TAXES ON INCOME (TAX BENEFITS)

Income (loss) from continuing operations before taxes on income (tax benefits) was as follows for the years ended December 31 (in thousands):



	2013		2012		2011
Domestic	$	23,695	$	45,290	$	825
Foreign	35,307		25,576		32,145
Total	$	59,002	$	70,866	$	32,970

Provisions (benefits) for taxes on income (tax benefit) from continuing operations consisted of the following components for the years ended December 31 (in thousands):



	2013			2012			2011
Current:
Federal	$	8,603		$	9,237		$	1,789
Foreign	6,078			9,704			8,878
State	527			995			423
Subtotal	15,208			19,936			11,090
Deferred:
Federal	(2,075		)	(1,817		)	(2,064		)
Foreign	(727		)	69			492
State	(252		)	475			(1,334		)
Subtotal	(3,054		)	(1,273		)	(2,906		)
Total tax provision	$	12,154		$	18,663		$	8,184

Income tax (benefit) expense differed from the amounts computed by applying the U.S. federal income tax rate of 35% to income (loss) before income taxes, equity in income (loss) of joint ventures and minority interests as a result of the following (in thousands):



	2013			2012			2011
Income taxes at U.S. federal statutory tax rate	$	20,651		$	24,803		$	11,539
Increase (decrease) in taxes resulting from:
Change in the balance of the valuation allowance for deferred tax assets allocated to income tax expense	1,447			3,714			477
State income taxes, net of federal income tax benefit	179			956			(547		)
Transaction costs	—			509			574
Meals and entertainment	1,034			962			570
Changes in taxes previously accrued	(3,098		)	(2,422		)	263
Foreign tax rate differences	(4,892		)	(4,236		)	(3,412		)
Recognition of uncertain tax positions	(89		)	(800		)	(214		)
Contingent consideration reversal	(1,461		)	(2,869		)	—
Domestic Production Activities Deduction	(1,548		)	(1,440		)	(52		)
Other matters	(69		)	(514		)	(1,014		)
Total tax provision	$	12,154		$	18,663		$	8,184
Effective tax rate	20.6		%	26.3		%	24.8		%

Net deferred taxes consisted of the following at December 31 (in thousands):



	2013			2012
Deferred income tax assets:
Foreign tax credit carryforwards	$	535		$	88
Net operating loss carryforwards	17,146			17,225
Accrued expenses	13,517			10,443
Other	8,158			8,394
Total gross deferred income tax assets	39,356			36,150
Less valuation allowance	(7,797		)	(6,574		)
Net deferred income tax assets	31,559			29,576
Deferred income tax liabilities:
Property, plant and equipment	(12,901		)	(14,051		)
Intangible assets	(34,983		)	(33,715		)
Undistributed foreign earnings	(7,051		)	(7,051		)
Other	(7,548		)	(8,579		)
Total deferred income tax liabilities	(62,483		)	(63,396		)
Net deferred income tax liabilities	$	(30,924	)	$	(33,820	)

The Company’s tax assets and liabilities, netted by taxing location, are in the following captions in the balance sheets (in thousands):



	2013			2012
Current deferred income tax assets, net	$	4,640		$	3,975
Current deferred income tax liabilities, net	(4,304		)	(5,994		)
Noncurrent deferred income tax assets, net	6,957			7,989
Noncurrent deferred income tax liabilities, net	(38,217		)	(39,790		)
Net deferred income tax liabilities	$	(30,924	)	$	(33,820	)

The Company’s deferred tax assets at December 31, 2013 included $17.1 million in federal, state and foreign net operating loss (“NOL”) carryforwards. These NOLs include $7.2 million, which if not used will expire between the years 2014 and 2032, and $9.9 million that have no expiration dates. The Company also has foreign tax credit carryforwards of $0.5 million, which has no expiration date.

For financial reporting purposes, a valuation allowance of $7.8 million has been recognized to reduce the deferred tax assets related to certain federal, state and foreign net operating loss carryforwards and other assets, for which it is more likely than not that the related tax benefits will not be realized, due to uncertainties as to the timing and amounts of future taxable income. The valuation allowance at December 31, 2012 was $6.6 million relating to the same items described above. Activity in the valuation allowance is summarized as follows for the years ended December 31 (in thousands):



	2013			2012			2011
Balance, at beginning of year	$	6,574		$	4,691		$	5,083
Additions	1,754			2,062			1,058
Reversals	(131		)	(191		)	(1,352		)
Other adjustments	(400		)	12			(98		)
Balance, at end of year	$	7,797		$	6,574		$	4,691

The Company has recorded income tax expense at U.S. tax rates on all profits, except for undistributed profits of non-U.S. subsidiaries of approximately $291.4 million, which are considered indefinitely reinvested. Determination of the amount of unrecognized deferred tax liability related to the indefinitely reinvested profits is not feasible. A deferred tax asset is recognized only if the Company has definite plans to generate a U.S. tax benefit by repatriating earnings in the foreseeable future.

FASB ASC 740, Income Taxes (“FASB ASC 740”), prescribes a more-likely-than-not threshold for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FASC ASC 740 also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods and disclosure of uncertain tax positions in financial statements.

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



	2013			2012			2011
Balance at January 1,	$	3,170		$	1,050		$	1,672
Additions for tax positions of prior years related to acquisitions	—			3,145			—
Additions for tax positions of prior years	30			111			41
Reductions for tax positions of prior years	—			—			(238		)
Lapse in statute of limitations	(236		)	(1,162		)	(406		)
Foreign currency translation	(28		)	26			(19		)
Balance at December 31, total tax provision	$	2,936		$	3,170		$	1,050

The total amount of unrecognized tax benefits, if recognized, that would affect the effective tax rate was $0.8 million at December 31, 2013.

The Company recognizes interest and penalties, if any, related to unrecognized tax benefits in income tax expense. During the years ended December 31, 2013, 2012 and 2011, approximately $0.3 million, $0.6 million and $0.1 million, respectively, was accrued for interest.

The Company believes that it is reasonably possible that the total amount of unrecognized tax benefits will change in 2014. The Company has certain tax return years subject to statutes of limitation that will expire within twelve months. Unless challenged by tax authorities, the expiration of those statutes of limitation is expected to result in the recognition of uncertain tax positions in the amount of approximately $0.3 million.

The Company is subject to taxation in the United States, various states and foreign jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal, state, local or foreign examinations by tax authorities for years before 2009.