5. Income taxes:

The components of income (loss) before income taxes consist of the following (in thousands):

	Years Ended December 31,

	2013			2012			2011
Domestic	$	30,779		$	20,411		$	27,832
Foreign		(23,792	)		(23,911	)		(22,250	)


Total income (loss) before income taxes	$	6,987		$	(3,500	)	$	5,582

The benefit (provision) for income taxes is comprised of the following (in thousands):

	Years Ended December 31,

	2013			2012			2011
Current:
Federal	$	—		$	—		$	—
State		(83	)		2,285			(3,432	)
Foreign		(284	)		(344	)		(369	)
Deferred:
Federal		49,317			—			—
State		995			(1,245	)		6,334
Foreign		(243	)		(1,447	)		(573	)


Total income tax benefit (provision)	$	49,702		$	(751	)	$	1,960

Our consolidated temporary differences comprising our net deferred tax assets at December 31, 2013 and 2012 are as follows (in thousands):

	December 31,

	2013			2012
Deferred Tax Assets:
Net operating loss carry-forwards	$	402,484		$	385,578
Depreciation and amortization		3,110			4,187
Tax credits		2,775			2,758
Accrued liabilities and other		3,748			6,138


Total gross deferred tax assets		412,117			398,661


Deferred Tax Liabilities:
Convertible notes		1,150			3,415
Equity-based compensation		248			600


Total gross deferred tax liabilities		1,398			4,015


Net deferred tax assets before valuation allowance		410,719			394,646
Valuation allowance		(354,537	)		(388,460	)


Net deferred tax asset	$	56,182		$	6,186

At each balance sheet date, the Company assesses the likelihood that it will be able to realize its deferred tax assets. The Company considers all available positive and negative evidence in assessing the need for a valuation allowance. At December 31, 2011, the Company concluded that it was more likely than not that it would be able to realize certain of its deferred tax assets primarily as a result of expected future taxable income related to its operations in certain state and municipal jurisdictions in the United States. Accordingly, the Company reduced the valuation allowance related to these deferred tax assets and recorded an income tax benefit of $6.3 million in the year ended December 31, 2011. At December 31, 2013, the Company concluded that it was more likely than not that it would be able to realize certain of its US Federal and state deferred tax assets primarily as a result of expected future US Federal taxable income related to its operations in the United States. Accordingly, the Company reduced the valuation allowance related to these deferred tax assets and recorded an income tax benefit of $52.2 million in the year ended December 31, 2013. As of December 31, 2013, the Company maintained a full valuation allowance against its other deferred tax assets consisting primarily of net operating loss carryforwards related to its foreign operations in Europe and Mexico and net operating losses in the United States that are limited for use under Section 382 of the Internal Revenue Code.

As of December 31, 2013, the Company has combined net operating loss carry-forwards of approximately $1.3 billion. This amount includes federal and state net operating loss carry-forwards in the United States of approximately $395.8 million, net operating loss carry-forwards related to its European, Mexican and Japanese operations of approximately $897.9 million, $1.8 million and $0.1 million, respectively. Section 382 of the Internal Revenue Code in the United States limits the utilization of net operating losses when ownership changes, as defined by that section, occur. The Company has performed an analysis of its Section 382 ownership changes and has determined that the utilization of certain of its net operating loss carryforwards in the United States is limited and for those carryforwards with limitations the Company continues to maintain a valuation allowance. The net operating loss carryforwards in the United States will expire, if unused, between 2024 and 2029. The net operating loss carry-forwards related to the Company's Mexican and Japanese operations expire if unused, between 2019 and 2023. The net operating loss carry-forwards related to the Company's European operations include $727.8 million that do not expire and $170.0 million that expire between 2014 and 2028.

The Company has not provided for US deferred income taxes or foreign withholding taxes on its undistributed earnings for certain non-US subsidiaries earnings or cumulative translation adjustments because these earnings and adjustments are intended to be permanently reinvested in operations outside the United States.

In the normal course of business the Company takes positions on its tax returns that may be challenged by taxing authorities. The Company evaluates all uncertain tax positions to assess whether the position will more likely than not be sustained upon examination. If the Company determines that the tax position is more likely than not to be sustained, the Company records the amount of the benefit that is more likely than not to be realized when the tax position is settled. This liability, including accrued interest and penalties, is included in other long-term liabilities in the accompanying balance sheets and was $1.1 million as of December 31, 2013 and $1.7 million as of December 31, 2012. The Company expects that its liability for uncertain tax positions will decrease by approximately $0.3 million during the twelve months ended December 31, 2014, due to the expiration of certain statutes of limitation, however, actual changes in the liability for uncertain tax positions could be different than currently expected. If recognized, changes in the Company's total unrecognized tax benefits would impact the Company's effective income tax rate. The roll-forward of the liability for uncertain tax positions is below and excludes interest and penalties.

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

	Years Ended December 31,

	2013			2012			2011
Beginning balance of unrecognized tax benefits	$	1,312		$	2,875		$	698
Change attributable to tax positions taken during a prior period		(51	)		745			2,177
Decrease attributable to settlements with taxing authorities					(1,655	)		—
Decrease attributable to lapses of statutes of limitation		(261	)		(653	)		—


Ending balance of unrecognized tax benefits	$	1,000		$	1,312		$	2,875

The Company or one of its subsidiaries files income tax returns in the US federal jurisdiction and various state and foreign jurisdictions. The Company is subject to US federal tax and state tax examinations for years 2004 to 2013. The Company is subject to tax examinations in its foreign jurisdictions generally for years 2005 to 2013.

The following is a reconciliation of the Federal statutory income taxes to the amounts reported in the financial statements (in thousands).

	Years Ended December 31,

	2013			2012			2011
Federal income tax benefit (provision) at statutory rates	$	(2,445	)	$	1,225		$	(1,954	)
Effect of:
State income taxes, net of federal benefit		(281	)		(387	)		(1,368	)
State tax credits		272			315			146
Foreign rate differential		255			227			1,071
Foreign tax expense		(122	)		(96	)		(342	)
Net operating loss limitation		(238	)		(1,081	)		—
Non-deductible expenses		(464	)		(2,551	)		(597	)
Changes in tax reserves		503			1,552			(2,969	)
Other		35			23			278
Changes in valuation allowance		52,187			22			7,695


Income tax benefit (provision)	$	49,702		$	(751	)	$	1,960