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:



	2013		2012		2011
	(In thousands)
Domestic	$	34,687	$	40,650	$	23,750
Foreign	3,322		2,821		3,599
Total	$	38,009	$	43,471	$	27,349

The provision for income taxes is as follows:



	2013			2012			2011
	(In thousands)
Current:
Federal	$	12,630		$	13,908		$	7,111
State	2,394			1,455			1,290
Foreign	802			507			780
Deferred:
Federal	(2,174		)	(663		)	(774		)
State	(228		)	(165		)	(79		)
Foreign	(32		)	397			(140		)
Total	$	13,392		$	15,439		$	8,188

The provision 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:



	2013			2012			2011
	(In thousands)
Provision at statutory rate	$	13,303		$	15,215		$	9,572
State income taxes, net of federal tax benefit	1,408			1,018			783
Foreign income taxes	(393		)	(87		)	(621		)
Domestic production activities deduction	(498		)	(529		)	(255		)
Tax audit settlements	—			(101		)	(1,330		)
Other	(428		)	(77		)	39
Actual provision	$	13,392		$	15,439		$	8,188

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



	2013			2012
	(In thousands)
Deferred tax assets:
Reserve for receivables and inventories	$	2,850		$	1,991
Accrued compensation	1,087			876
Payables	364			582
Non-pension postretirement benefits	2,447			2,652
Net operating loss and credit carryforwards	2,645			—
Accrued pension benefits	—			2,912
Accrued employee benefits	1,681			1,540
Other	793			745
Total deferred tax assets	11,867			11,298

Deferred tax liabilities:
Depreciation	4,408			4,657
Amortization	12,165			11,437
Accrued pension benefits	236			—
Other	14			—
Total deferred tax liabilities	16,823			16,094
Net deferred tax liabilities	$	(4,956	)	$	(4,796	)

At December 31, 2013, the Company had federal and state net operating loss carryforwards of $5.9 million, which were acquired in connection with the Aquacue acquisition. There were no carryforwards at December 31, 2012. The Company’s U.S. federal and state net operating loss carryforwards expire between 2029 and 2033.

At December 31, 2013 and 2012, the Company had federal and state general business credit carryforwards of $0.2 million and $0.1 million, respectively. The Company’s U.S. federal and state tax credit carryforwards expire between 2029 and 2033.

The Company’s federal and state net operating loss and federal and state credit carryforwards are limited on an annual basis to $0.4 million under Internal Revenue Code Section 382 and Section 383. The federal and state net operating loss carryforward must be fully utilized prior to the utilization of the federal and state credit carryforward.

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, 2013 were $19.1 million.

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



	2013			2012
	(In thousands)
Balance at beginning of year	$	698		$	796
Increases (decreases) in unrecognized tax benefits as a result of positions taken during the prior period	80			(18		)
Increases in unrecognized tax benefits as a result of positions taken during the current period	216			162
Decreases in unrecognized tax benefits relating to settlements with taxing authorities	—			(70		)
Reductions to unrecognized tax benefits as a result of a lapse of the applicable statute of limitations	(114		)	(172		)
Balance at end of year	$	880		$	698

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, 2014. 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, 2014.

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 2009. 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 at both December 31, 2013 and 2012, 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.