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The principal components of deferred taxes are as follows (U.S. dollars in thousands): 

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The components of deferred taxes, net on a jurisdiction basis are as follows (U.S. dollars in thousands): 

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The Company has considered projected future taxable income and ongoing tax planning strategies in determining that no valuation allowance is required. 

The net operating loss carryforwards begin expiring in 2008, while the foreign tax credits begin expiring in 2010. Utilization of these loss and credit carryforwards is subject to annual limitations; however, management believes that it is more likely than not that the Company will generate sufficient taxable income in the appropriate carry forward periods to realize the benefit of the net deferred tax assets. 

The Company is subject to regular audits by federal, state and foreign tax authorities. These audits may result in pro- posed assessments that may result in additional tax liabilities. The Company accounts for any income tax contingencies in accordance with SFAS No. 5, “Accounting for Contingencies.” 

