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INCOME TAXES | 12 Months Ended
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Dec. 31, 2014
INCOME TAXES |
INCOME TAXES | 12. INCOME TAXES The components of income before income taxes for the years ended December 31, 2012, 2013 and 2014 are as follows (in thousands):
|  | 2012 |  | 2013 |  | 2014 |
Domestic |  | $ | 26,249 |  | $ | 13,697 |  | $ | 57,767 |
Foreign |  |  | 18,547 |  |  | 32,776 |  |  | 28,401 |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Total |  | $ | 44,796 |  | $ | 46,473 |  | $ | 86,168 |
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The following is a reconciliation from the tax computed at statutory income tax rates to the Company's income tax expense for the years ended December 31, 2012, 2013, and 2014 (in thousands):
|  | 2012 |  | 2013 |  | 2014 |
Tax computed at statutory U.S. federal income tax rates |  | $ | 15,679 |  | $ | 16,270 |  | $ | 30,160 |
Income taxes in excess (below) statutory U.S. tax rates: |  |  |  |  |  |  |  |  |  |
Guyana |  |  | 812 |  |  | 701 |  |  | (130 | )
Bermuda and Turks & Caicos |  |  | 503 |  |  | (3,203 | ) |  | (4,712 | )
Turks & Caicos intercompany note receivable write-down |  |  | — |  |  | (8,572 | ) |  | — |
Valuation allowance |  |  | 832 |  |  | 711 |  |  | (887 | )
Foreign tax reserve |  |  | 2,359 |  |  | 2,081 |  |  | 2,095 |
State taxes |  |  | 906 |  |  | 1,032 |  |  | 1,813 |
Research and development credit |  |  | (1,971 | ) |  | — |  |  | — |
Other, net |  |  | 1,711 |  |  | 516 |  |  | (191 | )
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Income tax expense |  | $ | 20,831 |  | $ | 9,536 |  | $ | 28,148 |
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The components of income tax expense (benefit) for the years ended December 31, 2012, 2013 and 2014 are as follows (in thousands):
|  | 2012 |  | 2013 |  | 2014 |
Current: |  |  |  |  |  |  |  |  |  |
United States—Federal |  | $ | 4,812 |  | $ | 1,703 |  | $ | 14,761 |
United States—State |  |  | 2,418 |  |  | 895 |  |  | 1,347 |
Foreign |  |  | 11,099 |  |  | 11,787 |  |  | 12,153 |
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Total current income tax expense |  | $ | 18,329 |  | $ | 14,385 |  | $ | 28,261 |
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Deferred: |  |  |  |  |  |  |  |  |  |
United States—Federal |  | $ | 4,050 |  | $ | (5,273 | ) | $ | 5,205 |
United States—State |  |  | (1,011 | ) |  | 169 |  |  | 466 |
Foreign |  |  | (537 | ) |  | 255 |  |  | (5,784 | )
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Total deferred income tax expense (benefit) |  |  | 2,502 |  |  | (4,849 | ) |  | (113 | )
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Consolidated: |  |  |  |  |  |  |  |  |  |
United States—Federal |  | $ | 8,862 |  | $ | (3,570 | ) | $ | 19,966 |
United States—State |  |  | 1,407 |  |  | 1,064 |  |  | 1,813 |
Foreign |  |  | 10,562 |  |  | 12,042 |  |  | 6,369 |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Total income tax expense |  | $ | 20,831 |  | $ | 9,536 |  | $ | 28,148 |
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The significant components of deferred tax assets and liabilities are as follows as of December 31, 2013 and 2014 (in thousands):
|  | 2013 |  | 2014 |
Deferred tax assets: |  |  |  |  |  |  |
Receivables reserve |  | $ | 1,225 |  | $ | 1,321 |
Temporary differences not currently deductible for tax |  |  | 6,690 |  |  | 8,001 |
Deferred compensation |  |  | 1,702 |  |  | 2,019 |
Foreign tax credit carryforwards |  |  | 13,575 |  |  | 10,576 |
Pension |  |  | — |  |  | 436 |
Net operating losses |  |  | 2,822 |  |  | 4,171 |
Valuation allowance |  |  | (16,312 | ) |  | (13,763 | )
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Total deferred tax asset |  |  | 9,702 |  |  | 12,761 |
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Deferred tax liabilities: |  |  |  |  |  |  |
Property, plant and equipment, net |  | $ | 23,866 |  | $ | 27,681 |
Intangible assets, net |  |  | 11,245 |  |  | 12,021 |
Tax on foreign earnings |  |  | — |  |  | 1,050 |
Pension |  |  | 205 |  |  | — |
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Total deferred tax liabilities |  |  | 35,316 |  |  | 40,752 |
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Net deferred tax liabilities |  | $ | 25,614 |  | $ | 27,991 |
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Deferred tax assets and liabilities are reflected in the accompanying consolidated balance sheets as follows (in thousands):
|  | 2013 |  | 2014 |
Deferred tax assets: |  |  |  |  |  |  |
Current |  | $ | 1,994 |  | $ | 2,588 |
Long term |  |  | — |  |  | — |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Total deferred tax asset |  | $ | 1,994 |  | $ | 2,588 |
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Deferred tax liabilities: |  |  |  |  |  |  |
Current |  | $ | 1,601 |  | $ | 213 |
Long term |  |  | 26,007 |  |  | 30,366 |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Total deferred tax liabilities |  | $ | 27,608 |  | $ | 30,579 |
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Net deferred tax liabilities |  | $ | 25,614 |  | $ | 27,991 |
