INCOME TAXES

12 Months Ended

Dec. 31, 2013

Income Tax Disclosure [Abstract]

INCOME TAXES

10.  INCOME TAXES

The Company’s income tax provision consisted of the following:

For the years ended December 31,	2013			2012			2011
(in thousands)
Current:
Federal	$	54,778		$	54,815		$	48,505
State		9,259			8,717			7,723
Foreign		3,883			3,648			3,373
Deferred:
Federal		(468	)		(2,326	)		191
State		730			484			528
Foreign		94			(28	)		65
Total income tax provision	$	68,276		$	65,310		$	60,385

The primary factors causing income tax expense to be different than the federal statutory rate for 2013, 2012 and 2011 are as follows:

For the years ended December 31,	2013			2012			2011
(in thousands)
Income tax at statutory rate	$	67,063		$	61,825		$	56,384
State income tax expense (net of federal benefit)		6,498			5,835			5,477
Foreign tax benefit		(2,661	)		(2,560	)		(2,109	)
Other		(2,624	)		210			633
Total income tax provision	$	68,276		$	65,310		$	60,385

Other includes the release of deferred tax liabilities, tax credits, valuation allowance, and other immaterial adjustments.

The Provision for Income Taxes resulted in an effective tax rate of 35.6% on Income Before Income Taxes for the year ended December 31, 2013. The effective rate differs from the annual federal statutory rate primarily because of state and foreign income taxes and the release of certain deferred tax liabilities.

For 2012 and 2011 the effective tax rate was 37.0% and 37.5%, respectively. The effective income tax rate differs from the annual federal statutory tax rate primarily because of state and foreign income taxes.

During 2013, 2012 and 2011, the Company paid income taxes of $69.4 million, $63.0 million and $52.0 million, respectively, net of refunds.

Deferred income taxes reflect the net tax effects of the temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and income tax purposes. Significant components of the Company’s deferred tax assets and liabilities are as follows:

December 31,	2013			2012
(in thousands)
Deferred tax assets:
Termite accrual	$	2,738		$	2,288
Insurance and contingencies		26,171			25,841
Unearned revenues		14,692			14,413
Compensation and benefits		14,100			11,984
Pension liability		—			16,703
State and foreign operating loss carryforwards		9,637			9,838
Bad debt reserve		4,032			3,703
Other		1,275			1,384
Valuation allowance		(2,245	)		(2,096	)
Total deferred tax assets		70,400			84,058
Deferred tax liabilities:
Depreciation and amortization		(4,605	)		(6,554	)
Foreign currency translation		(1,792	)		(3,606	)
Prepaid pension		(2,485	)		—
Intangibles and other		(17,456	)		(13,719	)
Total deferred tax liabilities		(26,338	)		(23,879	)
Net deferred tax assets	$	44,062		$	60,179

Analysis of the valuation allowance:

December 31,	2013		2012
(in thousands)
Valuation allowance at beginning of year	$	2,096	$	1,646
Increase in valuation allowance		149		450
Valuation allowance at end of year	$	2,245	$	2,096

As of December 31, 2013, the Company has net operating loss carryforwards for foreign and state income tax purposes of approximately $199.0 million, which will be available to offset future taxable income. If not used, these carryforwards will expire between 2014 and 2028. Management believes that it is unlikely to be able to utilize approximately $10.0 million of foreign net operating losses before they expire and has included a valuation allowance for the effect of these unrealizable operating loss carryforwards. The valuation allowance increased by $0.2 million due to the foreign net operating losses.

Earnings from continuing operations before income tax includes foreign income of $15.0 million in 2013, $13.0 million in 2012 and $11 million in 2011. The Company's international business is expanding and we intend to continue to grow the business in foreign markets in the future through reinvestment of foreign deposits and future earnings as well as acquisition of unrelated companies. Repatriation of cash from the Company's foreign subsidiaries is not part of the Company's current business plan.

The total amount of unrecognized tax benefits at December 31, 2013 that, if recognized, would affect the effective tax rate is $0.5 million. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

December 31,	2013			2012
(in thousands)
Balance at Beginning of Year	$	1,581		$	2,009
Additions based on tax positions related to current year		0			45
Additions for tax positions of prior years		387			332
Reductions for tax positions of prior years		—			(344	)
Settlements		(1,968	)		(322	)
Expiration of statute of limitation		—			(139	)
Balance at End of Year	$	0		$	1,581

The Company and its subsidiaries are subject to U.S. federal income tax as well as income tax of multiple state and foreign jurisdictions. In many cases these uncertain tax positions are related to tax years that remain subject to examination by the relevant taxing authorities. The federal tax audit for 2002 and 2003 was completed in 2011. In addition, the Company has subsidiaries in various state and international jurisdictions that are currently under audit for years ranging from 2006 through 2012. With few exceptions, we are no longer subject to U.S. federal, state and local, or non-U.S., income tax examinations for years prior to 2007.

It is reasonably possible that the amount of unrecognized tax benefits will increase or decrease in the next 12 months. These changes may be the result of settlement of ongoing audits. None of the reductions in the liability for unrecognized tax benefits discussed above will affect the effective tax rate.

The Company’s policy is to record interest and penalties related to income tax matters in income tax expense. Accrued interest and penalties were $0.5 million and $0.9 million as of December 31, 2013 and December 31, 2012, respectively. During 2013, 2012, and 2011 the Company recognized interest and penalties of $0.9 million, $0.1 million and $0.3 million, respectively.