Annual report pursuant to Section 13 and 15(d)

INCOME TAXES

v3.3.1.900
INCOME TAXES
12 Months Ended
Dec. 31, 2015
INCOME TAXES [Abstract]  
INCOME TAXES
NOTE 17 – INCOME TAXES

The provision for income taxes consisted of the following:

   
Year ended December 31,
 
   
2015
   
2014
   
2013
 
   
(thousands of dollars)
 
Current federal provision
 
$
4,062
   
$
8,756
   
$
6,748
 
Current state provision
   
285
     
296
     
233
 
                         
Deferred federal provision (benefit)
   
5,367
     
(1,893
)
   
1,173
 
Deferred state provision (benefit)
   
50
     
(12
)
   
(7
)
                         
Income tax expense
 
$
9,764
   
$
7,147
   
$
8,147
 

The difference between the effective tax rate in income tax expense and the Federal statutory rate of 35% for the years ended December 31, 2015, 2014, and 2013, is as follows:

   
2015
   
2014
   
2013
 
   
(thousands of dollars)
 
Income taxes at U.S. statutory rate
 
$
9,927
   
$
7,952
   
$
9,675
 
State taxes, net of federal benefit
   
230
     
181
     
139
 
Permanent and other items
   
(393
)
   
(915
)
   
(644
)
Increase (decrease) in valuation allowance
   
-
     
(71
)
   
(1,023
)
    Total tax expense
 
$
9,764
   
$
7,147
   
$
8,147
 

The Texas margin tax rate was reduced in a legislative reduction effective January 1, 2015.  Permanent differences are primarily due to the Federal manufacturer's deduction and stock options.

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,
 
   
2015
   
2014
 
   
(thousands of dollars)
 
Deferred tax liabilities:
           
  Plant, pipeline and equipment
 
$
(14,996
)
 
$
(8,352
)
  Intangible assets
   
(284
)
   
-
 
  Other assets
   
(14
)
   
-
 
  Investment in AMAK
   
( 2,522
)
   
( 4,382
)
  Total deferred tax liabilities
 
$
(17,816
)
 
$
(12,734
)
                 
Deferred tax assets:
               
  Accounts receivable
   
283
     
276
 
  Inventory
   
1,785
     
1,018
 
  Mineral interests
   
376
     
376
 
  Unrealized loss on swap agreements
   
62
     
196
 
  Post-retirement benefits
   
330
     
327
 
  Stock-based compensation
   
969
     
1,705
 
  Intangible assets
   
-
     
229
 
  Deferred revenue
   
-
     
164
 
    Gross deferred tax assets
   
3,805
     
4,291
 
  Valuation allowance
   
(376
)
   
(376
)
  Total net deferred tax assets
 
$
3,429
   
$
3,915
 
    Net deferred tax liabilities
 
$
(14,387
)
 
$
(8,819
)

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

   
2015
   
2014
 
   
(thousands of dollars)
 
Current:
           
Deferred tax asset
 
$
2,116
   
$
1,652
 
                 
Non-current:
               
                 
Deferred tax assets
   
4,637
     
3,269
 
Deferred tax liability
   
(20,764
)
   
(13,364
)
Valuation allowance
   
(376
)
   
(376
)
Non-current deferred tax liability, net
   
(16,503
)
   
(10,471
)
                 
Total deferred liabilities, net
 
$
(14,387
)
 
$
(8,819
)

We have provided a valuation allowance in 2015 and 2014 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 2015, 2014, or 2013.

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 2011 through 2014.