15. INCOME TAXES

The components of income (loss) before taxes from continuing operations consisted of the following for the years ended December 31 (in thousands):


		2012		2011		2010
Domestic	$	18,468	$	13,403	$	(93,285	)
Foreign		3,699		3,482		1,006
Income (loss) before taxes from continuing operations	$	22,167	$	16,885	$	(92,279	)

The provision for (benefit of) income taxes from continuing operations for the years ended December 31 consisted of the following (in thousands):


		2012			2011			2010
Current:
U.S. Federal	$	5,780		$	139		$	(6,955	)
State		1,483			920			285
Foreign		1,260			1,582			376
Total current		8,523			2,641			(6,294	)
Deferred:
U.S. Federal		844			4,998			(10,847	)
State		489			783			482
Foreign		(339	)		(753	)		(264	)
Total deferred		994			5,028			(10,629	)
Provision for (benefit of) income taxes	$	9,517		$	7,669		$	(16,923	)

The provision for (benefit of) income taxes from discontinued operations for the years ended December 31 consisted of the following (in thousands):


		2012			2011		2010
Current:
U.S. Federal	$	(98	)	$	5,643	$	(542	)
State		(186	)		622		61
Foreign		–			67		254
Total current		(284	)		6,332		(227	)
Deferred:
U.S. Federal		–			166		(10,192	)
State		–			35		(972	)
Foreign		–			–		(22	)
Total deferred		–			201		(11,186	)
Provision for (benefit of) income taxes	$	(284	)	$	6,533	$	(11,413	)

The provision for (benefit of) income taxes from continuing operations differs from the federal statutory rate of 35% for the years December 31 due to the following (in thousands):


		2012					2011					2010
Statutory rate	$	7,758		35.0	%	$	5,910		35.0	%	$	(32,298	)	35.0	%
Intangible asset impairment		1,514		6.8	%		–		0.0	%		14,560		-15.8	%
State taxes, less federal effect		1,282		5.8	%		1,107		6.6	%		499		-0.5	%
Non-deductible expenses		284		1.3	%		1,443		8.5	%		984		-1.1	%
Foreign rate differential		(335	)	-1.5	%		(344	)	-2.0	%		(68	)	0.1	%
Uncertain tax positions		(872	)	-3.9	%		(228	)	-1.4	%		305		-0.3	%
Other		(114	)	-0.6	%		(219	)	-1.3	%		(905	)	0.9	%
	$	9,517		42.9	%	$	7,669		45.4	%	$	(16,923	)	18.3	%

Deferred tax liabilities (assets) at December 31 consist of the following (in thousands):


		2012			2011
Depreciation	$	20,116		$	22,782
Goodwill		28,130			21,686
Intangible assets		22,587			24,111
Other		1,680			2,046
Gross deferred tax liabilities		72,513			70,625

Equity compensation		(9,897	)		(8,526	)
Other		(15,975	)		(16,315	)
Gross deferred tax assets		(25,872	)		(24,841	)
Valuation allowances		2,574			2,613
Deferred tax assets, net of valuation allowances		(23,298	)		(22,228	)
Net deferred tax liabilities	$	49,215		$	48,397

Net current deferred tax assets of $7,853,000 and $7,404,000 are included in other current assets in the consolidated balance sheet at December 31, 2012 and 2011, respectively.

Deferred taxes include net deferred tax assets relating to certain state and foreign tax jurisdictions. A reduction of the carrying amount of deferred tax assets by a valuation allowance is required if it is more likely than not that such assets will not be realized. During 2010, the Company recorded an additional valuation allowance of $2,400,000 due to the uncertainty of its ability to utilize the deferred tax assets related to one state. The deferred tax assets in that state primarily relate to state net operating losses and intangible assets. The following sets forth a reconciliation of the beginning and ending amount of the Company's valuation allowance (in thousands):


		2012			2011			2010
Balance as of January 1	$	2,613		$	2,829		$	1,779
Cost charged to the tax provision		266			–			2,436
Write-offs		(305	)		(216	)		(1,386	)
Balance as of December 31	$	2,574		$	2,613		$	2,829

The Company received net refunds (made net payments) for income taxes, for the following amounts for the years ended December 31 (in thousands):


		2012			2011		2010
(Payments made) refunds received for income taxes, net	$	(8,944	)	$	2,000	$	6,085

Provision has not been made for U.S. taxes on $32,499,000 of undistributed earnings of foreign subsidiaries. Those earnings have been and will continue to be indefinitely reinvested. As of December 31, 2012, the Company's foreign operations held $21,865,000 of cash that provides foreign operations with liquidity to reinvest in working capital and capital expenditures for their operations. Any excess earnings could be used to grow the Company's foreign operations through launches of new capital projects or additional acquisitions. Determination of the amount of unrecognized deferred U.S. income tax liability is not practicable due to the complexities associated with its hypothetical calculation.

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


		2012			2011
Balance as of January 1	$	2,487		$	2,160
Additions for acquisitions		–			557
Additions for tax positions of the current year		68			218
Additions for tax positions of prior years		67			34
Reductions for tax positions of prior years for:
Settlements and changes in judgment		(557	)		(186	)
Lapses of applicable statute of limitations		(380	)		(296	)
Balance as of December 31	$	1,685		$	2,487

The Company and its U.S. subsidiaries file a U.S. federal consolidated income tax return. Foreign and U.S. state jurisdictions have statute of limitations generally ranging from four to six years. Currently, the Company does not have any returns under examination in U.S. state jurisdictions.

All unrecognized tax benefits would affect the effective tax rate, if recognized as of December 31, 2012 and 2011. The Company classifies accrued interest and penalties related to unrecognized tax benefits in income tax expense. Interest (net of federal tax benefit) and penalties recognized during the years ended December 31 were (in thousands):


		2012			2011		2010
Interest and penalties recognized as (income) expense	$	(48	)	$	10	$	115

At December 31, 2012, the Company had net operating loss carry forwards for federal, state, and foreign income tax purposes totaling $43,456,000 which will expire between 2013 and 2032. The Company recognized $2,703,000 of deferred tax assets, net of the federal tax benefit, related to these net operating losses prior to any valuation allowances.