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Income Taxes | 12 Months Ended
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Dec. 31, 2011
Income Taxes | 5. Income Taxes The provision (benefit) for income taxes included in the accompanying consolidated financial statements represents federal, state and foreign income taxes. The components of income (loss) before income taxes and the provision (benefit) for income taxes consist of the following:
Years ended December 31 |  | 2011 |  |  | 2010 |  |  | 2009 |
|  |  |  |  | As adjusted |  |  | As adjusted |
Income (loss) before income taxes: |  |  |  |  |  |  |  |  |
Domestic |  | $ | 62,510 |  |  | $ | (4,405 | ) |  | $ | (21,535 | )
Foreign |  |  | 9,132 |  |  |  | 16,429 |  |  |  | (12,044 | )
Total income (loss) before income taxes |  | $ | 71,642 |  |  | $ | 12,024 |  |  | $ | (33,579 | )
Provision (benefit) for income taxes: |  |  |  |  |  |  |  |  |  |  |  |
Current: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | - |  |  | $ | - |  |  | $ | 9 |
State and foreign |  |  | 2,167 |  |  |  | 1,147 |  |  |  | 2,188 |
Total current provision |  |  | 2,167 |  |  |  | 1,147 |  |  |  | 2,197 |
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | 23,443 |  |  |  | 1,188 |  |  |  | (1,242 | )
State and foreign |  |  | 495 |  |  |  | (1,657 | ) |  |  | (1,958 | )
Total deferred provision (benefit) |  |  | 23,938 |  |  |  | (469 | ) |  |  | (3,200 | )
Total provision (benefit) for income taxes |  | $ | 26,105 |  |  | $ | 678 |  |  | $ | (1,003 | )
A reconciliation of the Company’s effective income tax rate to the statutory federal tax rate is as follows:
Years ended December 31 |  | 2011 |  |  | 2010 |  |  | 2009 |
Statutory U.S. federal income tax rate |  |  | 35.0 | % |  |  | 35.0 | % |  |  | (35.0 | )%
State income taxes, net of federal tax benefit |  |  | 0.2 |  |  |  | 1.3 |  |  |  | 1.2 |
Tax credits |  |  | (1.4 | ) |  |  | (7.5 | ) |  |  | (2.8 | )
Foreign rate differential |  |  | (1.4 | ) |  |  | (51.4 | ) |  |  | 0.7 |
Change in income tax accruals |  |  | 0.1 |  |  |  | (0.1 | ) |  |  | (0.1 | )
Tax on foreign dividends, net of foreign tax credits |  |  | 1.1 |  |  |  | 39.0 |  |  |  | 24.2 |
Reduction of deferred taxes |  |  | 0.3 |  |  |  | 7.4 |  |  |  | 2.3 |
Valuation allowances |  |  | 0.5 |  |  |  | (9.2 | ) |  |  | 7.3 |
Non-deductible compensation |  |  | 0.3 |  |  |  | 4.9 |  |  |  | - |
Other comprehensive income |  |  | - |  |  |  | (9.6 | ) |  |  | - |
Other |  |  | 1.7 |  |  |  | (4.2 | ) |  |  | (0.8 | )
Effective income tax rate |  |  | 36.4 | % |  |  | 5.6 | % |  |  | (3.0 | )%
The Company recognized expense (benefit) for income taxes of $26,105, or 36.4% and $678, or 5.6% of pre-tax income and ($1,003), or (3.0%) of pre-tax loss, for federal, state and foreign income taxes for the years ended December 31, 2011, 2010 and 2009, respectively. The increase in tax expense for the year ended December 31, 2011 compared to the same period for 2010 was primarily attributable to the gain recognized on the remeasurement to fair market value of the previously held equity interest in PST. Excluding the tax on the PST gain, 2011 tax expense increased compared to 2010 due to improved performance of our European operations. In addition, 2010 tax expense included a tax benefit for the reversal of a deferred tax liability related to our UK operations that was previously included as a component of accumulated other comprehensive income (loss) within shareholders’ equity. Unremitted earnings of foreign subsidiaries were $16,347, $11,111 and $2,590 as of December 31, 2011, 2010 and 2009, respectively. Because these earnings have been indefinitely reinvested in foreign operations, no provision has been made for U.S. income taxes. It is impracticable to determine the amount of unrecognized deferred taxes with respect to these earnings; however, foreign tax credits may be available to reduce U.S. income taxes in the event of a distribution. Significant components of the Company’s deferred tax assets and liabilities are as follows:
As of December 31 |  | 2011 |  |  | 2010 |
|  |  |  |  | As adjusted |
Deferred tax assets: |  |  |  |  |  |  |  |
Inventories |  | $ | 3,338 |  |  | $ | 1,670 |
Employee benefits |  |  | 3,542 |  |  |  | 1,660 |
Insurance |  |  | 759 |  |  |  | 1,095 |
Depreciation and amortization |  |  | 14,448 |  |  |  | 21,057 |
Net operating loss carryforwards |  |  | 44,094 |  |  |  | 40,714 |
General business credit carryforwards |  |  | 10,987 |  |  |  | 9,545 |
Reserves not currently deductible |  |  | 6,315 |  |  |  | 3,136 |
Gross deferred tax assets |  |  | 83,483 |  |  |  | 78,877 |
Less: Valuation allowance |  |  | (78,211 | ) |  |  | (74,940 | )
Deferred tax assets less valuation allowance |  |  | 5,272 |  |  |  | 3,937 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Depreciation and amortization |  |  | (37,234 | ) |  |  | (1,294 | )
Basis difference - PST |  |  | (31,016 | ) |  |  | (9,463 | )
Other |  |  | (1,600 | ) |  |  | (509 | )
Gross deferred tax liabilities |  |  | (69,850 | ) |  |  | (11,266 | )
Net deferred tax liability |  | $ | (64,578 | ) |  | $ | (7,329 | )
