Income Taxes

Income before income taxes includes the following components:



	Year Ended December 31,
(in thousands)	2012		2011		2010
Domestic	$	234,497	$	205,966	$	162,921
Foreign	59,050		58,892		53,473
Total	$	293,547	$	264,858	$	216,394

The provision for income taxes is composed of the following:



	Year Ended December 31,
(in thousands)	2012			2011			2010
Current:
Federal	$	79,028		$	57,423		$	62,350
State	7,886			5,770			5,589
Foreign	22,046			24,011			21,964
Deferred:
Federal	(21,026		)	(11,768		)	(15,173		)
State	(3,913		)	(1,314		)	(2,102		)
Foreign	6,043			10,061			(9,366		)
Total	$	90,064		$	84,183		$	63,262

The reconciliation of the U.S. federal statutory tax rate to the consolidated effective tax rate is as follows:



	Year Ended December 31,
	2012		2011		2010
Federal statutory tax rate	35.0	%	35.0	%	35.0	%
State income taxes, net of federal benefit	1.2		1.1		0.7
Stock-based compensation	1.0		1.0		1.4
Changes in tax rates	0.8		2.2		—
Net tax (benefit) of unrepatriated earnings	0.7		—		(0.3	)
Uncertain tax positions	0.3		0.2		(0.8	)
Benefit from restructuring activities	(3.1	)	(3.5	)	(1.0	)
Domestic production activity benefit	(3.3	)	(2.9	)	(2.8	)
Foreign rate differential	(1.9	)	(1.1	)	(0.7	)
Research and experimentation credits	(0.1	)	(0.9	)	(0.7	)
Adjustments of prior year taxes	(1.3	)	(0.3	)	(1.1	)
Other	1.4		1.0		(0.5	)
	30.7	%	31.8	%	29.2	%

In general, it is the practice and intention of the Company to repatriate previously taxed earnings and to reinvest all other earnings of its non-U.S. subsidiaries. The Company has not made a provision for U.S. taxes on $145.6 million, representing the excess of the amount for financial reporting over the tax bases of investments in foreign subsidiaries that are essentially permanent in duration. Generally, such amounts become subject to U.S. taxation upon the remittance of dividends and under certain other circumstances. The residual U.S. tax cost associated with this difference is estimated to be $35.1 million. The Company has made a tax provision of $2.0 million related to $22 million of earnings that it expects to repatriate from a foreign subsidiary.

The components of deferred tax assets and liabilities are as follows:



	December 31,
(in thousands)	2012			2011
Deferred tax assets:
Net operating loss carryforwards	$	26,228		$	18,624
Employee benefits	17,670			16,697
Stock-based compensation	16,092			11,888
Foreign tax credits	558			7,219
Other accruals not currently deductible	1,207			6,090
Research and development credits	2,254			4,542
Uncertain tax positions	7,790			3,145
Deferred revenue	5,139			3,096
Allowance for doubtful accounts	1,661			1,259
Other	2,227			1,241
Valuation allowance	(14		)	(8		)
	80,812			73,793
Deferred tax liabilities:
Other intangible assets	(128,671		)	(141,949		)
Property and equipment	(5,838		)	(6,529		)
Unremitted foreign earnings	(2,204		)	(140		)
	(136,713		)	(148,618		)
Net deferred tax liabilities	$	(55,901	)	$	(74,825	)

As of December 31, 2012, the Company had federal net operating loss carryforwards of $4.6 million. These losses expire between 2020 - 2028, and are subject to limitations on their utilization. The Company had state net operating loss carryforwards of $4.1 million, which expire between 2014 and 2020, of which $4.1 million are subject to limitations on their utilization. The Company had total foreign net operating loss carryforwards of $70.5 million, of which $20.0 million are not currently subject to expiration dates. The remainder, $50.5 million, expires between 2019 and 2021. The Company had tax credit carryforwards of $4.9 million, of which $1.5 million are subject to limitations on their utilization. Approximately $2.5 million of these tax credit carryforwards are not currently subject to expiration dates. The remainder, $2.4 million, expires in various years between 2029 and 2032.

The following is a reconciliation of the total amounts of unrecognized tax benefits:



	Year Ended December 31,
(in thousands)	2012			2011			2010
Unrecognized tax benefit as of January 1	$	31,582		$	19,993		$	10,041
Acquired unrecognized tax benefit	3,845			5,813			—
Gross increases—tax positions in prior period	2,048			6,814			177
Gross decreases—tax positions in prior period	(2,167		)	(2,697		)	(2,415		)
Gross increases—tax positions in current period	2,660			2,297			13,001
Reductions due to a lapse of the applicable statute of limitations	(1,314		)	(190		)	(674		)
Changes due to currency fluctuation	625			(448		)	(84		)
Settlements	(76		)	—			(53		)
Unrecognized tax benefit as of December 31	$	37,203		$	31,582		$	19,993

The Company does not expect any uncertain tax positions to be resolved within the next twelve months. Of the total unrecognized tax benefit as of December 31, 2012, $3.8 million would not affect the effective tax rate, if recognized.

The Company recognizes interest and penalties related to unrecognized tax benefits as income tax expense. As of December 31, 2012, the Company accrued a liability for penalties of $2.1 million and interest of $2.5 million. As of December 31, 2011, the Company accrued a liability for penalties of $2.2 million and interest of $2.6 million.

The Company is subject to taxation in the U.S. and various states and foreign jurisdictions. The Company’s 2008 through 2011 tax years are open to examination by the Internal Revenue Service. The 2009 and 2010 federal returns are currently under examination. The Company also has various foreign and state tax filings subject to examination for various years.