(3) Income Taxes

The components of income tax (benefit) expense are:


	2014			2013		2012
Current:
Federal	$	(4,256	)	$	12,285	$	17,448
State		251			3,007		2,528
Foreign		934			1,101		1,027
Deferred:
Federal		3,492			2,213		(590	)
State		(872	)		310		(387	)

	$	(451	)	$	18,916	$	20,026

Total income tax expense differed from the amounts computed by applying the U.S. Federal income tax rate of 35.0% to income before income tax expense as a result of the following:


	2014			2013			2012
Computed tax expense at statutory federal rates	$	1,536		$	18,678		$	19,911
Increase (decrease) in taxes resulting from:
State taxes, net of federal income tax benefit		(11	)		1,983			1,947
Domestic production deduction		420			(1,142	)		(1,661	)
Income tax credits		(728	)		(724	)		(395	)
Foreign tax rate differential		(2,159	)		(1,459	)		(195	)
Subpart F income		338			—			87
Other expenses		153			1,580			332

	$	(451	)	$	18,916		$	20,026

The components of income before provision for income tax expense (benefit) are as follows:


	2014			2013		2012
Domestic	$	(5,196	)	$	46,520	$	53,361
Foreign		8,840			7,314		3,491

	$	3,644		$	53,834	$	56,852

Temporary differences between the financial statement carrying amounts and tax bases of assets and liabilities that give rise to significant portions of the net deferred tax liability at December 31, 2014 and 2013 relate to the following:


	2014			2013
Current:
Inventories	$	5,558		$	4,398
State income taxes		(633	)		(331	)
Vacation pay accrual		776			648
Accrued bonuses		95			1,791
Bad debt		45			169
Prepaid expenses		(1,314	)		(1,929	)
Stock compensation		2,446			1,281
Other		1,758			494

Net deferred tax asset	$	8,731		$	6,521

Non-Current:
Plant and equipment, principally due to differences in depreciation and capitalized interest	$	(28,365	)	$	(25,662	)
NOL Carryforward		361			—
Tax credit		319			14
Fair value adjustment		—			207
Other		(474	)		2,111

Net deferred tax liability		(28,159	)		(23,330	)

Total net deferred tax liability	$	(19,428	)	$	(16,809	)

The following is a roll-forward of the Company’s total gross unrecognized tax liabilities, not including interest and penalties, for the fiscal year ended December 31, 2014:


	2014			2013
	Gross Unrecognized Tax Liabilities			Gross Unrecognized Tax Liabilities
Balance at December 31, 2013	$	1,692		$	282
Additions for tax positions related to the current year		140			1,290
Additions for tax positions related to the prior year		499			161
Deletion for tax positions related to the prior year		(373	)		(41	)

Balance at December 31, 2014	$	1,958		$	1,692

The Company recognizes accrued interest and penalties related to unrecognized tax benefits in the provision for income taxes in the Company’s consolidated financial statements. For the year ended December 31, 2014, the Company had recognized approximately $215 in interest and penalties related to unrecognized tax benefits accrued.

It is expected that the amount of unrecognized tax benefits will change within the next 12 months; however we do not expect the change to have a significant impact on our consolidated financial statements. At this time, an estimate of the range of the reasonable possible outcomes cannot be made.

The Company believes it is more likely than not that the deferred tax assets detailed in the table above will be realized in the normal course of business. It is the intent of the Company that undistributed earnings of foreign subsidiaries are permanently reinvested and, accordingly, no provision for United States federal and state income taxes has been provided thereon. This amounted to $23,803 and $16,202 as of December 31, 2014 and December 31, 2013, respectively. Upon distribution of earnings in the form of dividends or otherwise, the Company would be subject to both United States income taxes (subject to adjustment for foreign tax credits) and withholding taxes payable to the various foreign countries. Determination of the unrecognized deferred United States income tax liability is not practical due to the complexities of a hypothetical calculation.

The Company is subject to U.S. federal income tax as well as to income tax in multiple state jurisdictions. Federal income tax returns of the Company are subject to IRS examination for the 2011 through 2013 tax years. State income tax returns are subject to examination for the 2010 through 2013 tax years.

The Company’s research and development credit is currently under audit by the California Franchise Tax Board for the years ended December 31, 2004 through December 31, 2006. In February 2015, the Company has agreed in principle to settle this matter for partial payment of the claimed refund plus interest.