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As of December 31, 2014, the Company estimated that it had gross state and foreign net operating loss ("NOL") carryforwards of $32.1 million and $8.7 million respectively. The state NOL's will expire at various dates between 2015 and 2028. The foreign NOL consists of $6.1 million from Aruba, which will expire between 2015 and 2019. The remaining foreign NOL is from Guyana, and has no expiration. The Company assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to use the existing NOL deferred tax assets. A significant piece of negative evidence evaluated was the cumulative loss incurred over the three-year period ended December 31, 2014. On the basis of this evaluation, the Company believes it is more likely than not that the benefit from these state and foreign NOL carryforwards will not be realized. In recognition of this risk at December 31, 2014, the Company provided a valuation allowance of $1.7 million and $1.4 million for the state and foreign NOL carryforwards, respectively. At December 31, 2013 our state and foreign NOL carryforward valuation allowance was $1.1 million and $1.6 million, respectively. As of December 31, 2014 and 2013, the Company had $10.5 million and $13.6 million of foreign tax credits. During the years ended December 31, 2014 and 2013, $3.0 million and $1.8 million foreign tax credit carryforwards expired. The remaining amounts that will expire in 2015 and 2016. Similar to prior years, the Company examined its projected mix of foreign source and U.S.-source earnings and concluded it is more likely than not that it will not generate enough foreign source income to utilize its existing foreign tax credits prior to their expiration date. As a result, the Company has continued to maintain a full valuation allowance against these credits through December 31, 2014. The Company has approximately $131.6 million of undistributed earnings of its foreign subsidiaries that as of December 31, 2014 are considered to be indefinitely reinvested and, accordingly, no U.S. federal and state income taxes have been provided thereon. Determination of the amount of unrecognized deferred U.S. income tax liability is not practical because of the complexities associated with its hypothetical calculation. The Company had net unrecognized tax benefits of $10.3 million as of December 31, 2012, $14.0 million as of December 31, 2013 and $16.5 million as of December 31, 2014. The net increase of the reserve during the year ended December 31, 2014 was attributable to additions to uncertain tax positions taken in the current and prior years and reductions resulting from the lapse of statute of limitation in one jurisdiction and the settlement of interest related to a prior Internal Revenue Service audit. The following shows the activity related to unrecognized tax benefits during the three years ended December 31, 2014 (in thousands):
Gross unrecognized tax benefits at December 31, 2011 |  | $ | 6,952 |
Increase in uncertain tax positions |  |  | 3,384 |
Lapse in statute of limitations |  |  | — |
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Gross unrecognized tax benefits at December 31, 2012 |  |  | 10,336 |
Increase in uncertain tax positions |  |  | 4,137 |
Lapse in statute of limitations |  |  | — |
Settlements |  |  | (423 | )
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Gross unrecognized uncertain tax benefits at December 31, 2013 |  |  | 14,050 |
Increase in uncertain tax positions |  |  | 1,675 |
Lapse in statute of limitations |  |  | (226 | )
Settlements |  |  | — |
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Gross unrecognized uncertain tax benefits at December 31, 2014 |  | $ | 15,499 |
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The Company's accounting policy is to classify interest and penalties related to income tax matters as part of income tax expense. The accrued amounts for interest and penalties are $1.0 million as of December 31, 2014, and $0.4 million as of December 31, 2013, and $0.5 million as of December 31, 2012. All $16.5 million of unrecognized tax benefits would affect the effective tax rate if recognized. The Company accrues interest and penalties related to unrecognized tax benefits in its provision for income taxes, if material. The Company and its subsidiaries file income tax returns in the U.S. and in various state and local jurisdictions. The statute of limitations related to the consolidated U.S. federal income tax return is closed for all tax years up to and including 2010. The expiration of the statute of limitations related to the various state income tax returns that the Company and subsidiaries file varies by state. The Company does not expect that the amount of unrecognized tax benefits relating to U.S. tax matters will change significantly within the next 12 months. The Company also files an income tax return in Guyana. See Note 14 relating to certain tax matters pertaining to those filings. There is no expected settlement date of those matters and upon settlement, which might not occur in the near future, the payment may vary significantly from the amounts currently recorded. The Company will continue to update amounts recorded as new developments arise.

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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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