15.

INCOME TAXES:

The components of the provision for (benefit from) income taxes are as follows:


	Year Ended December 31,
	2013			2012			2011
	(in thousands)
Current:
Federal	$	5,737		$	5,428		$	2,639
State		566			130			695

Total current tax expense		6,303			5,558			3,334

Deferred:
Federal		(7,319	)		(296	)		5,380
State		(1,110	)		259			904

Total deferred tax expense		(8,429	)		(37	)		6,284

	$	(2,126	)	$	5,521		$	9,618

The difference between the Company’s effective income tax rates and the statutory United States federal income tax rate of 35% is explained as follows:


	Year Ended December 31,
	2013			2012			2011
	(in thousands)
Provision (benefit) at statutory rate of 35%	$	(1,067	)	$	7,618		$	7,800
State provision, net of federal benefit		(393	)		519			922
Research and development credits		(916	)		(1,734	)		—
Domestic manufacturing deduction		(641	)		(762	)		(389	)
Sale of business		—			—			341
Change in valuation allowance		954			—			872
Uncertain tax positions		(311	)		(67	)		126
Nondeductible expenses		370			278			190
Other		(122	)		(331	)		(244	)

	$	(2,126	)	$	5,521		$	9,618

Effective tax (benefit) rate		(69.7	)%		25.4	%		43.2	%

The tax effect of temporary differences that give rise to significant portions of deferred tax assets and liabilities is presented below:


	December 31,
	2013			2012
	(in thousands)
Current deferred tax assets:
Costs and estimated earnings in excess of billings on uncompleted contracts, net	$	2,384		$	1,323
Accrued employee benefits		951			1,612
Inventories		2,671			1,393
Trade receivable, net		319			650
Net operating loss carryforwards		500			364
Other		520			693

		7,345			6,035
Valuation allowance		(500	)		(146	)

		6,845			5,889
Current deferred tax liabilities:
Prepaid expenses		(637	)		(712	)

Current deferred tax assets, net		6,208			5,177

Noncurrent deferred tax assets:
Net operating loss carryforwards		211			549
Tax credit carryforwards		478			64
Accrued employee benefits		3,740			3,673
Other assets		5,520			4,527
Other		138			17

		10,087			8,830
Valuation allowance		(1,394	)		(794	)

		8,693			8,036
Noncurrent deferred tax liabilities:
Property and equipment		(19,343	)		(23,290	)
Intangible assets		(1,192	)		—

Noncurrent deferred tax liabilities, net		(11,842	)		(15,254	)

Net deferred tax liabilities	$	(5,634	)	$	(10,077	)

As of December 31, 2013, the Company had approximately $13 million of state net operating loss carryforwards which expire on various dates between 2018 and 2031. The Company also had state tax carryforwards of $889,000, which begin to expire in 2014.

The Company considers the earnings of the Mexican subsidiary to be indefinitely reinvested outside the United States on the basis of estimates that future domestic cash generation will be sufficient to meet future domestic cash needs. Should the Company decide to repatriate the foreign earnings, the income tax provision would be adjusted in the period it is determined that the earnings will no longer be indefinitely reinvested outside the United States, and a deferred tax liability of approximately $650,000 related to the United States federal and state income taxes and foreign withholding taxes on approximately $1.9 million of undistributed foreign earnings would be recorded.

The Company files income tax returns in the United States Federal jurisdiction, in a limited number of foreign jurisdictions, and in many state jurisdictions. The Company is currently under examination by the Internal Revenue Service for years 2009, 2010 and 2011. With few exceptions, the Company is no longer subject to United States Federal or state income tax examinations for years before 2009.

A summary of the changes in the unrecognized tax benefits during the years ended December 31, 2013, 2012 and 2011 is presented below (in thousands):


	2013			2012			2011
Unrecognized tax benefits, beginning of year	$	5,245		$	309		$	125
Increases for positions taken in prior years		646			3,571			10
Decreases for positions taken in prior years		(696	)		(184	)		—
Increases for positions taken in the current year		1,012			1,549			174

Unrecognized tax benefits, end of year	$	6,207		$	5,245		$	309

The Company believes it is reasonably possible that the total amounts of unrecognized tax benefits will decrease in the following twelve months due to the anticipated settlement of the examination by the Internal Revenue Service; however, actual results could differ from those currently expected. Of the balance of unrecognized tax benefits, $2.1 million would affect the Company’s effective tax rate if recognized at some point in the future.

The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. As of December 31, 2013 and 2012, the Company has approximately $268,000 and $172,000, respectively, of accrued interest related to uncertain tax positions. Total interest for uncertain tax positions increased by approximately $96,000 in 2013, $100,000 in 2012, and $8,000 in 2011.