9. Income Taxes
U.S. and foreign income before income taxes consist of the following (in thousands):

	2013		2012		2011


United States	$	31,823	$	49,021	$	56,836
Foreign		214,842		190,574		181,367

	$	246,665	$	239,595	$	238,203

The income tax provision (benefit) related to income before income taxes consists of the following components (in thousands):

	2013		2012		2011


Current:
U.S. federal statutory tax	$	8,167	$	6,858	$	7,685
State		1,822		938		2,767
Foreign		36,254		24,649		27,514

		46,243		32,445		37,966

Deferred:
U.S. federal statutory tax		2,171		7,642		6,218
State		566		1,380		2,194
Foreign		(10,980)		643		(6,771)

		(8,243)		9,665		1,641

Non-current tax expense (income)		1,505		(3,866)		(606)

	$	39,505	$	38,244	$	39,001

Non-current tax expense (income) is primarily related to income tax associated with the reserve for uncertain tax positions.

A reconciliation of the U.S. federal statutory income tax rate to our effective income tax rate is as follows:

	2013	2012	2011


U.S. federal statutory tax rate	35.0%	35.0%	35.0%
Foreign earnings, net of foreign taxes	(18.7)	(16.7)	(18.7)
State income taxes, net of U.S. federal income tax benefit	0.6	0.6	1.3
Other permanent differences	(0.9)	(2.9)	(1.2)

Effective income tax rate	16.0%	16.0%	16.4%

For 2013, our effective income tax rate was 16.0%, for an income tax provision of $39.5 million, as compared to an effective income tax rate of 16.0% and an income tax provision of $38.2 million for 2012. The effective income tax rate for 2013 remained flat compared to 2012. However, there were underlying differences in the actual results of our subsidiaries in tax jurisdictions with different income tax rates as compared to 2012 and differences in outstanding uncertain tax positions net of certain nonrecurring discrete tax items including statute lapses, audit settlements, and a change in estimate.

For 2012, our effective income tax rate was 16.0%, for an income tax provision of $38.2 million, as compared to an effective income tax rate of 16.4% and an income tax provision of $39.0 million for 2011. The lower effective income tax rate for 2012 resulted primarily from differences in the actual results of our subsidiaries in tax jurisdictions with different income tax rates as compared to 2011, the reduction of certain income tax reserves for uncertain tax positions due to a discrete item related to a change in estimate, statute of limitation lapses, and the settlement of an income tax audit.

U.S. income taxes have not been provided on undistributed earnings of foreign subsidiaries. As of December 31, 2013 and 2012, we had $1.1 billion and $934.5 million, respectively, of earnings attributable to foreign subsidiaries. Our intention is to reinvest these earnings permanently in active non-U.S. business operations. Therefore, no income tax liability has been accrued for these earnings. Because of the availability of U.S. foreign tax credits, it is not practicable to determine the amount of U.S. income tax payable if such earnings are not reinvested indefinitely.

The temporary differences which comprise our net deferred tax liabilities are as follows (in thousands):

	As of December 31,

	2013		2012

Gross Deferred Tax Assets:
Bad debt reserve	$	6,426	$	4,573
Net operating loss		774		675
Accrued and other shared-based compensation		21,393		14,909
Accrued expenses		10,032		2,069
Unrealized derivative losses		558		316
Customer deposits		5,149		7,545
Unrealized foreign exchange		6,082		914

Total gross deferred tax assets		50,414		31,001
Less: Valuation allowance		—		—

Gross deferred tax assets, net of valuation allowance		50,414		31,001

Deferred Tax Liabilities:
Depreciation		(19,199)		(11,999)
Goodwill and intangible assets		(28,099)		(23,108)
Prepaid expenses, deductible for tax purposes		(3,452)		(1,719)
Other		(740)		(1,330)

Gross deferred tax liabilities		(51,490)		(38,156)

Net deferred tax liabilities	$	(1,076)	$	(7,155)

Reported on the consolidated balance sheets as:
Other current assets for deferred tax assets, current	$	32,118	$	15,282

Identifiable intangible and other non-current assets for deferred tax assets, non-current	$	16,342	$	5,406

Accrued expenses and other current liabilities for deferred tax liabilities, current	$	3,229	$	6,084

Non-current income tax liabilities, net for deferred tax liabilities, non-current	$	46,307	$	21,759

As of December 31, 2013 and 2012, we had foreign net operating losses ("NOLs") of approximately $2.6 million and $2.8 million, respectively. The NOLs as of December 31, 2013 originated in various foreign countries including India, Brazil, and The Netherlands. We have recorded a deferred tax asset of $0.8 million reflecting the benefit of the NOL carryforward as of December 31, 2013. This deferred tax asset expires as follows (in thousands):

Expiration Date	Deferred Tax Asset


December 31, 2014	$	74
December 31, 2021		76
December 31, 2022		455
Indefinite		169

Total	$	774

In addition, as a result of certain realization requirements of accounting guidance on stock compensation, the table of deferred tax assets and liabilities shown above does not include certain deferred tax assets as of December 31, 2013 and 2012 that arose directly from income tax deductions related to equity compensation in excess of compensation recognized for financial reporting. As of December 31, 2013 and 2012, we had no foreign tax credits related to the excess stock compensation deductions that resulted in an income tax deduction or credit before the realization of the income tax benefit from the deduction or credit. We use the "with and without" method for purposes of determining when excess income tax benefits have been realized.

