9. Income Taxes

The Company's provision for income taxes consists of the following (dollars in thousands):

	Year ended December 31,
	2011			2010			2009
Current:
Federal	$	14,312		$	–		$	–
State		1,885			307			339
		16,197			307			339
Deferred:
Federal		15,632			19,127			15,221
State		1,887			2,831			(12,378	)
		17,519			21,958			2,843
Change in valuation allowance		(271,393	)		(21,958	)		(2,843	)
Provision for income taxes	$	(237,677	)	$	307		$	339

The Company is the taxpaying entity and files a consolidated federal income tax return. Currently, the Company is not under examination by any major taxing jurisdiction to which the Company is subject. The statute of limitation for tax years 2011, 2010, 2009, and 2008 is open, for federal and state income taxes. Additionally, tax year 2007 remains open for examination by certain state taxing authorities.

Significant components of deferred tax assets and liabilities are as follows (dollars in thousands):

	December 31,
	2011		2010
Deferred tax assets:
Goodwill and intangible assets	$	160,311	$	186,014
Accrued expenses		16,572		11,967
Deferred revenue		1,370		1,093
Inventories		2,720		2,733
Pension obligations		8,641		6,059
Stock-based compensation		5,302		2,435
Operating loss and R&D credit carryforwards		50,429		64,436
Interest rate swap		2,065		1,625
Other		719		381
Valuation allowance		–		(271,393	)
Total deferred tax assets		248,129		5,350

Deferred tax liabilities:
Depreciation		5,994		4,780
Prepaid expenses		377		570
Total deferred tax liabilities		6,371		5,350
Net deferred tax asset	$	241,758	$	–

The net current and noncurrent components of deferred taxes included in the consolidated balance sheets are as follows (dollars in thousands):

	December 31,
	2011		2010
Net current deferred tax assets	$	14,395	$	15,269
Net long-term deferred tax assets		227,363		256,124
Valuation allowance		–		(271,393	)
Net deferred tax assets	$	241,758	$	–

The Company was in a three year cumulative net loss position, due primarily to the 2008 goodwill and tradename impairment write-off, and therefore had not considered expected future taxable income in analyzing the realizability of the deferred tax assets as of December 31, 2010, resulting in a full valuation allowance against these net deferred tax assets. In the fourth quarter of 2011, the Company was no longer in a three-year cumulative loss position and, as part of the normal assessment of the future realization of the net deferred tax assets, determined that a valuation allowance was no longer required. As a result, the valuation allowance was reversed in the fourth quarter of 2011 and the Company recorded as a tax benefit of $271,393,000.

At December 31, 2011, the Company has federal net operating loss carryforwards of approximately $127,100,000, which expire between 2027 and 2030, and various state net operating loss carryforwards, which expire between 2016 and 2030.

As a result of ownership changes, Section 382 of the Internal Revenue Code of 1986 as amended and similar state provisions can limit the annual deductions of net operating loss and tax credit carry forwards. Such annual limitations could result in the expiration of net operating loss and tax credit carry forwards before utilization. The Company has no such limitation as of December 31, 2010 and expects no limitation was triggered in 2011. Future ownership changes may result in such a limitation.

A reconciliation of the statutory tax rates and the effective tax rates for the years ended December 31, 2011, 2010 and 2009 are as follows:

	Year ended December 31,
	2011			2010			2009
U.S. statutory rate		35	%		35	%		35	%
State taxes		4			4			4
Valuation allowance		(312.3	)		(38	)		(38	)
Effective tax rate		(273.3	)%		1	%		1	%

At December 31, 2011 and 2010 the Company has no reserves recorded for uncertain tax positions.