10. PROVISION FOR INCOME TAXES

Income Tax Provision

The domestic and foreign components of income (loss) before income taxes from continuing operations were as follows:


	Year ended December 31,
	2011		2010			2009
Domestic	$	6,313	$	1,821		$	(21,843	)
Foreign		9,935		(4,780	)		(26,860	)
Income (loss) from continuing operations before provision for income taxes	$	16,248	$	(2,959	)	$	(48,703	)

The provision for (benefit from) income taxes from continuing operations was as follows:


	Year ended December 31,
	2011		2010			2009
Current tax provision (benefit):
U.S. Federal	$	—	$	—		$	(3,700	)
State and local		239		(819	)		115
Foreign		3,828		2,524			1,376
Total current		4,067		1,705			(2,209	)
Deferred tax (benefit) provision
U.S. Federal		—		—			—
State and local		—		—			—
Foreign		1,272		(223	)		(3,541	)
Total deferred		1,272		(223	)		(3,541	)
Total provision	$	5,339	$	1,482		$	(5,750	)

Deferred Taxes

Deferred income taxes are provided for the tax effect of temporary differences between the financial reporting basis and the tax basis of assets and liabilities. Significant temporary differences at December 31, 2011 and 2010 were:


	December 31,
	2011			2010
Current deferred tax assets (liabilities):
Allowance for doubtful accounts	$	362		$	572
Prepaid expenses		(543	)		(428	)
Accrued and other current liabilities		1,077			2,162
Accrued compensation liabilities		3,763			3,597
Tax loss carry-forwards		—			152
		4,659			6,055
Valuation allowance		(566	)		(739	)
Total current deferred tax asset		4,093			5,316
Non-current deferred tax assets (liabilities):
Property and equipment		2,093			2,540
Goodwill and intangibles		18,467			22,584
Accrued and other current liabilities and other liabilities		1,062			1,342
Deferred compensation		3,735			4,238
Other		1,873			1,786
Tax loss carry-forwards		132,298			130,155
		159,528			162,645
Valuation allowance		(151,217	)		(154,329	)
Total non-current deferred tax asset (liability)		8,311			8,316
Net deferred tax assets	$	12,404		$	13,632

Net deferred tax assets were included in other current assets and other assets in the accompanying Consolidated Balance Sheets.

Net Operating Losses (“NOLs”) and Valuation Allowance

At December 31, 2011, the Company had net NOLs for U.S. Federal tax purposes of approximately $285,388. This total includes approximately $16,584 of tax losses that were not absorbed by Monster on its consolidated U.S. Federal tax returns through the Distribution Date. NOLs expire at various dates through 2031. The NOL balance does not include a deduction in the amount of $4,845 attributable to stock options and restricted stock until such time as the Company recognizes the deferred tax asset associated with such deduction. The Company’s utilization of NOLs is subject to an annual limitation imposed by Section 382 of the Internal Revenue Code, which may limit our ability to utilize all of the existing NOLs before the expiration dates. As of December 31, 2011, certain international subsidiaries had NOLs for local tax purposes of $80,470. With the exception of $73,439 of NOLs with an indefinite carry forward period as of December 31, 2011, these losses will expire at various dates through 2031, with $174 scheduled to expire during 2012.

ASC 740-10-30-5 requires that a valuation allowance be established when it is more likely than not that all or a portion of a deferred tax asset will not be realized. In making this assessment, management considers the level of historical taxable income, scheduled reversal of deferred tax liabilities, tax planning strategies, and projected future taxable income. The valuation allowance of $126,348 relates to the deferred tax asset for NOLs, $108,447 of which is U.S. Federal and state, and $17,901 of which is foreign, that management has determined will more likely than not expire prior to realization, and $25,435 which relates to deferred tax assets on U.S. and foreign temporary differences that management estimates will not be realized due to the Company’s U.S. and foreign tax losses.

Tax years with NOLs remain open until the losses expire or the statutes of limitations for those years expire. The open tax years are 2008 through 2011 for the U.S. Federal and 2005 through 2011 for most state and local jurisdictions, 2009 through 2011 for the U.K., 2007 through 2011 for Australia and 2003 through 2011 for most other jurisdictions. The Company is currently under income tax examination in the State of Pennsylvania (2004 – 2009), Illinois (2008 – 2009) and New Zealand (2009). The Company believes that its tax reserves are adequate for all years subject to examination.

