Income Taxes

Income (loss) before income taxes and equity earnings is attributable to the following jurisdictions (in thousands):



	Year Ended December 31,
	2012			2011		2010
United States	$	144,578		$	111,376	$	92,108
Foreign ⁽¹⁾	(6,178		)	5,727		2,518
Total	$	138,400		$	117,103	$	94,626

⁽¹⁾ The foreign loss before income taxes in 2012 includes the $6.9 million goodwill impairment charge related to the United Kingdom.

The provision for income taxes consisted of the following (in thousands):



	Year Ended December 31,
	2012		2011		2010
Current:
Federal	$	43,871	$	32,850	$	29,040
State and other	5,958		7,675		5,682
Total current provision for income taxes	49,829		40,525		34,722

Deferred:
Federal	6,071		4,754		1,715
State and other	844		40		656
Total deferred provision for income taxes	6,915		4,794		2,371
Provision for income taxes	$	56,744	$	45,319	$	37,093

A reconciliation of the U.S. federal statutory tax rate to our effective tax rate on Income before income taxes and equity earnings is as follows:



	Year Ended December 31,
	2012		2011		2010
Federal statutory rate	35.00	%	35.00	%	35.00	%
Change in valuation allowance	1.97		0.37		0.81
Other, primarily state income tax rate	4.03		3.33		3.39
Total effective tax rate	41.00	%	38.70	%	39.20	%

The components of the deferred tax assets and liabilities are as follows (in thousands):



	December 31,
	2012			2011
Deferred tax assets:
Product inventories	$	7,703		$	8,075
Accrued expenses	2,780			2,885
Allowance for doubtful accounts	420			777
Total current	10,903			11,737
Less: valuation allowance	(1,584		)	(1,677		)
Component reclassified for net presentation	(4,133		)	(2,976		)
Total current, net	5,186			7,084

Leases	1,957			1,866
Share-based compensation	16,970			17,740
Uncertain tax positions	1,226			1,650
Net operating losses	6,703			3,972
Interest rate swaps	1,327			164
Equity losses in unconsolidated investments	5,653			5,653
Other	1,150			1,037
Total non-current	34,986			32,082
Less: valuation allowance	(10,772		)	(7,948		)
Component reclassified for net presentation	(23,474		)	(23,461		)
Total non-current, net	740			673

Total deferred tax assets	5,926			7,757

Deferred tax liabilities:
Trade discounts on purchases	2,681			1,944
Prepaid expenses	1,452			1,032
Total current	4,133			2,976
Component reclassified for net presentation	(4,133		)	(2,976		)
Total current, net	—			—

Intangible assets, primarily goodwill	30,645			27,107
Depreciation	6,282			5,885
Total non-current	36,927			32,992
Component reclassified for net presentation	(23,474		)	(23,461		)
Total non-current, net	13,453			9,531

Total deferred tax liabilities	13,453			9,531

Net deferred tax liability	$	(7,527	)	$	(1,774	)

At December 31, 2012, certain of our international subsidiaries had tax loss carryforwards totaling approximately $23.9 million, which expire in various years after 2013. Deferred tax assets related to the tax loss carryforwards of these international subsidiaries were $6.7 million as of December 31, 2012 and $4.0 million as of December 31, 2011. We have recorded a corresponding valuation allowance of $6.7 million and $4.0 million in the respective years. The increase in our net operating losses and corresponding valuation allowances in 2012 is primarily related to the United Kingdom. We have also recorded a $5.7 million valuation allowance related to our deferred tax asset recorded for the write‑off of our investment in LAC.

As presented in the Consolidated Statements of Cash Flows, the changes in deferred income taxes include changes related to the deferred income tax provision and the estimated tax impact of accumulated other comprehensive income (loss).

We reduce federal and state income taxes payable by the tax benefits associated with the exercise of nonqualified stock options and the lapse of restrictions on restricted stock awards. To the extent realized tax deductions exceed the amount of previously recognized deferred tax benefits related to share-based compensation, we record an excess tax benefit in stockholders’ equity. We recorded excess tax benefits of $4.5 million in 2012 and $3.1 million in 2011.

As of December 31, 2012, United States income taxes were not provided on earnings of our foreign subsidiaries, as we have invested or expect to invest the undistributed earnings indefinitely. If in the future these earnings are repatriated to the United States, or if we determine that the earnings will be remitted in the foreseeable future, additional income tax provisions may be required. Determining the amount of unrecognized deferred tax liability on these undistributed earnings is not practicable due to the complexity of tax laws and regulations and the varying circumstances, tax treatments and timing of any future repatriation.

We hold, through our affiliates, cash balances in the countries in which we operate, including amounts held outside the United States. Most of the amounts held outside the United States could be repatriated to the United States, but, under current law, may be subject to United States federal income taxes, less applicable foreign tax credits. Repatriation of some foreign balances is restricted by local laws including the imposition of withholding taxes in some jurisdictions. We have not provided for the United States federal tax liability on these amounts and for financial statement purposes, these foreign cash balances are considered indefinitely reinvested.

The following is a summary of the activity related to uncertain tax positions for the past three years (in thousands):



	2012			2011			2010
Balance at beginning of year	$	4,715		$	3,962		$	4,550
Increases for tax positions taken during a prior period	—			—			114
Increases for tax positions taken during the current period	972			914			811
Decreases resulting from the expiration of the statute of limitations	(2,123		)	(46		)	(992		)
Decreases relating to settlements	(60		)	(115		)	(521		)
Balance at end of year	$	3,504		$	4,715		$	3,962

The total amount of unrecognized tax benefits that, if recognized, would decrease the effective tax rate was $2.3 million at December 31, 2012 and $3.0 million at December 31, 2011.

We record interest expense related to unrecognized tax benefits in interest expense, while we record related penalties in selling and administrative expenses. For unrecognized tax benefits, we had interest income of $0.3 million in 2012 and interest expense of $0.3 million in 2011 and $0.1 million in 2010. Accrued interest related to unrecognized tax benefits was approximately $0.5 million at December 31, 2012 and $0.8 million at December 31, 2011.

We file income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. With few exceptions, we are no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years before 2009.