Income Taxes

The Company is subject to income taxes in the United States and numerous foreign jurisdictions. Significant judgment is required in determining the worldwide provision for income taxes and recording the related deferred tax assets and liabilities.

Details of earnings before income taxes are as follows:



	2012		2011		2010
	(In thousands)
Domestic	$	40,650	$	23,750	$	42,213
Foreign	2,821		3,599		2,225
Total	$	43,471	$	27,349	$	44,438

The provision for income taxes are as follows:



	2012			2011			2010
	(In thousands)
Current:
Federal	$	13,908		$	7,111		$	14,696
State	1,455			1,290			2,553
Foreign	507			780			385
Deferred:
Federal	(663		)	(774		)	(1,485		)
State	(165		)	(79		)	(324		)
Foreign	397			(140		)	(49		)
Total	$	15,439		$	8,188		$	15,776

The provision (benefit) for income taxes differs from the amount that would be provided by applying the statutory

U.S. corporate income tax rate in each year due to the following items:



	2012			2011			2010
	(In thousands)
Provision at statutory rate	$	15,215		$	9,572		$	15,553
State income taxes, net of federal tax benefit	1,018			783			1,449
Foreign income taxes	(87		)	(621		)	(430		)
Domestic production activities deduction	(529		)	(255		)	(573		)
Tax audit settlements	(101		)	(1,330		)	—
Other	(77		)	39			(223		)
Actual provision	$	15,439		$	8,188		$	15,776

The components of deferred income taxes as of December 31 are as follows:



	2012			2011
	(In thousands)
Deferred tax assets:
Reserve for receivables and inventories	$	1,991		$	1,674
Accrued compensation	876			873
Payables	582			717
Non-pension postretirement benefits	2,652			2,516
Accrued pension benefits	2,912			3,338
Accrued employee benefits	1,540			1,266
Other	745			131
Total deferred tax assets	11,298			10,515

Deferred tax liabilities:
Depreciation	4,657			3,529
Amortization	11,437			1,263
Other	—			64
Total deferred tax liabilities	16,094			4,856
Net deferred tax assets (liabilities)	$	(4,796	)	$	5,659

At December 31, 2012, the Company did not have any net operating loss carryforwards.

No provision for federal income taxes was made on the earnings of foreign subsidiaries that are considered permanently invested or that would be offset by foreign tax credits upon distribution. Such undistributed earnings at December 31, 2012 were $16.2 million.

Changes in the Company's gross liability for unrecognized tax benefits, excluding interest and penalties, are as follows:



	2012			2011
	(In thousands)
Balance at beginning of year	$	796		$	2,125
Increases (decreases) in unrecognized tax benefits as a result of positions taken during the prior period	(18		)	8
Increases in unrecognized tax benefits as a result of positions taken during the current period	162			141
Decreases in unrecognized tax benefits relating to settlements with taxing authorities	(70		)	(1,368		)
Reductions to unrecognized tax benefits as a result of a lapse of the applicable statute of limitations	(172		)	(110		)
Balance at end of year	$	698		$	796

The Company does not expect a significant increase or decrease to the total amounts of unrecognized tax benefits during the fiscal year ending December 31, 2013. To the extent these unrecognized tax benefits are ultimately recognized, they will impact the effective tax rate in a future period, possibly as early as the fiscal year ending December 31, 2013.

The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction, and various states and foreign jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years prior to 2008. The Company's policy is to recognize interest related to unrecognized tax benefits as interest expense and penalties as operating expenses. Accrued interest was approximately

$0.1 million and $0.1 million at December 31, 2012 and 2011, respectively, and there were no penalties accrued in either year.

The Company believes that it has appropriate support for the income tax positions taken and to be taken on its tax returns and that its accruals for tax liabilities are adequate for all open years based on an assessment of many factors including past experience and interpretations of tax law applied to the facts of each matter.