Uncertain Tax Positions

Earnings from the Company’s global operations are subject to tax in various jurisdictions both within and outside the United States. The Company provides tax reserves for U.S. Federal, state, local and international unrecognized tax benefits for all periods subject to audit. The development of reserves for these exposures requires judgments about tax issues, potential outcomes and timing, and is a subjective critical estimate. The Company assesses its tax positions and records tax benefits for all years subject to examination based upon management’s evaluation of the facts, circumstances, and information available at the reporting dates. For those tax positions where it is more-likely-than-not that a tax benefit will be sustained, the Company has recorded the largest amount of tax benefit with a greater than 50% likelihood of being realized upon settlement with a tax authority that has full knowledge of all relevant information. For those tax positions where it is not more-likely-than-not that a tax benefit will be sustained, no tax benefit has been recognized in the financial statements. Where applicable, associated interest and penalties have also been recognized. Although the outcome related to these exposures is uncertain, in management’s opinion, adequate provisions for income taxes have been made for estimable potential liabilities emanating from these exposures. In certain circumstances, the ultimate outcome for exposures and risks involve significant uncertainties which render them inestimable. If actual outcomes differ materially from these estimates, including those that cannot be quantified, they could have material impact on the Company’s results of operations.

The Company had $7,807 and $8,303 of unrecognized tax benefits, including interest and penalties, at December 31, 2011 and 2010, respectively. If these amounts were recognized, they would affect the Company’s effective tax rate. These unrecognized tax benefits are related to tax positions in jurisdictions in which the Company does not have tax losses to offset the tax liability with respect to the uncertain tax positions. During 2011, the income tax audits and examinations noted above remained pending. On the basis of the information available in this regard as of December 31, 2011, it is reasonably possible that a reduction in the range of $200 to $3,700 of unrecognized tax benefits may occur in 2012 as a result of projected resolutions of global tax examinations and controversies or by lapsing statutes of limitations.

The Company recognizes interest accrued and penalties related to unrecognized tax benefits in tax expense. The Company recognized a net benefit of approximately $230, a net benefit of approximately $93, and an expense of approximately $320 in interest and penalties for 2011, 2010 and 2009, respectively. At December 31, 2011 and 2010, the Company had accrued approximately $1,644 and $1,895 for the payment of interest and penalties, respectively which if recognized in the future, would affect the annual effective income tax rate as of December 31, 2011 and 2010.

The following table shows a reconciliation of the beginning and ending amounts of unrecognized tax benefits, exclusive of interest and penalties:


Balance at January 1, 2011	$	6,408
Additions based on tax positions related to the current year		302
Additions for tax positions of prior years		239
Reductions for tax positions of prior years		(59	)
Settlements		(198	)
Lapse of statute of limitations		(568	)
Currency Translation		39
Balance at December 31, 2011	$	6,163

Tax Rate Reconciliation:

The effective tax rate differs from the U.S. Federal statutory rate of 35% due to the inability to recognize tax benefits on net U.S. losses, state taxes, non-deductible expenses such as certain acquisition related payments, variations from the U.S. tax rate in foreign jurisdictions and taxes on repatriations of foreign profits. The following is a reconciliation of the effective tax rate from continuing operations for the years ended December 31, 2011, 2010 and 2009 to the U.S. Federal statutory rate of 35%:


	Year ended December 31,
	2011			2010			2009
Provision for (benefit from) continuing operations at Federal statutory rate of 35%	$	5,687		$	(1,036	)	$	(17,046	)
State income taxes, net of Federal income tax effect		155			(532	)		75
Change in valuation allowance		(3,284	)		2,970			8,060
Non-deductible goodwill impairment charges		—			—			600
Taxes related to foreign income		(112	)		(467	)		1,004
Nondeductible expenses and others		2,893			547			1,557
Provision for (benefit from) income tax	$	5,339		$	1,482		$	(5,750	)

Federal income and foreign withholding taxes have not been provided on the undistributed earnings of foreign subsidiaries at December 31, 2011. The Company intends to reinvest these earnings in its foreign operations indefinitely, except where it is able to repatriate these earnings to the United States without a material incremental tax provision. The determination and estimation of the future income tax consequences in all relevant taxing jurisdictions involves the application of highly complex tax laws in the countries involved, particularly in the United States, and is based on the tax profile of the Company in the year of earnings repatriation. Accordingly, it is not practicable to determine the amount of tax associated with such undistributed earnings.

The Company had a net current income tax payable of $1,136 and $698 at December 31, 2011 and 2010, respectively.