As of December 31, 2013, 2012 and 2011, our annual capital in excess of par value pool of windfall income tax benefits related to employee compensation was estimated to be $3.3 million, $3.7 million and $6.0 million, respectively.

We operated under a special income tax concession in Singapore which was effective from January 1, 2008 through December 31, 2012. In March 2013, we received final approval that we were awarded an additional five year special income tax concession in Singapore beginning January 1, 2013. The special income tax concession is conditional upon our meeting certain employment and investment thresholds which, if not met in accordance with our agreement, may eliminate the benefit beginning with the first year in which the conditions are not satisfied. The income tax concession reduces the income tax rate on qualified sales and the impact of this income tax concession decreased foreign income taxes by $6.2 million, $5.5 million and $8.4 million for 2013, 2012 and 2011, respectively. The impact of the income tax concession on diluted earnings per common share was $0.09 for 2013, $0.08 for 2012 and $0.12 for 2011.

Income Tax Contingencies
We recorded an increase of $4.1 million of liabilities related to unrecognized income tax benefits ("Unrecognized Tax Liabilities") and an increase of $1.8 million of assets related to unrecognized income tax benefits ("Unrecognized Tax Assets") during 2013. In addition, during 2013, we recorded a decrease of $0.1 million to our Unrecognized Tax Liabilities related to a foreign currency translation gain, which is included in other (expense) income, net, in the accompanying consolidated statements of income and comprehensive income. As of December 31, 2013, our Unrecognized Tax Liabilities were $36.2 million and our Unrecognized Tax Assets were $6.9 million.

We recorded a decrease of $5.6 million of liabilities related to Unrecognized Tax Liabilities and a decrease of $1.7 million of assets related to Unrecognized Tax Assets during 2012. In addition, during 2012, we recorded a decrease of $0.1 million to our Unrecognized Tax Liabilities related to a foreign currency translation loss, which is included in other (expense) income, net, in the accompanying consolidated statements of income and comprehensive income. As of December 31, 2012, our Unrecognized Tax Liabilities were $33.0 million and our Unrecognized Tax Assets were $5.1 million.

The following is a tabular reconciliation of the total amounts of unrecognized income tax benefits for the year:

	2013		2012		2011


Unrecognized tax benefit – opening balance	$	22,394	$	25,574	$	26,293
Gross increases – tax positions in prior period		2,559		—		—
Gross decreases – tax positions in prior period		(39)		(7,659)		—
Gross increases – tax positions in current period		4,999		5,730		5,890
Gross decreases – tax positions in current period		—		—		(64)
Settlements		—		—		(62)
Lapse of statute of limitations		(3,426)		(1,251)		(6,483)

Unrecognized tax benefit – ending balance	$	26,487	$	22,394	$	25,574

If our uncertain tax positions as of December 31, 2013 are settled by the taxing authorities in our favor, our income tax expense would be reduced by $20.1 million (exclusive of interest and penalties) in the period the matter is considered settled in accordance with Accounting Standards Codification 740. This would have the impact of reducing our 2013 effective income tax rate by 8.2%. As of December 31, 2013, it does not appear that the total amount of our unrecognized income tax benefits will significantly increase or decrease within the next twelve months.

We record accrued interest and penalties related to unrecognized income tax benefits as income tax expense. Related to the uncertain income tax benefits noted above, for interest we recorded income of $0.6 million, $0.7 million and $0.6 million during 2013, 2012 and 2011, respectively. For penalties, we recorded income of $0.3 million and $1.5 million and expense of $0.2 million during 2013, 2012 and 2011, respectively. As of December 31, 2013 and 2012, we had recognized liabilities of $4.9 million and $5.5 million for interest and $4.8 million and $5.1 million for penalties, respectively.

In many cases, our uncertain tax positions are related to tax years that remain subject to examination by the relevant taxing authorities. The following table summarizes these open tax years by jurisdiction with major uncertain tax positions:

	Open Tax Year

Jurisdiction	Examination in progress	Examination not yet initiated

United States	2011	2010, 2012-2013
Singapore	None	2010-2013
United Kingdom	None	2004-2013
Brazil	2009	2010-2013
Chile	None	2008-2013
Denmark	None	2004-2013