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Income Taxes

The Company or its subsidiaries file income tax returns in the U.S. federal, and various states and foreign jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal, state, and local or non-U.S. income tax examinations by tax authorities for years before 2009.

The Company follows the provisions of uncertain tax positions as addressed in FASB Accounting Standards Codification 740-10-65-1. The Company did not recognize any increase in the liability for unrecognized tax benefits and has no uncertain tax position at December 31, 2013. The Company recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties as a component of the provision for income taxes. No interest or penalties were recognized during the periods presented and there is no accrual for interest and penalties at December 31, 2013.

The components of income before income taxes consist of the following:

	Year ended December 31,
	2013		2012		2011
U.S. operations	$	11,340	$	8,904	$	3,478
Foreign operations		69,306		265,861		63,915

	$	80,646	$	274,765	$	67,393

The provision for current and deferred income tax expense (benefit) consists of the following:

	Year ended December 31,
	2013		2012			2011
Current:
Federal	$	3,638	$	2,511		$	1,269
State and local		454		558			286
Foreign		20,744		102,717			23,898
		24,836		105,786			25,453
Deferred:
Federal		370		703			(170	)
State and local		59		40			3
Foreign		4,415		(8,654	)		(842	)
		4,844		(7,911	)		(1,009	)
Total income tax expense	$	29,680	$	97,875		$	24,444

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are as follows:

	December 31,
	2013			2012
Deferred tax assets:
Foreign net operating loss carry-forwards	$	707		$	591
Inventory and accounts receivable		626			703
Profit sharing		4,805			6,352
Stock option compensation		526			540
Effect of inventory profit elimination		1,710			5,560
Other		(410	)		(23	)
Total gross deferred tax assets		7,964			13,723
Valuation allowance		(707	)		(591	)
Net deferred tax assets		7,257			13,132
Deferred tax liabilities (long-term):
Trademarks and licenses		(2,555	)		(3,502	)
Other		-			(297	)
Total deferred tax liabilities		(2,555	)		(3,799	)
Net deferred tax assets	$	4,702		$	9,333

Valuation allowances are provided for foreign net operating loss carry-forwards, as future profitable operations from certain foreign subsidiaries might not be sufficient to realize the full amount of net operating loss carry-forwards.

No other valuation allowances have been provided as management believes that it is more likely than not that the asset will be realized in the reduction of future taxable income.

The Company has not provided for U.S. deferred income taxes on $329 million of undistributed earnings of its non-U.S. subsidiaries as of December 31, 2013 since the Company intends to reinvest most of these earnings in its foreign operations indefinitely and the Company believes it has sufficient foreign tax credits available to offset any potential tax on amounts that have been and are planned to be repatriated.

Differences between the United States Federal statutory income tax rate and the effective income tax rate were as follows:

	Year ended December 31,
	2013			2012			2011
Statutory rates		34.0	%		34.0	%		34.0	%
State and local taxes, net of Federal benefit		0.4			0.1			0.3
Effect of foreign taxes greater than (less than) U.S. statutory rates		2.0			1.4			2.0
Other		0.4			0.1			-
Effective rates		36.8	%		35.6	%		36.3	%