The valuation allowance represents the amount of tax benefit related to U.S., state and foreign net operating losses, credits and other deferred tax assets that will more likely than not be unrealized. This valuation allowance has no impact on the Company’s ability to utilize the U.S. net operating losses and credits to offset future U.S. taxable income. The Company believes that it should ultimately generate sufficient U.S. taxable income during the remaining tax loss and credit carry forward periods in order to realize substantially all of the benefits of the net operating losses and credits before they expire. The Company has deferred tax assets for net operating loss carry forwards of $418, net of a valuation allowance of $43,676. The net operating losses relate to U.S. federal, state and foreign tax jurisdictions. The U.S. federal net operating losses begin to expire if unused by December 31, 2025, the state net operating losses expire at various times and the foreign net operating losses have indefinite expiration dates. The Company has a deferred tax asset for general business credit carry forwards of $582 net of a valuation allowance of $10,405. The carry forward for U.S. federal general business credits begins to expire if unused by December 31, 2021 and the state tax credits expire at various times. The Company is required to provide a deferred tax liability corresponding to the difference between the financial reporting basis (which was remeasured to fair value upon the acquisition of an additional 24% of PST) and the tax basis in the previously held 50% ownership interest in PST (the “outside” basis difference). This outside basis difference will generally remain fixed until (1) dividends from the subsidiary exceed the parent’s share of earnings subsequent to the date it became a subsidiary or (2) there is a transaction that affects the Company’s ownership of PST. During the fourth quarter of 2010, the Company undertook a secondary offering. As a result of the secondary offering, a substantial change in the Company’s ownership occurred and the Company experienced an ownership change pursuant to Section 382 of the Internal Revenue Code of 1986, as revised. Due to the Company being in a full valuation allowance position with respect to our federal deferred tax assets, there was no impact to the balance sheet and income statement during 2011 or 2010. The following is a reconciliation of the Company’s total gross unrecognized tax benefits:
|  | 2011 |  |  | 2010 |  |  | 2009 |
Balance as of January 1 |  | $ | 3,101 |  |  | $ | 2,838 |  |  | $ | 2,599 |
Tax positions related to the current year: |  |  |  |  |  |  |  |  |  |  |  |
Additions |  |  | 381 |  |  |  | 387 |  |  |  | 369 |
Tax positions related to prior years: |  |  |  |  |  |  |  |  |  |  |  |
Additions |  |  | 28 |  |  |  |  |  |  |  |  |
Reductions |  |  | - |  |  |  | (11 | ) |  |  | (26 | )
Acquisition balance |  |  | 268 |  |  |  |  |  |  |  |  |
Settlements |  |  | - |  |  |  | - |  |  |  | (104 | )
Expiration of statutes of limitation |  |  | (58 | ) |  |  | (113 | ) |  |  | - |
Balance as of December 31 |  | $ | 3,720 |  |  | $ | 3,101 |  |  | $ | 2,838 |
The liability for uncertain tax benefits is classified as a non-current liability unless it is expected to be paid within one year. At December 31, 2011 the Company has classified $268 as a current liability and $2,701 as a reduction to non-current deferred income tax assets. Through a combination of anticipated state audit settlements and the expiration of certain statutes of limitation, the amount of unrecognized tax benefits could decrease by approximately $71 within the next 12 months. Management is currently unaware of issues under review that could result in a significant change or a material deviation in this estimate. If the Company’s tax positions are sustained by the taxing authorities in favor of the Company, approximately $3,584 would affect the Company’s effective tax rate. Consistent with historical financial reporting, the Company has elected to classify interest expense and, if applicable, penalties which could be assessed related to unrecognized tax benefits as a component of income tax expense. For the years ended December 31, 2011, 2010 and 2009, the Company recognized approximately $67, $45 and $104 of gross interest and penalties, respectively. The Company has accrued approximately $740 and $575 for the payment of interest and penalties at December 31, 2011 and 2010, respectively. The Company conducts business globally and, as a result, files income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. In the normal course of business the Company is subject to examination by taxing authorities throughout the world. The following table summarizes the open tax years for each important jurisdiction:
Jurisdiction |  | Open Tax Years |
U.S. Federal |  | 2008-2011 |
Brazil |  | 2006-2011 |
France |  | 2007-2011 |
Mexico |  | 2006-2011 |
Spain |  | 2007-2011 |
Sweden |  | 2006-2011 |
United Kingdom |  | 2007-2011

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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 2 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 136, 172 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 43, 44, 45, 46, 47, 48, 49 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 Reference 5: 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 Reference 6: 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 7: 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 8: 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=6881521&loc=d3e23780-122690 + Details
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