INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2012

The income tax expense (benefit) for the years ended December 31, 2012, 2011 and 2010, consists of the following:


	2012								2011						2010
	Current		Deferred			Total			Current		Deferred		Total		Current			Deferred			Total

Federal	$	—	$	(133	)	$	(133	)	$	—	$	—	$	—	$	(415	)	$	(5,636	)	$	(6,051	)
State		8		(85	)		(77	)		36		—		36		105			(450	)		(345	)
Foreign		80		—			80			57		—		57		50			—			50

	$	88	$	(218	)	$	(130	)	$	93	$	0	$	93	$	(260	)	$	(6,086	)	$	(6,346	)

Differences Between Effective Tax Rate and Expected Tax Rate

The differences between the effective tax rate used in the consolidated statements of income and the expected tax rate (computed by applying the U.S. federal corporate tax rate of 34% to income before income taxes) are as follows:


	2012			2011			2010
Loss before income tax (expense) benefit:
- Domestic	$	(29,530	)	$	(25,867	)	$	(26,294	)
- Foreign		(15,537	)		(40,804	)		5,371

	$	(45,067	)	$	(66,670	)	$	(20,923	)


Computed expected tax provision (benefit)	$	(15,322	)	$	(22,668	)	$	(7,114	)
State taxes – net of federal benefit		(626	)		(787	)		69
Nondeductible items		74			26			25
Change in valuation allowance		14,326			19,888			1,545
Change in rate for deferred taxes		—			—			—
Foreign rate differential		1,418			3,671			(469	)
Domestic net operating loss carryforward		—			—			(281	)
ASC 740- 10 Reserve Release		—			—			(133	)
Other		—			(37	)		12

Income tax (benefit) expense	$	(130	)	$	93		$	(6,346	)

Tax Effect of Temporary Differences which Give Rise to Deferred Tax Assets Liabilities

The tax effect of temporary differences, which give rise to deferred tax assets (liabilities) are as follows at December 31, 2012 and 2011:


	2012			2011
Gross deferred tax assets:
Domestic net operating loss carryforward	$	38,326		$	31,737
Pension and other employee benefit plans, including stock-based compensation		4,926			4,615
Accrued liabilities		4,087			3,908
Impairment		12,912			9,474
Foreign net operating loss carryforward		9,779			7,416
Other		42			47

Gross deferred tax assets		70,072			57,197
Less valuation allowance		(38,389	)		(23,366	)

Gross deferred tax assets – net of valuation allowance		31,683			33,831


Gross deferred tax liabilities:
Property, plant, and equipment		(29,185	)		(30,503	)
Intangible assets		(4,289	)		(5,336	)

Gross deferred tax liabilities		(33,474	)		(35,839	)


Net deferred tax liabilities	$	(1,791	)	$	(2,008	)

Net Deferred Tax Liabilities

The net deferred tax liabilities are recognized as follows in the consolidated balance sheets at December 31, 2012 and 2011:


	2012			2011
Current deferred tax assets	$	2,511		$	3,370
Noncurrent deferred tax liabilities		(4,302	)		(5,378	)

Net deferred tax liabilities	$	(1,791	)	$	(2,008	)

The following table summarizes the activity related to the Company’s unrecognized tax benefits, excluding interest and penalties:


Balance as of January 1, 2010	$	886
Reductions for tax positions of prior years		(498	)
Expiration of the statute of limitations for the assessment of taxes		(126	)

Balance as of December 31, 2010		262

Reductions for tax positions of prior years		—
Expiration of the statute of limitations for the assessment of taxes		—

Balance as of December 31, 2011		262

Reductions for tax positions of prior years		—
Expiration of the statute of limitations for the assessment of taxes		—

Balance as of December 31, 2012	$	262

AGY Holding Corp. 10-K