(8) Income Taxes

For the years ended December 31, 2011, 2010 and 2009 net income before income taxes and non-controlling interest consisted of the following (in thousands):

	Year Ended December 31,
		2011		2010		2009
U.S. operations	$	21,909	$	11,276	$	9,217
Foreign operations		39,989		20,481		8,258
	$	61,898	$	31,757	$	17,475

Income tax expense attributable to income from operations consisted of (in thousands):

	Year Ended December 31,
	2011		2010			2009
Current:
Federal	$	6,261	$	(607	)	$	1,736
State		29		32			(218	)
Foreign		1,241		772			889
		7,531		197			2,407
Deferred:
Federal		2,623		2,739			1,757
State		89		92			(368	)
Foreign		841		527			123
		3,553		3,358			1,512
Income tax expense	$	11,084	$	3,555		$	3,919

The reconciliations between the Company's income tax expense and the amounts computed by applying the U.S. federal income tax rates of 35.0% for the years ended December 31, 2011, 2010 and 2009 are as follows (in thousands):

	Year Ended December 31,
		2011			2010			2009
Computed expected tax expense	$	21,668		$	11,116		$	6,116
Non-deductible stock-based compensation		68			80			76
Provision to tax return true-up		8			(261	)		(451	)
Enactment of California apportionment factor law change		-			-			(313	)
Other permanent differences		920			88			224
Increase (release) of uncertain tax liabilities		185			(1,919	)		-
Increase (decrease) in income taxes resulting from:
State income tax expense, net of federal income tax benefit		154			321			145
Foreign tax differential		(11,919	)		(5,870	)		(1,878	)
	$	11,084		$	3,555		$	3,919

As of December 31, 2011, the Company had $18.0 million of net operating loss (NOL) carry forwards to offset future taxable income. The NOL carry forwards will begin to expire in 2017. As of December 31, 2011, the Company had $2.2 million of NOL carry forwards to offset future state taxable income. The state NOL carry forwards will begin to expire in 2029.

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities as of December 31, 2011 and 2010 are presented below (in thousands):

	2011		2010
Deferred tax assets:
Accounts receivable (owned fleet)	$	181	$	558
Accrued expenses and other current liabilities		71		75
State taxes		1		1
Unearned revenue		1,753		1,289
Stock-based compensation		1,214		1,018
Interest expense		6		3
Tax credits		161		162
Net operating loss carry forwards		574		271
Gross deferred tax assets		3,961		3,377

Deferred tax liabilities:
Intangible assets		527		873
Depreciation and amortization		30,717		27,368
Foreign deferred tax liabilities		2,937		2,684
Deferred subpart F income		1,590		756
Unrealized gain or (loss)		38		(9	)
Net deferred tax liability	$	31,848	$	28,295

The realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. The Company's management considers the projected future taxable income for making this assessment. Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, the Company's management believes it is more likely than not the Company will realize the benefits of the deductible differences noted above.

Deferred income taxes have not been provided on the undistributed earnings of foreign subsidiaries. As of December 31, 2011, the amount of such earnings totaled approximately $69.3 million. These earnings have been permanently reinvested and the Company does not plan to initiate any action that would precipitate the payment of income taxes thereon. The amount of income taxes that would have resulted had such earnings been repatriated is not practically determinable.

The Company is required to recognize in the financial statements the impact of a tax position, if that position is more likely than not of being sustained on audit, based on the technical merits of the position. The Company has elected to record penalties and interest associated with uncertain tax position within income tax expense. The following table summarizes the activity related to the Company's unrecognized tax benefits (in thousands):

Balance at January 1, 2010	$	1,826
Decreases related to prior year tax positions		(1,752	)
Increases related to current year tax positions		3
Balance at December 31, 2010	$	77
Increases related to prior year tax positions		56
Increases related to current year tax positions		123
Balance at December 31, 2011	$	256

The unrecognized tax benefits of approximately $0.3 million at December 31, 2011, if recognized, would reduce the Company's effective tax rate. The Company accrued potential interest and penalties of less than $0.1 million related to unrecognized tax benefits for each of the years ended December 31, 2011 and 2010.

The Company's federal tax returns in the United States and state tax returns in the states of California, New Jersey and South Carolina are subject to examination by tax authorities. The Company accrues for unrecognized tax benefits based upon its best estimate of the additional taxes, interest and penalties expected to be paid. These estimates are updated over time as more definitive information becomes available from taxing authorities, completion of tax audits, expiration of statute of limitations, or upon occurrence of other events.

The Company does not believe the total amount of unrecognized tax benefit as of December 31, 2011 will increase or decrease significantly in the next twelve months. As of December 31, 2011, the statutes of limitations for tax examinations in the United States has not expired for the years ended December 31, 2008 through 2010. The statutes of limitations for tax examinations in the states of California, New Jersey and South Carolina have not expired for tax returns filed for the years December 31, 2007 through 2010.