Note 16.

Income Taxes

Significant components of the Company’s deferred tax liabilities and assets as of December 31, 2012 and 2011 are as follows:



		2012		2011
		In thousands
Deferred tax liabilities:
Goodwill and other intangibles	$	(12,057)	$	(12,884)
Depreciation		(2,745)		(3,499)
Inventories		(3,433)		(4,333)
Unrepatriated earnings of foreign subsidiary		-		(428)
Other-net		(223)		(174)
Total deferred tax liabilities		(18,458)		(21,318)
Deferred tax assets:
Pension liability		2,787		3,210
Warranty reserve		5,752		2,058
Deferred compensation		1,161		1,601
Accounts receivable		358		924
Contingent liabilities		657		675
Deferred gain on sale / leaseback		-		178
State tax incentives		17		5
Net operating loss carryforwards		59		88
Foreign tax credit carryforwards		112		112
Total deferred tax assets		10,903		8,851
Net deferred tax liability	$	(7,555)	$	(12,467)

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



		2012		2011		2010
		In thousands
Current:
Federal	$	9,742	$	4,123	$	10,023
State		1,977		485		775
Foreign		1,910		2,493		30
Total current		13,629		7,101		10,828
Deferred:
Federal		(3,966)		3,446		1,204
State		(155)		553		111
Foreign		(442)		(515)		(185)
Total deferred		(4,563)		3,484		1,130
Total income tax expense from continuing operating activities	$	9,066	$	10,585	$	11,958

The Company has unrecorded deferred income taxes on the undistributed earnings of its foreign subsidiaries. It is management’s intent and practice to indefinitely reinvest such earnings outside of the U.S. to support the continuing operations of its foreign subsidiaries. As a result of the liquidity and financial strength of the Company’s domestic operations, the Company does not currently anticipate a scenario where repatriation of these earnings would occur. At December 31, 2012, the aggregate undistributed earnings of the foreign subsidiaries (including cumulative unrealized currency gains related to previously taxed income) amounted to approximately $43,304,000. Upon distribution of these earnings in the form of dividends or otherwise, the Company may be subject to U.S. income taxes and foreign withholding taxes. It is not practical, however, to estimate the amount of taxes that may be payable on the eventual remittance of these earnings because of the complexity of the calculation.

Income before income taxes, as shown in the accompanying consolidated statements of operations, includes the following components:



		2012		2011		2010
		In thousands

Domestic	$	16,600	$	23,433	$	32,067
Foreign		7,230		9,219		(103)
Income from continuing operations, before income taxes	$	23,830	$	32,652	$	31,964

The reconciliation of income tax computed at statutory rates to income tax expense is as follows:



	2012		2011		2010

Statutory rate	35.0	%	35.0	%	35.0	%
Effect of foreign tax	(3.0)		(2.3)		-
State income tax	4.5		2.2		2.2
Nondeductible expenses	1.4		0.7		0.2
Tax credits	(2.2)		(2.0)		-
Other	2.3		(1.1)		-
	38.0	%	32.5	%	37.4	%

At December 31, 2012 and 2011, the tax benefit of net operating loss carryforwards available for state income tax purposes was approximately $59,000 and $88,000, respectively. The net operating loss carryforwards will expire in 2017 through 2024. The Company has foreign tax credit carryforwards in the amount of $112,000 that will expire in 2014 through 2016. The Company anticipates utilizing these credit carryforwards prior to their expiration and, therefore, has not provided a valuation allowance for these amounts. The Company received approximately $903,000 in state tax refunds in 2011 not previously recognized by the Company as realization was not more likely than not.

The following table provides a reconciliation of unrecognized tax benefits as of December 31, 2012 and 2011:



		2012		2011
		In thousands

Unrecognized tax benefits at beginning of period:	$	1,849	$	645
Increases based on tax positions for prior periods		220		1,401
Increases based on tax positions related to current period		-		34
Decreases related to settlements with taxing authorities		-		(139)
Decreases as a result of a lapse of the applicable statute of limitations		(24)		(92)
Balance at end of period	$	2,045	$	1,849

The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate is $2,045,000 at December 31, 2012. The Company accrues interest and penalties related to unrecognized tax benefits in its provision for income taxes. At December 31, 2012, the Company had accrued interest and penalties related to unrecognized tax benefits of $320,000.

The Company files income tax returns in the United States and in various state, local and foreign jurisdictions. The Company is subject to federal income tax examinations for the period 2009 forward. With respect to the state, local and foreign filings, the Company is generally subject to income tax examinations for the periods 2008 forward.