Annual report pursuant to Section 13 and 15(d)

INCOME TAXES

v2.4.1.9
INCOME TAXES
12 Months Ended
Dec. 31, 2014
INCOME TAXES [Abstract]  
INCOME TAXES
NOTE 17 – INCOME TAXES

The provision for income taxes consisted of the following:

   
Year ended December 31,
 
   
2014
   
2013
   
2012
 
   
(thousands of dollars)
 
Current federal provision
  $ 8,756     $ 6,748     $ 4,821  
Current state provision
    296       233       199  
                         
Deferred federal provision (benefit)
    (1,893 )     1,173       882  
Deferred state provision (benefit)
    (12 )     (7 )     2  
                         
Income tax expense
  $ 7,147     $ 8,147     $ 5,904  

The difference between the effective tax rate in income tax expense and the Federal statutory rate of 35% for the years ended December 31, 2014, 2013, and 2012, is as follows:

   
2014
   
2013
   
2012
 
   
(thousands of dollars)
 
Income taxes at U.S. statutory rate
  $ 7,952     $ 9,675     $ 5,679  
State taxes, net of federal benefit
    181       139       132  
Permanent and other items
    (915 )     (644 )     (250 )
Increase (decrease) in valuation allowance
    (71 )     (1,023 )     343  
    Total tax expense
  $ 7,147     $ 8,147     $ 5,904  

Permanent and other items primarily include non-deductible expenses offset by the manufacturers’ deduction under §199 of the Internal Revenue Code and increase in the effective tax rate to 35% during the year ended December 31, 2012.

Tax effects of temporary differences that give rise to significant portions of federal and state deferred tax assets and deferred tax liabilities were as follows:

   
December 31,
 
   
2014
   
2013
 
   
(thousands of dollars)
 
Deferred tax liabilities:
           
  Plant, pipeline and equipment
  $ (8,352 )   $ (8,507 )
  Other assets
    -       (43 )
  Investment in AMAK
    ( 4,382 )     ( 4,757 )
  Total deferred tax liabilities
  $ (12,734 )   $ (13,307 )
                 
Deferred tax assets:
               
  Accounts receivable
    276       260  
  Inventory
    1,018       131  
  Mineral interests
    376       376  
  Unrealized loss on swap agreements
    196       214  
  Environmental
    -       71  
  Post-retirement benefits
    327       373  
  Stock-based compensation
    1,705       1,015  
  Intangible assets
    229       -  
  Deferred revenue
    164       654  
    Gross deferred tax assets
    4,291       3,094  
  Valuation allowance
    (376 )     (447 )
  Total net deferred tax assets
  $ 3,915     $ 2,647  
    Net deferred tax liabilities
  $ (8,819 )   $ (10,660 )

The current and non-current classifications of the deferred tax balances are as follows:

   
2014
   
2013
 
   
(thousands of dollars)
 
Current:
           
Deferred tax asset
  $ 1,652     $ 1,324  
                 
Non-current:
               
                 
Deferred tax assets
    3,269       1,764  
Deferred tax liability
    (13,364 )     (13,301 )
Valuation allowance
    (376 )     (447 )
Non-current deferred tax liability, net
    (10,471 )     (11,984 )
                 
Total deferred liabilities, net
  $ (8,819 )   $ (10,660 )

We have provided a valuation allowance in 2014 and 2013 against certain deferred tax assets because of uncertainties regarding their realization.  The 2014 decrease in the valuation allowance of $71,000 is due largely to changes in our environmental accrual.  The 2013 decrease in the valuation allowance of $1,023,000 is due largely to changes in our investment in AMAK.

We had no Saudi Arabian income tax liability in 2014, 2013, or 2012.

We file an income tax return in the U.S. federal jurisdiction and a margin tax return in Texas. Tax returns for various jurisdictions remain open for examination for the years 2010 through 2013.