NOTE 13 – INCOME TAXES:

Income before income taxes and equity losses in Chinese joint venture is comprised of the following:


	2013		2012		2011
Domestic	$	25,269	$	14,754	$	30,629
Foreign		1,911		413		4,098
	$	27,180	$	15,167	$	34,727

At December 31, 2013, the Corporation has state net operating loss carryforwards of $20,949 which begin to expire in 2018, foreign net operating loss carryforwards of $1,531 which begin to expire in 2014 and capital loss carryforwards of $1,003 which begin to expire in 2017.

The income tax provision consisted of the following:


	2013			2012			2011
Current:
Federal	$	5,535		$	2,550		$	6,047
State		139			184			754
Foreign		28			(61	)		140
		5,702			2,673			6,941
Deferred:
Federal		(488	)		2,142			3,518
State		133			360			2
Foreign		622			175			2,633
Reversal of valuation allowance		(156	)		(132	)		(178	)
		111			2,545			5,975
	$	5,813		$	5,218		$	12,916

The income tax provision was affected by the reversal of valuation allowances previously provided against deferred income tax assets associated with state net operating loss carryforwards for each of the years.

The difference between statutory U.S. federal income tax and the Corporation’s effective income tax was as follows:


	2013			2012			2011
Computed at statutory rate	$	9,513		$	5,309		$	12,154
Tax differential on non-U.S. earnings		(223	)		(45	)		(358	)
State income taxes		152			403			1,296
Manufacturers deduction (I.R.C. Section 199)		(566	)		(257	)		(792	)
Meals and entertainment		205			198			220
Tax credits		(145	)		(64	)		(29	)
Chinese joint venture		(3,125	)		(558	)		(175	)
Reversal of valuation allowance		(156	)		(132	)		(178	)
Other – net		158			364			778
	$	5,813		$	5,218		$	12,916

Deferred income tax assets and liabilities as of December 31, 2013 and 2012 are summarized below. The current portion of net deferred income tax assets is included in other current assets in the consolidated balance sheets. Unremitted earnings of the Corporation’s non-U.S. subsidiaries and affiliates are deemed to be permanently reinvested and, accordingly, no deferred income tax liability has been recorded. It is not practical to estimate the income tax effect that might be incurred if cumulative prior year earnings not previously taxed in the United States were remitted to the United States.


	2013			2012
Assets:
Employment – related liabilities	$	11,946		$	12,814
Pension liability – foreign		2,434			3,984
Pension liability – domestic		5,137			19,574
Liabilities related to discontinued operations		959			1,155
Capital loss carryforwards		273			391
Asbestos-related liability		18,172			23,702
Net operating loss – state		1,654			1,795
Inventory related		2,644			2,017
Impairment charge associated with investment in UES-MG		2,316			0
Other		3,939			3,803
Gross deferred income tax assets		49,474			69,235
Valuation allowance		(2,639	)		(2,887	)
		46,835			66,348
Liabilities:
Depreciation		(31,918	)		(31,931	)
Mark-to-market adjustment – derivatives		(73	)		(153	)
Other		(2,495	)		(2,353	)
Gross deferred income tax liabilities		(34,486	)		(34,437	)
Net deferred income tax assets	$	12,349		$	31,911

The following summarizes changes in unrecognized tax benefits for the year ended December 31:


	2013			2012			2011
Balance at the beginning of the year	$	442		$	311		$	786
Gross increases for tax positions taken in the current year		8			233			81
Gross increases for tax positions taken in prior years		12			18			0
Gross decreases in tax positions due to lapse in statute of limitations		0			(120	)		(498	)
Gross decreases for tax positions taken in prior years		(192	)		0			(25	)
Gross decreases for tax settlements with taxing authorities		0			0			(33	)
Balance at the end of the year	$	270		$	442		$	311

If the unrecognized tax benefits were recognized, $175 would reduce the Corporation’s effective income tax rate. The amount of penalties and interest recognized in the consolidated balance sheets as of December 31, 2013 and 2012 and in the consolidated statements of operations for 2013, 2012 and 2011 is insignificant. Unrecognized tax benefits of $52 are to expire due to the lapse in the statute of limitations within the next 12 months.

The Corporation is subject to taxation in the United States, various states and foreign jurisdictions, and remains subject to examination by tax authorities for tax years 2010-2013.