12. INCOME TAXES

The provision for income taxes included the following components at December 31, 2014, 2013 and 2012:

	2014		2013		2012
	(Dollars in thousands)
Current:
Federal	$	7,339	$	6,449	$	6,985
State		1,131		940		928
Foreign		1,649		1,273		972
Total		10,119		8,662		8,885
Deferred		1,115		1,268		1,648
Total provision	$	11,234	$	9,930	$	10,533

The differences between the U.S. federal statutory income tax rate and the Company’s effective tax rate were as follows for the years ended December 31, 2014, 2013 and 2012:

	2014			2013			2012
U.S. federal statutory income tax rate		35.0	%		35.0	%		35.0	%
State income taxes, net of federal tax benefit		2.8			2.6			2.3
Non-taxable municipal bond interest		(1.2	)		(1.7	)		(1.9	)
Foreign income tax rate differences		(0.8	)		(0.9	)		(2.2	)
Other		0.4			0.2			0.9
Effective tax rate		36.2	%		35.2	%		34.1	%

The foreign component of pretax net earnings was $5.0 million, $4.2 million and $6.2 million for 2014, 2013 and 2012, respectively. As of December 31, 2014, the total amount of unremitted foreign earnings was $7.0 million. A deferred tax liability has not been recorded on these unremitted earnings because the Company intends to permanently reinvest such earnings outside of the U.S. Future dividends, if any, would be paid only out of current year earnings in the year earned. If the remaining unremitted foreign earnings at December 31, 2014 were to be repatriated in the future, the related deferred tax liability would not have a material impact on the Company’s financial statements.

The components of deferred taxes as of December 31, 2014 and 2013 were as follows:

	2014			2013
	(Dollars in thousands)
Deferred tax benefits:
Accounts receivable reserves	$	442		$	440
Pension liability		13,161			8,691
Accrued liabilities		2,426			2,164
		16,029			11,295
Deferred tax liabilities:
Inventory and related reserves		(3,636	)		(2,601	)
Cash value of life insurance		(3,451	)		(3,240	)
Property, plant and equipment		(1,703	)		(1,757	)
Intangible assets		(6,642	)		(5,948	)
Prepaid expenses and other assets		(240	)		(264	)
Foreign currency gains on intercompany loans		(105	)		(327	)
		(15,777	)		(14,137	)
Net deferred income tax benefits (liabilities)	$	252		$	(2,842	)

The net deferred tax benefits (liabilities) are classified in the Consolidated Balance Sheets as follows:

	2014			2013
	(Dollars in thousands)
Current deferred income tax liabilities	$	(1,747	)	$	(849	)
Noncurrent deferred income tax benefits (liabilities)		1,999			(1,993	)
	$	252		$	(2,842	)

Uncertain Tax Positions

The Company accounts for its uncertain tax positions in accordance with ASC 740, Income Taxes (“ASC 740”). ASC 740 provides that the tax effects from an uncertain tax position can be recognized in the Company’s consolidated financial statements only if the position is more likely than not of being sustained on audit, based on the technical merits of the position.

The following table summarizes the activity related to the Company’s unrecognized tax benefits:

(Dollars in thousands)
Balance at December 31, 2011	$	—
Increases related to current year tax positions		124
Balance at December 31, 2012	$	124
Increases related to current year tax positions		—
Balance at December 31, 2013	$	124
Favorable settlements of tax positions		(55	)
Decreases related to prior year tax positions		(69	)
Balance at December 31, 2014	$	—

The Company had no unrecognized tax benefits at December 31, 2014. At December 31, 2013 and 2012, the Company had unrecognized tax benefits of $124,000, which, if recognized, would reduce the Company’s annual effective tax rate. Included in the Consolidated Balance Sheets at December 31, 2013 and 2012, was a liability for potential interest related to these positions of $5,000 and $2,000, respectively.

The Company files a U.S. federal income tax return, various U.S. state income tax returns and several foreign returns. In general, the 2010 through 2014 tax years remain subject to examination by those taxing authorities.