5. INCOME TAXES

The provision for income taxes is based on income before income taxes as follows (in thousands):

	For the year ended December 31, 2012		For the year ended December 31, 2011

Domestic	$	3,725	$	2,821
Foreign		3,773		6,698

Income before income taxes	$	7,498	$	9,519

Components of the total provision for income taxes are as follows (in thousands):

	For the year ended December 31, 2012			For the year ended December 31, 2011

Current provision:
Domestic	$	115		$	302
Foreign		881			1,190

Total current provision		996			1,492

Deferred provision:
Domestic		1,162			984
Foreign		(57	)		76

Total deferred provision		1,105			1,060

Provision for income taxes	$	2,101		$	2,552

The provision for income taxes differs from the amount determined by applying the federal statutory rate as follows (in thousands):



Tax provision, computed at statutory rate	34.0	%	34.0	%
State tax, net of federal impact	3.3	%	1.7	%
Permanent item; adjustment to contingent consideration	—	%	(3.9	)%
Effect of foreign tax rate differences	(4.4	)%	(4.6	)%
Foreign tax adjustments	(1.6	)%	(2.1	)%
Adjustments to prior year accruals(1)	(1.9	)%	—	%
Other	(1.4	)%	1.7	%

Provision for income taxes	28.0	%	26.8	%

(1): Adjustments relate to the resolution of certain prior year income tax related matters.

The tax effects of significant temporary differences and credit and operating loss carryforwards that give rise to the net deferred tax assets and tax liabilities are as follows (in thousands):

	December 31, 2012			December 31, 2011

Current deferred tax assets:
Allowances and other	$	591		$	587
Tax credit carryforwards		—			—
Net operating loss carryforwards		98			749

Total current deferred tax assets		689			1,336
Valuation allowance		(50	)		(82	)

Net current deferred tax assets	$	639		$	1,254

Noncurrent deferred tax assets:
Employee benefit plans	$	1,375		$	1,268
Net operating loss carryforwards		—			—
Goodwill and Intangibles		1,983			2,349
Property, plant & equipment		(188	)		50
Other		933			659

Total noncurrent deferred tax assets	$	4,103		$	4,326

Deferred tax liabilities:
Acquired property, plant and equipment and intangible assets	$	638		$	756
Other		297			217

Total deferred tax liabilities	$	935		$	973

During 2010, the Company acquired foreign operating losses and tax credit carryforwards in relation to its acquisition of Agile Systems Inc. in Canada. At the time of the acquisition, the Company could not conclude, on a more likely than not basis, that it would ultimately realize tax benefits from the losses and credits, and therefore valued the deferred benefit at zero. During 2012 and 2011, the Company utilized a portion of the foreign tax loss carryforward which reduced the consolidated tax provision for income taxes by $72,000 and $244,000, respectively. In addition, in 2012 the Company recorded a deferred tax asset of $66,000 for the forecasted utilization of the Company's foreign tax loss carryforward; however, the Company has not concluded that it will ultimately realize the remainder of the foreign tax carryforward on a more likely than not basis. The Company will continue to assess its ability to utilize any portion of the tax carryforward balance and whether it should adjust the amount of deferred tax asset related to this loss carryforward. Realization of the Company's recorded deferred tax assets is dependent upon the Company generating sufficient taxable income in the appropriate tax jurisdictions in future years to obtain benefit from the reversal of net deductible temporary differences and from utilization of domestic net operating losses and tax credit carryforwards. The Company has recorded a valuation allowance due to the uncertainty related to the realization of certain deferred tax assets existing at December 31, 2012. The amount of deferred tax assets considered realizable is subject to adjustment in future periods if estimates of future taxable income are changed. Management believes that it is more likely than not that the Company will realize the benefits of its deferred tax assets, net of valuation allowances as of December 31, 2012.

The Company files income tax returns in various U.S. and foreign taxing jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal and state tax examinations in its major tax jurisdictions for periods before 2008. The Company is no longer subject to tax examinations in The Netherlands or Sweden for periods before 2007.