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Income Taxes | 12 Months Ended
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Dec. 31, 2013
Income Taxes | 14. Income Taxes Components of our income (loss) from continuing operations are as follows (in thousands):
|  | Year Ended December 31, |
|  | 2013 |  |  | 2012 |  |  | 2011 |
Income (loss) from continuing operations before income taxes: |  |  |  |  |  |  |  |  |  |  |  |
Canadian |  | $ | (5,366 | ) |  | $ | (5,199 | ) |  | $ | (871 | )
U.S. |  |  | 11,061 |  |  |  | 12,132 |  |  |  | 7,455 |
Other |  |  | 8,835 |  |  |  | 4,601 |  |  |  | 17,636 |
Total |  | $ | 14,530 |  |  | $ | 11,534 |  |  | $ | 24,220 |
Components of the Company’s income tax provision (benefit) are as follows (in thousands):
|  | Year Ended December 31, |
|  | 2013 |  |  | 2012 |  |  | 2011 |
Current |  |  |  |  |  |  |  |  |  |  |  |
Canadian |  | $ | — |  |  | $ | — |  |  | $ | — |
U.S. |  |  | 1,082 |  |  |  | 3,625 |  |  |  | 388 |
Other |  |  | 652 |  |  |  | 2,277 |  |  |  | 1,664 |
|  |  | 1,734 |  |  |  | 5,902 |  |  |  | 2,052 |
Deferred |  |  |  |  |  |  |  |  |  |  |  |
Canadian |  |  | — |  |  |  | — |  |  |  | — |
U.S. |  |  | 2,206 |  |  |  | (13,882 | ) |  |  | (150 | )
Other |  |  | 1,740 |  |  |  | (2,960 | ) |  |  | 642 |
|  |  | 3,946 |  |  |  | (16,842 | ) |  |  | 492 |
Total |  | $ | 5,680 |  |  | $ | (10,940 | ) |  | $ | 2,544 |
The Company is incorporated in Canada and therefore uses the Canadian statutory rate. The reconciliation of the statutory Canadian income tax rate to the effective rate related to income from continuing operations before income taxes is as follows (in thousands, except percentage data):
|  | Year Ended December 31, |
|  | 2013 |  |  | 2012 |  |  | 2011 |
Statutory Canadian tax rate |  |  | 26.00 | % |  |  | 25.00 | % |  |  | 27.00 | %
Expected income tax provision at statutory Canadian tax rate |  | $ | 3,778 |  |  | $ | 2,884 |  |  | $ | 6,539 |
International tax rate differences |  |  | 14 |  |  |  | 1,419 |  |  |  | 641 |
Permanent differences |  |  | 121 |  |  |  | 241 |  |  |  | 5 |
Change in valuation allowance |  |  | (3,052 | ) |  |  | (15,086 | ) |  |  | (5,598 | )
Prior year provision to return differences |  |  | (296 | ) |  |  | 37 |  |  |  | 69 |
Net operating loss expirations |  |  | 4,538 |  |  |  | — |  |  |  | — |
Statutory tax rate change |  |  | 379 |  |  |  | 316 |  |  |  | 357 |
Uncertain tax positions |  |  | 259 |  |  |  | (4,093 | ) |  |  | 423 |
Tax credits |  |  | (938 | ) |  |  | — |  |  |  | (144 | )
State income taxes, net |  |  | 118 |  |  |  | 375 |  |  |  | 577 |
IRS audit |  |  | 680 |  |  |  | 1,846 |  |  |  | (268 | )
Withholding and other taxes |  |  | 321 |  |  |  | 488 |  |  |  | — |
Other |  |  | (242 | ) |  |  | 633 |  |  |  | (57 | )
Reported income tax provision (benefit) |  | $ | 5,680 |  |  | $ | (10,940 | ) |  | $ | 2,544 |
Effective tax rate |  |  | 39.1 | % |  |  | (94.9% | ) |  |  | 10.5 | %
Deferred income taxes result principally from temporary differences in the recognition of certain revenue and expense items and operating loss carryforwards and credit carryforwards for financial and tax reporting purposes. Significant components of the Company’s deferred tax assets and liabilities as of December 31, 2013 and 2012 are as follows (in thousands):
|  | December 31, |
|  | 2013 |  |  | 2012 |
Deferred tax assets |  |  |  |  |  |  |  |
Losses & IRC Section 163(j) carryforwards |  | $ | 16,218 |  |  | $ | 24,372 |
Compensation related deductions |  |  | 2,725 |  |  |  | 4,737 |
Tax credits |  |  | 3,817 |  |  |  | 5,101 |
Restructuring related liabilities |  |  | 406 |  |  |  | 510 |
Inventory |  |  | 5,680 |  |  |  | 6,493 |
Depreciation |  |  | 938 |  |  |  | 194 |
Amortization |  |  | 163 |  |  |  | — |
