Income Taxes (Tables)

12 Months Ended

Dec. 31, 2014

The benefit provision for income taxes on loss before income taxes, by tax jurisdiction, consisted of the following (in thousands):

The components of loss before income taxes, by tax jurisdiction, were as follows (in thousands):

	Year Ended
	December 31, 2014			December 31, 2013			December 31, 2012
Statutory federal tax rate		35.0	%		35.0	%		35.0	%
Non-deductible impairment of goodwill		—			—			(12.3	)
State taxes (net of federal tax benefits)		0.8			6.8			(1.8	)
Foreign rate differential		(2.9	)		(2.0	)		(3.0	)
Domestic production activities deduction		2.3			0.8			0.6
Acquisition related		0.3			—			0.4
Change in valuation allowance		(2.4	)		(2.3	)		—
UK interest deduction		6.9			2.5			1.3
Uncertain tax positions		(2.8	)		—			—
Other differences		(5.3	)		3.8			(6.9	)

Effective tax rate		31.9	%		44.6	%		13.3	%

Significant deferred tax assets and liabilities consist of the following (in thousands):

	December 31, 2014			December 31, 2013
Deferred tax assets:
Accrual and reserves	$	2,138		$	1,841
Inventory costs		2,854			2,064
Acquisition related		2,127			2,225
Net operating losses		1,991			1,806

Total deferred tax assets		9,110			7,936

Deferred tax liabilities:
Fixed and intangible assets		(77,128	)		(93,388	)
Section 481(a) adjustments		(260	)		—

Total deferred tax liabilities		(77,388	)		(93,388	)

Valuation Allowance		(1,204	)		(603	)

Net deferred tax liabilities	$	(69,482	)	$	(86,055	)

The net deferred tax assets and liabilities are included in the balance sheets as follows (in thousands):

	December 31, 2014			December 31, 2013
Current deferred tax assets	$	4,938		$	3,555
Non-current deferred tax liabilities		(74,420	)		(89,610	)

Net deferred tax liabilities	$	(69,482	)	$	(86,055	)

The following is a reconciliation of the beginning and ending amounts of the Company's gross unrecognized tax benefits (in thousands):

	Year Ended
	December 31, 2014			December 31, 2013			December 31, 2012
Unrecognized tax benefits—beginning of period	$	865		$	379		$	417
Gross increases—tax positions in prior periods		275			625			—
Gross increase—current period tax positions		1,082			—			75
Reversal of accrual for prior year tax positions		(43	)		—			—
Statute of limitations lapse		(57	)		(51	)		—
Settlements		(66	)		(88	)		(113	)

Unrecognized tax benefits—end of period	$	2,056		$	865		$	379

Armored AutoGroup Inc. 10-K