9. Income Taxes

The provisions for taxes on income and the related income before taxes for the years ended December 31, 2014, 2013 and 2012, were as follows:

(In thousands)	2014		2013			2012
Taxes on Income
Federal
Current	$	3,362	$	9,744		$	23,744
Deferred		4,338		(285	)		(525	)
State
Current		782		1,223			1,999
Deferred		643		(680	)		(537	)
Foreign
Current		9,004		12,067			10,158
Deferred		325		1,224			1,196
Total	$	18,454	$	23,293		$	36,035
Income before Taxes
Domestic	$	34,091	$	50,626		$	80,371
Foreign		41,444		45,004			35,351
Total	$	75,535	$	95,630		$	115,722

The variations between the effective and statutory U.S. federal income tax rates are summarized as follows:

(In thousands)	2014 Amount			%			2013 Amount			%			2012 Amount			%
Federal income tax provision at statutory tax rate	$	26,437			35.0		$	33,471			35.0		$	40,503			35.0
State tax provision on income less applicable federal tax benefit		926			1.2			353			0.4			1,470			1.3
Foreign income taxed at different rates		(5,175	)		(6.9	)		(2,509	)		(2.6	)		(1,172	)		(1.0	)
Repatriation of foreign earnings		83			0.1			146			0.2			24			—
Domestic production activities deduction		(312	)		(0.4	)		(991	)		(1.0	)		(1,446	)		(1.2	)
Nontaxable foreign interest income		(2,435	)		(3.2	)		(2,614	)		(2.7	)		(2,690	)		(2.3	)
Nontaxable biodiesel excise credit income		(130	)		(0.2	)		(2,347	)		(2.5	)		—			—
U.S. tax credits		(1,086	)		(1.4	)		(2,209	)		(2.3	)		—			—
Non-deductible expenses and other items, net		146			0.2			(7	)		(0.1	)		(654	)		(0.7	)
Total income tax provision	$	18,454			24.4		$	23,293			24.4		$	36,035			31.1

At December 31, 2014 and 2013, the tax effects of significant temporary differences representing deferred tax assets and liabilities were as follows:

(In thousands)	2014			2013

Deferred Tax Liabilities:
Depreciation	$	(63,104	)	$	(57,113	)
Amortization of intangibles		—			(49	)
Unrealized foreign exchange loss		(838	)		(910	)
Other		(1,159	)		(823	)
	$	(65,101	)	$	(58,895	)

Deferred Tax Assets:
Pensions	$	18,775		$	5,640
Deferred revenue		1,650			3,058
Other accruals and reserves		13,230			12,061
Inventories		1,957			1,158
Legal and environmental accruals		9,505			6,594
Deferred compensation		15,636			20,510
Bad debt and rebate reserves		4,618			3,018
Subsidiaries net operating loss carryforwards		727			899
Tax credit carryforwards		2,064			915
	$	68,162		$	53,853

Valuation Allowance	$	(1,506	)	$	(1,302	)

Net Deferred Tax (Liabilities) Assets	$	1,555		$	(6,344	)

Reconciliation to Consolidated Balance Sheet:
Current deferred tax assets	$	15,364		$	12,637
Non-current deferred tax assets (in other non-current assets)		2,044			1,658
Current deferred tax liabilities (in accrued liabilities)		(49	)		(23	)
Non-current deferred tax liabilities		(15,804	)		(20,616	)
Net Deferred Tax (Liabilities) Assets	$	1,555		$	(6,344	)

Undistributed earnings of foreign subsidiaries and related companies that are deemed to be permanently reinvested amounted to $224,483,000 at December 31, 2014, compared to $194,148,000 at December 31, 2013. In general, the Company reinvests earnings of foreign subsidiaries in their operations indefinitely. However, the Company will repatriate earnings from a subsidiary where excess cash has accumulated and it is advantageous for tax or foreign exchange reasons. Because of the probable availability of foreign tax credits, it is not practicable to estimate the amount, if any, of the deferred tax liability on earnings reinvested indefinitely.

The Company has tax loss carryforwards of $2,776,000 (pretax) as of December 31, 2014, and $3,980,000 as of December 31, 2013, that are available for use by the Company between 2015 and 2023. The Company has tax credit carryforwards of $2,064,000 as of December 31, 2014 and $915,000 as of December 31, 2013, that are available for use by the Company between 2015 and 2034.

At December 31, 2014, the Company had valuation allowances of $1,506,000, which were primarily attributable to deferred tax assets in China, India and the Philippines. The realization of deferred tax assets is dependent on the generation of sufficient taxable income in the appropriate tax jurisdictions. The Company believes that it is more likely than not that the related deferred tax assets will not be realized.

As of December 31, 2014 and 2013, unrecognized tax benefits totaled $464,000 and $240,000, respectively. The amount of unrecognized tax benefits that, if recognized, would favorably affect the Company’s effective income tax rate in any future periods, net of the federal benefit on state issues, was approximately $454,000, $231,000 and $275,000 at December 31, 2014, 2013 and 2012, respectively. The Company does not believe that the amount of unrecognized tax benefits related to its current uncertain tax positions will change significantly over the next 12 months.

The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. In 2014, the Company recognized net interest and penalty expense of $6,000 compared to $9,000 and $444,000 of net interest and penalty income in 2013 and 2012, respectively. At December 31, 2014 the liability for interest and penalties was $38,000 compared to $32,000 at December 31, 2013.

During 2012, the Company negotiated and finalized ten state income tax voluntary disclosure agreements. As a result, the Company recorded a net tax benefit of $688,000.

The Company files income tax returns in the U.S. federal jurisdiction and various states and foreign jurisdictions. The Company is not subject to U.S. federal income tax examinations by tax authorities for years before 2010. Some foreign jurisdictions and various U.S. states jurisdictions may be subject to examination back to 2008.

Below are reconciliations of the January 1 and December 31 balances of unrecognized tax benefits for 2014, 2013 and 2012:

(In thousands)	2014			2013			2012
Unrecognized tax benefits, opening balance	$	240		$	289		$	1,232
Gross increases – tax positions in prior period		—			27			—
Gross decreases – tax positions in prior period		—			(41	)		(569	)
Gross increases – current period tax positions		261			17			44
Settlements		—			—			—
Foreign currency translation		(13	)		5			23
Lapse of statute of limitations		(24	)		(57	)		(441	)
Unrecognized tax benefits, ending balance	$	464		$	240		$	289