Warranty |  |  | 1,007 |  |  |  | 680 |
Other |  |  | 854 |  |  |  | 598 |
Total deferred tax assets |  |  | 31,808 |  |  |  | 42,685 |
Valuation allowance for deferred tax assets |  |  | (11,534 | ) |  |  | (15,481 | )
Net deferred income tax assets |  | $ | 20,274 |  |  | $ | 27,204 |
Deferred tax liabilities |  |  |  |  |  |  |  |
Equity investment |  | $ | (1,025 | ) |  | $ | (807 | )
Depreciation |  |  | (471 | ) |  |  | — |
Amortization |  |  | (11,283 | ) |  |  | (14,254 | )
Unrealized gain/loss |  |  | (985 | ) |  |  | (1,132 | )
Other |  |  | (581 | ) |  |  | (201 | )
Total deferred tax liabilities |  | $ | (14,345 | ) |  | $ | (16,394 | )
Net deferred income tax assets (liabilities) |  | $ | 5,929 |  |  | $ | 10,810 |
In determining its 2013, 2012, and 2011 income tax provisions, the Company calculated deferred tax assets and liabilities for each separate jurisdiction. The Company then considered a number of factors, including positive and negative evidence related to the realization of its deferred tax assets to determine whether a valuation allowance should be recognized with respect to its deferred tax assets. In 2013, the Company adjusted a portion of its Canadian loss carryforward and the related valuation allowance of $4.8 million. The Company also recorded valuation allowances against its current year net operating losses in certain tax jurisdictions of $1.3 million and released valuation allowance previously recorded on certain U.S. state tax credits of $0.3 million. Additionally, the Company adjusted the carrying value of deferred tax assets on net operating losses and tax credits and their related valuation allowance in Canada and the U.K. as a result of changes in statutory tax rates amounting to $0.7 million in 2013. In 2012, the Company recognized a tax benefit of $15.3 million due to the release of a portion of the valuation allowance on deferred tax assets which the Company believes are more likely than not to be realized. Our effective income tax rate benefited from the availability of previously unrealized deferred tax assets which the Company utilized to reduce tax expense for the U.S., U.K., France, and Japan for income tax purposes. Valuation allowance continues to be provided on U.S. capital loss, certain state net operating loss and certain foreign tax attributes that the Company has determined that it is more likely than not that they will not be realized. In conjunction with the Company’s ongoing review of its actual results and anticipated future earnings, the Company continuously reassesses the possibility of releasing the valuation allowance currently in place on its deferred tax assets. As of December 31, 2013, the Company had loss carryforwards of $10.0 million (tax effected) available to reduce future taxable income. Of this amount, approximately $1.8 million relates to the U.S. and expires through 2033; $7.1 million relates to Canada and expires starting in 2015; $0.7 million relates to the U.K. and can be carried forward indefinitely; and the remaining $0.4 million relates to various foreign jurisdictions. As of December 31, 2013, the Company had tax credits of approximately $3.8 million available to reduce income taxes in future years. Approximately $1.6 million relates to the U.S., both federal and state, and expires through 2033. The remaining $2.2 million relates to Canada, of which $1.4 million expires through 2022 and $0.8 million can be carried forward indefinitely. Income and foreign withholding taxes have not been recognized on the excess of the amount for financial reporting purposes over the tax basis of investments in foreign subsidiaries that are essentially permanent in nature. This amount becomes taxable upon a repatriation of assets from a subsidiary or a sale or liquidation of a subsidiary. The amount of