฀swap.฀See฀Note฀9฀for฀additional฀information฀on฀our฀
debt฀and฀credit฀arrangements.฀
฀ ฀