15. INCOME TAXES

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


		2013			2012		2011
Domestic	$	19,787		$	18,468	$	13,403
Foreign		(20,619	)		3,699		3,482
(Loss) income before taxes from continuing operations	$	(832	)	$	22,167	$	16,885

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


		2013			2012			2011
Current:
U.S. Federal	$	3,635		$	5,780		$	139
State		1,507			1,483			920
Foreign		892			1,260			1,582
Total current		6,034			8,523			2,641
Deferred:
U.S. Federal		2,655			844			4,998
State		(2,847	)		489			783
Foreign		(1,045	)		(339	)		(753	)
Total deferred		(1,237	)		994			5,028
Provision for income taxes	$	4,797		$	9,517		$	7,669

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


		2013			2012			2011
Current:
U.S. Federal	$	(3	)	$	(98	)	$	5,643
State		–			(186	)		622
Foreign		–			–			67
Total current		(3	)		(284	)		6,332
Deferred:
U.S. Federal		–			–			166
State		–			–			35
Foreign		–			–			–
Total deferred		–			–			201
(Benefit of) provision for income taxes	$	(3	)	$	(284	)	$	6,533

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


		2013					2012					2011
Statutory rate	$	(291	)	35.0	%	$	7,758		35.0	%	$	5,910		35.0	%
Intangible asset impairment		7,241		-870.3	%		1,514		6.8	%		–		0.0	%
State taxes, less federal effect		1,382		-166.1	%		1,282		5.8	%		1,107		6.6	%
Change in valuation allowance		(2,268	)	272.6	%		(39	)	-0.2	%		(216	)	-1.3	%
Federal tax credits		(517	)	62.1	%		(270	)	-1.2	%		–		0.0	%
Uncertain tax positions		(515	)	61.9	%		(872	)	-3.9	%		(228	)	-1.4	%
Foreign rate differential		(163	)	19.6	%		(335	)	-1.5	%		(344	)	-2.0	%
Non-deductible expenses		(66	)	7.9	%		366		1.7	%		1,443		8.5	%
Other		(6	)	0.7	%		113		0.5	%		(3	)	0.0	%
	$	4,797		-576.6	%	$	9,517		43.0	%	$	7,669		45.4	%

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


		2013			2012
Depreciation	$	19,278		$	20,116
Goodwill		33,982			28,130
Intangible assets		20,951			22,587
Other		1,466			1,680
Gross deferred tax liabilities		75,677			72,513

Equity compensation		(12,858	)		(9,897	)
Other		(15,623	)		(15,975	)
Gross deferred tax assets		(28,481	)		(25,872	)
Valuation allowances		306			2,574
Deferred tax assets, net of valuation allowances		(28,175	)		(23,298	)
Net deferred tax liabilities	$	47,502		$	49,215

Net current deferred tax assets of $7,622,000 and $7,853,000 are included in other current assets in the consolidated balance sheet at December 31, 2013 and 2012, 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. The following sets forth a reconciliation of the beginning and ending amount of the Company's valuation allowance (in thousands):


		2013			2012			2011
Balance as of January 1	$	2,574		$	2,613		$	2,829
Cost charged to the tax provision		–			266			–
Reductions		(2,268	)		(305	)		(216	)
Balance as of December 31	$	306		$	2,574		$	2,613

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


		2013			2012			2011
(Payments made) refunds received for income taxes, net	$	(7,564	)	$	(8,944	)	$	2,000

Provision has not been made for U.S. taxes on $26,478,000 of undistributed earnings of foreign subsidiaries. Those earnings have been and will continue to be indefinitely reinvested. As of December 31, 2013, the Company's foreign operations held $21,183,000 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):


		2013			2012			2011
Balance as of January 1	$	2,485		$	3,687		$	3,166
Additions for tax positions of the current year		83			105			1,192
Additions for tax positions of prior years		–			67			52
Reductions for tax positions of prior years for:
Settlements and changes in judgment		(26	)		(857	)		(268	)
Lapses of applicable statute of limitations		(848	)		(517	)		(455	)
Balance as of December 31	$	1,694		$	2,485		$	3,687

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 ten years. Currently, the Company is under examination in Germany for 2009 through 2012.

All unrecognized tax benefits would affect the effective tax rate, if recognized as of December 31, 2013 and 2012. The Company classifies 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):


		2013			2012			2011
Interest and penalties recognized as (income) expense	$	(92	)	$	(48	)	$	10

At December 31, 2013, the Company had net operating loss carry forwards for federal, state, and foreign income tax purposes totaling $32,756,000 which will expire between 2014 and 2033. The Company recognized $1,901,000 of deferred tax assets, net of the federal tax benefit, related to these net operating losses prior to any valuation allowances.