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Income Taxes
 9 Months Ended
Sep. 30, 2013
Income Tax Disclosure [Abstract]  
Income Taxes
Income Taxes
The Company’s corporate organizational structure requires the filing of two separate consolidated U.S. Federal income tax returns. Taxable income of one group cannot be offset by tax attributes, including net operating losses, of the other group.
A reconciliation of the effective tax rate to the U.S. federal statutory tax rate is as follows:
 
Three months ended September 30,

Nine months ended September 30,
 
2013
 
2012
 
2013
 
2012
Federal statutory tax rate
35.0
 %
 
35.0
 %
 
35.0
 %
 
35.0
 %
State income taxes, net of federal benefit
3.6

 
1.1

 
3.2

 
2.1

Change in valuation allowance
0.2

 
(6.9
)
 
(0.1
)
 
(5.1
)
Warrant liability fair value adjustment
—

 
(2.3
)
 
—

 
(1.9
)
Domestic production activities deduction
(2.3
)
 
(2.8
)
 
(2.4
)
 
(2.5
)
Other
2.1

 
(1.0
)
 
1.0

 
(0.3
)
Effective income tax rate
38.6
 %
 
23.1
 %
 
36.7
 %
 
27.3
 %

Fluctuations in effective tax rates were historically impacted by non-cash changes in the fair value of the Company’s warrant liability, permanent tax differences with no associated income tax impact, and existing deferred tax asset valuation allowances.
The change in the net deferred tax asset (liability) relates primarily to an increase in deferred tax liabilities from the acquisition of Florida Chemical. Deferred taxes are presented in the balance sheets as follows (in thousands):
 
 
September 30, 2013
 
December 31, 2012
Current deferred tax assets
 
$
1,591

 
$
1,274

Non-current deferred tax assets
 
14,763

 
16,045

Non-current deferred tax liabilities
 
(25,491
)
 
(751
)
Net deferred tax assets (liabilities)
 
$
(9,137
)
 
$
16,568


As part of its acquisition assessment, the Company recognized a deferred tax asset related to Florida Chemical's allowance for doubtful accounts and inventory obsolescence reserve expected to be realized in the future. In addition, the Company recorded a deferred tax liability for the difference between the assigned fair values of the tangible and intangible assets acquired and the tax bases of those assets.