INCOME TAXES

The temporary differences between the tax basis of assets and liabilities and their financial reporting amounts that give rise to the deferred income tax assets and liabilities are as follows:



	December 31,
	2013			2012
Current deferred tax assets (liabilities):
Inventories	$	3,871		$	1,888
Accrued vacation	912			705
Stock award	891			522
Obligation under operating leases	733			587
Other	164			137
Net current deferred tax asset	6,571			3,839

Long-term deferred tax assets (liabilities):
Goodwill	20,904			215
Depreciation	(6,178		)	(6,151		)
Long-term contract costs	(4,475		)	(1,941		)
Amortization of intangibles	(3,265		)	(3,646		)
Professional fees	1,852			1,946
Gain on sale of real estate	954			1,022
NOL Carryforwards	1,031			261
Other	525			(177		)
Net long-term deferred tax assets (liabilities)	11,348			(8,471		)
Less: valuation allowance	(18,137		)	(261		)
Net deferred tax assets (liabilities)	$	(218	)	$	(4,893	)

Based on our current and anticipated future pre-tax earnings, we believe it is more likely than not that our federal and state deferred tax assets, including benefits related to net operating loss carry forwards, will not be realized based on the measurement standards required under ASC 740, Accounting for Income Taxes. We established a valuation allowance of $17,876 and $261 in 2013 and 2012, respectively. The federal net operating losses expire in the year 2033. We evaluated all significant available positive and negative evidence, including the existence of losses in the current year in assessing the need for a valuation allowance.

The Company’s income tax (benefit) provision attributable to income before taxes consisted of the following for the years ended December 31, 2013, 2012 and 2011:



	2013			2012			2011
Federal:
Current	$	(676	)	$	7,926		$	5,658
Deferred	(6,066		)	(109		)	1,149
	(6,742		)	7,817			6,807

State:
Current	120			346			225
Deferred	(357		)	(10		)	104
	(237		)	336			329
(Benefit) provision for income taxes	$	(6,979	)	$	8,153		$	7,136

The reconciliation of income tax computed at the U.S. federal statutory tax rates to income tax expense is as follows:



	2013			2012			2011
Federal taxes	$	(22,912	)	$	8,627		$	8,235
State and local taxes, net of federal benefit	(1,119		)	336			329
Production deduction	—			(530		)	(508		)
Valuation allowance	17,718			—			—
Research and experimental and other tax credits	(634		)	(300		)	(665		)
Other	(32		)	20			(255		)
(Benefit) provision for income taxes	$	(6,979	)	$	8,153		$	7,136