Income Taxes (Tables)

12 Months Ended

Dec. 31, 2012

Sources of income (loss) before income taxes

The sources of income (loss) before income taxes are as follows (in thousands):



	Years Ended December 31,
	2012		2011		2010
Domestic	$	34,633	$	12,674	$	(55,547	)
Foreign	52,050		22,028		45,651
Total	$	86,683	$	34,702	$	(9,896	)

Components of income taxes

Components of income taxes are as follows (in thousands):



	Years Ended December 31,
	2012			2011			2010
Current:
Federal	$	873		$	6,594		$	(3,489	)
State and local	192			493			665
Foreign	19,106			11,180			7,559
Deferred:
Federal	3,822			(4,893		)	21,665
Foreign	(136		)	(3,238		)	542
Total income tax expense	$	23,857		$	10,136		$	26,942

Reconciliation of the expected income tax expense on income (loss) before income taxes using the statutory federal income tax

A reconciliation of the expected income tax expense on income (loss) before income taxes using the statutory federal income tax rate of 35% for 2012, 2011 and 2010 to income tax expense is as follows (in thousands):



	Years Ended December 31,
	2012			2011			2010
Expected income tax expense (benefit) at 35%	$	30,339		$	12,146		$	(3,464	)
Foreign tax rate differential	(5,404		)	(7,858		)	(11,914		)
Foreign tax differences	4,897			(2,511		)	—
Formation of INOVA Geophysical	—			—			10,507
Nondeductible financings	—			—			1,082
State and local taxes	192			493			665
Nondeductible expenses	47			1,091			492
Deferred tax asset valuation allowance:
Deferred tax asset valuation allowance on formation of INOVA Geophysical	—			—			20,213
Deferred tax asset valuation allowance on equity in losses of INOVA Geophysical	(104		)	8,002			8,303
Deferred tax asset valuation allowance on write-down of investments	195			459			2,677
Deferred tax asset valuation allowance on operations	(6,305		)	(1,686		)	(1,619		)
Total income tax expense	$	23,857		$	10,136		$	26,942

Tax effects of the cumulative temporary differences resulting in the net deferred income tax asset (liability)

The tax effects of the cumulative temporary differences resulting in the net deferred income tax asset (liability) are as follows (in thousands):



	December 31,
	2012			2011
Current deferred:
Deferred income tax assets:
Accrued expenses	$	11,417		$	3,701
Allowance accounts	5,057			3,900
Inventory	302			457
Total current deferred income tax asset	16,776			8,058
Valuation allowance	(10,454		)	(6,148		)
Net current deferred income tax asset	6,322			1,910
Deferred income tax liabilities:
Unbilled receivables	(26,863		)	(7,592		)
Net current deferred income tax liability	$	(20,541	)	$	(5,682	)
Non-current deferred:
Deferred income tax assets:
Net operating loss carryforward	$	7,227		$	6,598
Capital loss carryforward	19,919			19,005
Equity method investment	33,305			33,409
Cost method investments	4,037			3,843
Basis in identified intangibles	4,852			3,606
Basis in research and development	3,196			2,045
Basis in property, plant and equipment	(2,387		)	1,234
Tax credit carryforwards and other	10,387			10,386
Total non-current deferred income tax asset	80,536			80,126
Valuation allowance	(52,807		)	(63,327		)
Net non-current deferred income tax asset	$	27,729		$	16,799

Aggegate changes in gross amount of unrecognized tax benefits

For 2012, 2011 and 2010, the aggregate changes in the Company’s total gross amount of unrecognized tax benefits are summarized as follows (in thousands):



	Years Ended December 31,
	2012		2011		2010
Beginning balance	$	1,375	$	816	$	470
Increases in unrecognized tax benefits – prior year positions	—		—		—
Increases in unrecognized tax benefits – current year positions	459		559		346
Ending balance	$	1,834	$	1,375	$	816