Income Taxes

Earnings (loss) from continuing operations before income taxes consist of the following (in thousands):



	2014			2013			2012
Domestic	$	(104,776	)	$	(73,529	)	$	(30,886	)
Foreign	41,566			30,070			31,958
	$	(63,210	)	$	(43,459	)	$	1,072

The Company has provided for income taxes (benefits) from continuing operations as follows (in thousands):



	2014			2013			2012
Current:
Federal	$	(7,105	)	$	(2,485	)	$	(11,031	)
State	(63		)	300			716
Foreign	15,105			11,043			21,154
	7,937			8,858			10,839
Deferred:
Federal	100			3,011			3,968
Foreign	(2,487		)	(994		)	348
	(2,387		)	2,017			4,316
Income Taxes	$	5,550		$	10,875		$	15,155

Included in the 2014, 2013 and 2012 Federal current tax benefit is a benefit of $7,175,000, $3,455,000 and $9,230,000, respectively, related to an intra-period allocation to continuing operations. A charge in an equal amount is in discontinued operations. A reconciliation to the effective income tax rate from the federal statutory rate is as follows:



	2014		2013		2012
Statutory federal income tax rate	(35.0	)%	(35.0	)%	35.0	%
State and local income taxes, net of federal income tax benefit	(0.1	)	0.5		43.4
Tax credits	(5.1	)	(22.8	)	(45.2	)
Foreign taxes at less than the federal statutory rate (including tax holidays)	(10.7	)	(10.6	)	(322.9	)
Federal and foreign valuation allowance	52.5		35.8		1,757.6
Non-deductible extinguishment and debt finance costs	—		—		6.4
Withholding taxes	0.6		0.7		65.2
Compensation	0.1		0.5		6.8
Dividends	12.3		54.6		(9.8	)
Life insurance	4.1		(1.5	)	(60.2	)
Foreign branch activity	(1.8	)	(1.8	)	(78.0	)
Uncertain tax positions	1.2		1.3		826.6
Other, net	(9.3	)	3.3		(811.2	)
	8.8	%	25.0	%	1,413.7	%

At December 31, 2014, total deferred tax assets were $137,511,000, total deferred tax liabilities were $33,778,000 and the tax valuation allowance total was $133,912,000 for a net deferred income tax liability of $30,179,000 compared to total deferred tax assets of $126,264,000, total deferred tax liabilities of $43,317,000 and a tax valuation allowance total of $117,790,000 for a net deferred income tax liability of $34,843,000 at December 31, 2013.

Significant components of deferred income tax assets and liabilities at December 31, 2014 and 2013 are as follows (in thousands):



	2014			2013
Current deferred income tax assets (liabilities), net:
Bad debt	$	5,364		$	6,924
Warranty	7,092			6,104
State and local taxes	2,240			2,787
Other accrued expenses and reserves	1,852			3,939
Inventory	3,096			1,654
Compensation and benefits	2,209			1,657
Product liability	594			487
Valuation allowance	(22,084		)	(27,214		)
Other, net	(732		)	406
	$	(369	)	$	(3,256	)
Long-term deferred income tax assets (liabilities), net:
Goodwill and intangibles	(21,915		)	(28,517		)
Convertible debt	(700		)	(659		)
Fixed assets	(10,431		)	(13,111		)
Compensation and benefits	14,630			22,967
Loss and credit carryforwards	65,123			62,738
Product liability	4,919			3,562
State and local taxes	17,745			13,039
Valuation allowance	(111,828		)	(90,576		)
Other, net	12,647			(1,030		)
	$	(29,810	)	$	(31,587	)

Net Deferred Income Taxes	$	(30,179	)	$	(34,843	)

The Company recorded a valuation allowance for its U.S. and certain foreign country net deferred tax assets where it is in a three year cumulative loss. The Company made net payments for income taxes of $6,384,000, $6,349,000, and $10,837,000 during the years ended December 31, 2014, 2013 and 2012, respectively.

At December 31, 2014, the Company had foreign tax loss carryforwards of approximately $60,518,000 which are non-expiring, of which $60,518,000 are offset by valuation allowances. At December 31, 2014, the Company also had $496,000,000 of domestic state and local tax loss carryforwards, of which $179,000,000 expire between 2015 and 2018, $196,000,000 expire between 2019 and 2028 and $121,000,000 expire after 2028. The Company has a federal domestic net operating loss carryforward of $47,266,000 which expires in 2034 and federal tax credit carryforwards of $31,601,000 of which $4,170,000 expire between 2016 and 2018 and $25,813,000 expire between 2019 and 2024, $1,371,000 expire between 2031 and 2034, and $247,000 are indefinite.

As of December 31, 2014 and 2013, the Company had a liability for uncertain tax positions, excluding interest and penalties of $10,030,000 and $10,343,000, respectively. The Company does not believe there will be a material change in its unrecognized tax positions over the next twelve months. The total liabilities associated with unrecognized tax benefits that, if recognized, would impact the effective tax rates were $10,030,000 and $10,343,000 at December 31, 2014 and 2013, respectively.

A reconciliation of the beginning and ending balance of unrecognized tax benefits is as follows (in thousands):



	2014			2013
Balance at beginning of year	$	10,833		$	9,851
Additions to:
Positions taken during the current year	348			942
Positions taken during a prior year	418			55
Exchange rate impact	—			313
Deductions due to:
Exchange rate impact	(362		)	—
Settlements with taxing authorities	—			(36		)
Lapse of statute of limitations	(218		)	(292		)
Balance at end of year	$	11,019		$	10,833

The Company recognizes interest and penalties associated with uncertain tax positions in income tax expense. During 2014, 2013 and 2012 the (expense) benefit for interest and penalties was $(500,000), $(676,000) and $(3,309,000), respectively. The Company had approximately $5,130,000 and $5,181,000 of accrued interest and penalties as of December 31, 2014 and 2013, respectively.

Included in the balance of uncertain tax positions in Other Long-Term Obligations at the end of 2014 is an accrual of tax $5,940,000 and interest $4,400,000 resulting from a foreign audit related to years before 2012.

The Company and its subsidiaries file income tax returns in the U.S. and certain foreign jurisdictions. The Company is subject to U.S. federal income tax examinations for calendar years 2011 to 2014, and is subject to various U.S. state income tax examinations for 2010 to 2014. With regards to foreign income tax jurisdictions, the Company is generally subject to examinations for the periods 2008 to 2014.