16. INCOME TAXES

The components of income (loss) before taxes from continuing operations consisted of the following for the years ended December 31 (in thousands):


	2011		2010			2009
Domestic	$	13,403	$	(93,285	)	$	(57,120	)
Foreign		3,482		1,006			(1,063	)
Income (loss) before taxes from continuing operations	$	16,885	$	(92,279	)	$	(58,183	)

The provision for (benefit of) income taxes from continuing operations for the years ended December 31 consisted of the following (in thousands):


	2011			2010			2009
Current:
U.S. Federal	$	139		$	(7,171	)	$	(3,264	)
State		920			285			591
Foreign		1,582			376			36
Total current		2,641			(6,510	)		(2,637	)
Deferred:
U.S. Federal		4,998			(10,631	)		(10,224	)
State		783			482			(5,373	)
Foreign		(753	)		(264	)		(377	)
Total deferred		5,028			(10,413	)		(15,974	)
Provision for (benefit of) income taxes	$	7,669		$	(16,923	)	$	(18,611	)

The provision for (benefit of) income taxes from discontinued operations for the years ended December 31 consisted of the following (in thousands):


	2011		2010			2009
Current:
U.S. Federal	$	5,643	$	(542	)	$	(6,787	)
State		622		61			(34	)
Foreign		67		254			(140	)
Total current		6,332		(227	)		(6,961	)
Deferred:
U.S. Federal		166		(10,192	)		(68	)
State		35		(972	)		(671	)
Foreign		–		(22	)		(28	)
Total deferred		201		(11,186	)		(767	)
Provision for (benefit of) income taxes	$	6,533	$	(11,413	)	$	(7,728	)

The provision for (benefit of) income taxes from continuing operations differs from the federal statutory rate of 35% for the years December 31 due to the following (in thousands):


	2011					2010					2009
Statutory rate	$	5,910		35.0	%	$	(32,298	)	35.0	%	$	(20,364	)	35.0	%
Non-deductible expenses		1,443		8.5	%		984		-1.1	%		589		-1.0	%
State taxes, less federal effect		1,107		6.6	%		499		-0.5	%		(3,108	)	5.3	%
Intangible asset impairment		–		0.0	%		14,560		-15.8	%		4,081		-7.0	%
Foreign rate differential		(344	)	-2.0	%		(68	)	0.1	%		30		-0.1	%
Uncertain tax positions		(228	)	-1.4	%		305		-0.3	%		107		-0.2	%
Other		(219	)	-1.3	%		(905	)	0.9	%		54		0.0	%
	$	7,669		45.4	%	$	(16,923	)	18.3	%	$	(18,611	)	32.0	%

Deferred tax liabilities (assets) at December 31 consist of the following (in thousands):


	2011			2010
Depreciation	$	22,782		$	19,705
Goodwill		21,686			15,070
Intangible assets		24,111			13,921
Other		2,046			420
Gross deferred tax liabilities		70,625			49,116
Equity compensation		(8,526	)		(8,456	)
Other		(16,315	)		(12,578	)
Gross deferred tax assets		(24,841	)		(21,034	)
Valuation allowances		2,613			2,829
Deferred tax assets, net of valuation allowances		(22,228	)		(18,205	)
Net deferred tax liabilities	$	48,397		$	30,911

Net current deferred tax assets of $7,404,000 and $6,208,000 are included in other current assets in the consolidated balance sheet at December 31, 2011 and 2010, respectively.

Deferred taxes include net deferred tax assets relating to certain state and foreign tax jurisdictions. A reduction of the carrying amount of deferred tax assets by a valuation allowance is required if it is more likely than not that such assets will not be realized. During 2010, the Company recorded an additional valuation allowance of $2,400,000 due to the uncertainty of its ability to utilize the deferred tax assets related to one state.

The deferred tax assets in that state primarily relate to state net operating losses and intangible assets. The following sets forth a reconciliation of the beginning and ending amount of the Company's valuation allowance (in thousands):


	2011			2010		2009
Balance as of January 1	$	2,829		$	1,779	$	2,614
Cost charged to the tax provision		–			1,050		157
Write-offs		(216	)		–		(992	)
Balance as of December 31	$	2,613		$	2,829	$	1,779

The Company received refunds for income taxes, net of tax payments, of the following amounts for the years ended December 31 (in thousands):


	2011		2010		2009
Refunds received for income taxes, net	$	2,000	$	6,085	$	3,516

Provision has not been made for U.S. taxes on $28,800,000 of undistributed earnings of foreign subsidiaries. Those earnings have been and will continue to be reinvested. As of December 31, 2011, the Company's foreign operations held $19,426,000 of cash that provides foreign operations with liquidity to reinvest in working capital and capital expenditures for their operations. Any excess earnings could be used to grow the Company's foreign operations through launches of new capital projects or additional acquisitions. Determination of the amount of unrecognized deferred U.S. income tax liability is not practicable due to the complexities associated with its hypothetical calculation.

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


	2011			2010
Balance as of January 1	$	2,160		$	2,165
Additions for acquisitions		557			–
Additions for tax positions of the current year		218			239
Additions for tax positions of prior years		34			138
Reductions for tax positions of prior years for:
Settlements and changes in judgment		(186	)		(372	)
Lapses of applicable statute of limitations		(296	)		(10	)
Balance as of December 31	$	2,487		$	2,160

The Company and its U.S. subsidiaries file a U.S. federal consolidated income tax return. Foreign and U.S. state jurisdictions have statute of limitations generally ranging from four to six years. Currently, the Company does not have any returns under examination in U.S. state jurisdictions.

During 2011, the Internal Revenue Service concluded their examination of the Company's income tax return for 2010 with no adjustments.

All unrecognized tax benefits would affect the effective tax rate, if recognized as of December 31, 2011 and 2010. The Company reports accrued interest and penalties related to unrecognized tax benefits in income tax expense. Interest (net of federal tax benefit) and penalties recognized during the years ended December 31 were (in thousands):


	2011		2010		2009
Interest and penalties recognized as expense	$	10	$	115	$	171

At December 31, 2011, the Company had net operating loss carry forwards for federal, state, and foreign income tax purposes totaling $48,113,000 which will expire between 2012 and 2031. The Company recognized $3,321,000 of deferred tax assets, net of the federal tax benefit, related to these net operating losses prior to any valuation allowances.