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,
	2012			2011		2010
Domestic	$	(400	)	$	6,313	$	1,821
Foreign	(6,619		)	9,935		(4,780		)
Income (loss) from continuing operations before provision for income taxes	$	(7,019	)	$	16,248	$	(2,959	)

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



	Year ended December 31,
	2012			2011		2010
Current tax provision (benefit):
U.S. Federal	$	—		$	—	$	—
State and local	(3,214		)	239		(819		)
Foreign	1,840			3,828		2,524
Total current provision for (benefit from) income taxes	(1,374		)	4,067		1,705
Deferred tax provision (benefit):
U.S. Federal	—			—		—
State and local	—			—		—
Foreign	(310		)	1,272		(223		)
Total deferred provision for (benefit from) income taxes	(310		)	1,272		(223		)
Total provision for (benefit from) income taxes from continuing operations	$	(1,684	)	$	5,339	$	1,482

Tax Rate Reconciliation

The effective tax rates for the years ended December 31, 2012, 2011 and 2010 were 24.0%, 32.9% and negative 50.1%, respectively. These effective tax rates differ 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, 2012, 2011 and 2010 to the U.S. Federal statutory rate of 35%:



	Year ended December 31,
	2012			2011			2010
Provision for (benefit from) continuing operations at Federal statutory rate of 35%	$	(2,457	)	$	5,687		$	(1,036	)
State income taxes, net of Federal income tax effect	(2,089		)	155			(532		)
Change in valuation allowance	2,545			(3,284		)	2,970
Taxes related to foreign income	(2,505		)	(112		)	(467		)
Nondeductible expenses and others	2,822			2,893			547
Provision for (benefit from) income tax	$	(1,684	)	$	5,339		$	1,482

Deferred Taxes Assets (Liabilities)

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. Net deferred tax assets were included in other current assets and other assets in the accompanying Consolidated Balance Sheets. Significant temporary differences at December 31, 2012 and 2011 were as follows:



	As of December 31,
	2012			2011
Current deferred tax assets (liabilities):
Allowance for doubtful accounts	$	145		$	362
Prepaid expenses	—			(543		)
Accrued and other current liabilities	1,015			1,077
Accrued compensation liabilities	2,886			3,763
Tax loss carry-forwards	—			—
Current deferred tax assets (liabilities), gross, total	4,046			4,659
Valuation allowance	(610		)	(566		)
Total current deferred tax asset, net of valuation allowance	3,436			4,093
Non-current deferred tax assets (liabilities):
Property and equipment	3,355			2,093
Goodwill and intangibles	14,434			18,467
Accrued and other non-current liabilities	1,775			1,062
Deferred compensation	3,613			3,735
Other	—			1,873
Tax loss carry-forwards	140,068			132,298
Non-current deferred tax assets (liabilities), gross, total	163,245			159,528
Valuation allowance	(153,718		)	(151,217		)
Total non-current deferred tax asset (liabilities), net of valuation allowance	9,527			8,311
Deferred tax assets (liabilities), net of valuation allowance, total	$	12,963		$	12,404

Net Operating Losses (“NOLs”) and Valuation Allowance

At December 31, 2012, the Company had net NOLs for U.S. Federal tax purposes of approximately $288,747. 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 2032. The NOL balance does not include a deduction in the amount of $5,030 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, 2012, certain international subsidiaries had NOLs for local tax purposes of $108,271. With the exception of $95,936 of NOLs with an indefinite carry forward period as of December 31, 2012, these losses will expire at various dates through 2032, with $235 scheduled to expire during 2013.

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. As of December 31, 2012, the valuation allowance of $132,524 relates to the deferred tax asset for NOLs, $109,724 of which is U.S. Federal and state, and $22,800 of which is foreign, that management has determined will more likely than not expire prior to realization, and $21,804 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.

Uncertain Tax Positions

As of December 31, 2012 and 2011, the Company's unrecognized tax benefits, including interest and penalties, which would lower the Company’s annual effective income tax rate if recognized in the future, were as follows:



	As of December 31,
	2012		2011
Unrecognized tax benefits, excluding interest and penalties	$	3,144	$	6,163
Accrued interest and penalties	701		1,644
Total unrecognized tax benefits that would impact effective tax rate	$	3,845	$	7,807

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, 2012	$	6,163
Additions based on tax positions related to the current year	225
Additions for tax positions of prior years	65
Reductions for tax positions of prior years	(2,868		)
Settlements	(83		)
Lapse of statute of limitations	(410		)
Currency Translation	52
Balance at December 31, 2012	$	3,144

Estimated interest and penalties classified as part of the provision for income taxes in the Company’s Consolidated Statements of Operations and Other Comprehensive Income (Loss) for the years ended December 31, 2012, 2011 and 2010 were as follow:



	Year ended December 31,
	2012			2011			2010
Expense for (benefit of) estimated interest and penalties related to unrecognized tax benefits	$	(909	)	$	(230	)	$	(93	)

Based on information available as of December 31, 2012, it is reasonably possible that the total amount of unrecognized tax benefits could decrease in the range of $200 to $700 over the next 12 months as a result of projected resolutions of global tax examinations and controversies and potential lapses of the applicable statutes of limitations.

In many cases, the Company’s unrecognized tax benefits are related to tax years that remain subject to examination by the relevant tax authorities. Tax years with NOLs remain open until such losses expire or the statutes of limitations for those years when the NOLs are used or expire. As of December 31, 2012, the Company's open tax years remain subject to examination by the relevant tax authorities and currently under income tax examination were principally as follows:



		Year
Earliest tax years remain subject to examination by the relevant tax authorities:
U.S. Federal		2009
Other U.S. state and local jurisdictions		2008
U.K.		2011
Australia		2008
Other foreign jurisdictions		2007
Currently under income tax examination:
New Zealand		2009

The Company believes that its tax reserves are adequate for all years subject to examination above.