INCOME TAXES

The components of income (loss) before income taxes are as follows:



			Year ended
(In thousands)	December 31, 2012		December 31, 2011			December 31, 2010
Domestic	$	114,176	$	97,677		$	87,539
Foreign	477		(728		)	200
Total	$	114,653	$	96,949		$	87,739

The components of the provision for income taxes are as follows:



				Year ended
(In thousands)	December 31, 2012			December 31, 2011			December 31, 2010
Current:
Federal	$	40,338		$	28,846		$	25,574
State	6,419			4,889			5,357
Foreign	345			373			351
	47,102			34,108			31,282
Deferred:
Federal	(5,510		)	2,062			2,015
State	(352		)	(52		)	31
Foreign	(418		)	47			(47		)
	(6,280		)	2,057			1,999
Total	$	40,822		$	36,165		$	33,281

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



	Year ended
	December 31, 2012		December 31, 2011		December 31, 2010
Statutory U.S. federal tax rate	35.0	%	35.0	%	35.0	%
State income taxes, net of federal benefit	2.9	%	3.3	%	3.9	%
Domestic production activities deduction	(2.3	)%	(1.5	)%	(1.3	)%
Tax credits	(0.1	)%	(1.0	)%	(1.2	)%
Nondeductible expenses and other	0.1	%	1.5	%	1.5	%
Effective tax rate	35.6	%	37.3	%	37.9	%

Deferred income taxes reflect the tax effects of temporary differences between the basis of assets and liabilities recognized for financial reporting purposes and tax purposes. Significant components of our deferred income taxes are as follows:



(In thousands)	December 31, 2012			December 31, 2011
Deferred tax assets:
Inventory reserve	$	16,288		$	14,414
Accruals, reserves, and other currently not deductible	5,639			2,603
Stock-based compensation	4,913			3,843
Foreign net operating loss carryforwards	952			1,149
Total deferred tax assets	27,792			22,009
Valuation allowance	(533		)	(1,149		)
Total deferred tax assets, net of valuation allowance	27,259			20,860
Deferred tax liabilities:
Depreciation and amortization	(9,993		)	(9,326		)
Other	(782		)	(1,129		)
Total deferred tax liabilities	(10,775		)	(10,455		)
Net deferred tax assets	$	16,484		$	10,405

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, management believes it is more likely than not that we will realize the benefits of these deductible differences at December 31, 2012. The amount of the deferred tax asset considered realizable, however, could be reduced in the near term if estimates of future taxable income during the carryforward period are reduced. Of the amount presented above as of December 31, 2012, $0.4 million of long-term deferred tax assets is included as a component of other assets on our consolidated balance sheet.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:



				Year ended
(In thousands)	December 31, 2012			December 31, 2011			December 31, 2010
Unrecognized tax benefit at the beginning of the year	$	2,799		$	3,845		$	2,455
Additions related to current year tax positions	$	673		$	612		$	863
Additions related to prior year tax positions	46			22			582
Reductions related to current year tax positions	—			(86		)	—
Reductions related to prior year tax positions	(18		)	(1,594		)	(55		)
Unrecognized tax benefit at the end of the year	3,500			2,799			3,845

The impact of our unrecognized tax benefits to the effective income tax rate is as follows:



(In thousands)	December 31, 2012		December 31, 2011
Portion of total unrecognized tax benefits that, if recognized, that would affect the effective income tax rate	$	747	$	591

Interest and penalties are recorded in the statement of operations as provision for income taxes. The total interest and penalties recorded in the statement of operations was nominal for the years ended December 31, 2012, 2011 and 2010. Our uncertain tax benefits could increase in the next twelve months as we continue our current transfer pricing policies and deduct additional tax credits. We are unable to estimate a range of reasonably possible changes in our uncertain tax benefits in the next twelve months as we are unable to predict when, or if, the tax authorities will commence audits, the time needed for the audits, and the audit findings that will require settlement with the applicable tax authorities, if any. The tax years that remained subject to examination by a major tax jurisdiction as of December 31, 2012 were 2008 and beyond for India and Switzerland; 2009 and beyond for the United States, Belgium and Germany; 2010 and beyond for the United Kingdom, Poland and South Africa and 2011 for Denmark, Sweden, Israel and Australia.

On January 2, 2013, the American Taxpayer Relief Act of 2012 (the “ATRA”) was signed into law. One of the provisions of the ATRA was a reinstatement and extension of the research and experimentation tax credit from January 1, 2012 through December 31, 2013. However, as of December 31, 2012 no benefit could be recognized for this tax credit due to the passage of the ATRA in 2013. We estimate that the impact on the year ended December 31, 2012 would have been a tax benefit of approximately $0.7 million, which we will record as a discrete tax benefit in the first quarter of 2013, the period in which the legislation, including the reinstatement, was enacted.