undistributed earnings of foreign subsidiaries totaled $13.9 million as of December 31, 2013. Determination of the amount of any unrecognized deferred income tax liabilities on this temporary difference is not practicable because of the complexities of the hypothetical calculation. As of December 31, 2011, the amount of gross unrecognized tax benefits totaled approximately $7.3 million, all of which would favorably affect the Company’s effective tax rate, if recognized. As of December 31, 2012, the Company’s total amount of gross unrecognized tax benefits was $7.6 million, of which $4.3 million would favorably affect its effective tax rate, if recognized. As a result of settling a U.S. federal tax examination, the Company released $3.0 million of unrecognized tax benefits during the year ended December 31, 2012. As of December 31, 2013, the Company’s total amount of gross unrecognized tax benefits was $7.1 million, of which $4.9 million would favorably affect its effective tax rate, if recognized. Over the next twelve months, the Company may need to record up to $2.1 million of previously unrecognized tax benefits in the event of statute of limitations closures. The Company believes there are no other jurisdictions in which the outcome of unresolved issues or claims is likely to be material to its results of operations, financial position or cash flows. Furthermore, the Company believes it has adequately provided for all income tax uncertainties. The reconciliation of the total amounts of unrecognized tax benefits is as follows (in thousands):
Balance at December 31, 2010 |  | $ | 5,088 |
Additions based on tax positions related to the current year |  |  | 2,318 |
Additions for tax positions of prior years |  |  | 55 |
Reductions for tax positions of prior years |  |  | (177 | )
Balance at December 31, 2011 |  |  | 7,284 |
Additions based on tax positions related to the current year |  |  | 2,618 |
Additions for tax positions of prior years |  |  | 1,422 |
Reductions for tax positions of prior years |  |  | (481 | )
Reductions to tax positions resulting from a lapse of the applicable statute of limitations |  |  | (254 | )
Settlements with taxation authorities |  |  | (3,035 | )
Balance at December 31, 2012 |  |  | 7,554 |
Additions based on tax positions related to the current year |  |  | 508 |
Additions for tax positions of prior years |  |  | 1,475 |
Reductions for tax positions of current years |  |  | (1,888 | )
Reductions to tax positions resulting from a lapse of the applicable statute of limitations |  |  | (575 | )
Balance at December 31, 2013 |  | $ | 7,074 |
The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. As of December 31, 2013 and 2012, the Company had approximately $0.3 million and $0.6 million, respectively, of accrued interest and penalties related to uncertain tax positions. During the years ended December 31, 2013 and 2012, the Company recognized approximately $0.3 million and $0.6 million, respectively, of benefits from lower interest and penalties related to uncertain tax positions. The Company files income tax returns in Canada, the U.S., and various states and foreign jurisdictions. Generally, the Company is no longer subject to U.S. or foreign income tax examinations by tax authorities for the years before 2006. The Company’s income tax returns may be reviewed in the following countries for the following periods under the appropriate statute of limitations:
United States |  |  | 2009 - Present |
Canada |  |  | 2006 - Present |
United Kingdom |  |  | 2009 - Present |
China |  |  | 2010 - Present |
Japan |  |  | 2008 - Present |
Germany |  |  | 2008 - Present |
Netherlands |  |  | 2009 - Present |

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319 + Details
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