67 Income T axes The Company is subject to income tax in numerous United States federal, state, and foreign jurisdictions. Significant judgments and estimates are inherent in determining the Company's consolidated income tax expense, current tax payable, deferred tax assets and liabilities, and liabilities for uncertain tax positions. Future events such as changes in business conditions, tax legislation, tax audit resolutions, or foreign earnings repatriation plans could materially impact these estimates and the Company's tax position. Deferred tax assets and liabilities are determined based on the dif ferences between the financial statement basis and tax basis of assets and liabilities using enacted tax rates in ef fect for the year in which the dif ferences are expected to reverse. The ef fect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. At December 31, 2012 , the Company had recorded a net deferred tax liability of $ 170.4 million ($ 38.3 million net current deferred tax asset less $ 208.7 million net long term deferred tax liability). The valuation of deferred tax assets is dependent on, among other things, the ability of the Company to generate a suf ficient level of future taxable income. In estimating future taxable income, the Company has considered both positive and negative evidence, such as historical and forecasted results of operations, including prior losses, and has considered the implementation of prudent and feasible tax planning strategies. As of December 31, 2012, the Company recorded a valuation allowance of $ 74.3 million to reduce deferred tax assets to the amount judged more likely than not to be realized. The Company has and will continue to review on a quarterly basis its assumptions and tax planning strategies, and, if the amount of the estimated realizable deferred tax assets is less than the amount currently on the balance sheet, the Company would reduce its deferred tax asset, recognizing a non-cash char ge against reported earnings. Likewise, if the Company determines that a valuation allowance against a deferred tax asset is no longer appropriate, the adjustment to the valuation allowance would reduce income tax expense. The Company operates in multiple jurisdictions with complex tax policies and regulations. In certain jurisdictions, the Company has taken tax positions that it believes are supportable, but which could be subject to challenge by the tax authorities. These tax positions are evaluated and liabilities for uncertain tax positions are established in accordance with the ASC 740 - Income T axes tax accounting guidance. The status of uncertain tax positions is reviewed in light of changing facts and circumstances, such as tax audits, rulings, and case law , and the related liabilities are adjusted accordingly . The Company recognizes interest and penalties related to unrecognized tax benefits within the income tax expense line in the accompanying consolidated statement of operations. Accrued interest and penalties are included within the related tax liability line item in the consolidated balance sheet. Shipping and Handling Costs All shipping and handling amounts billed to a customer in a sales transaction are classified as revenue. Shipping and handling costs associated with storage and handling of finished goods and storage and handling of shipments to customers are included in cost of sales and totaled $ 150.4 million , $ 137.8 million and $ 1 19.4 million for the years ended December 31, 2012 , 201 1 and 2010 , respectively . Advertising Expense Advertising expense consists of expenses relating to promoting the Company’ s products, including trade shows, catalogs, and e- commerce promotions, and is char ged to expense when incurred. Advertising expense was $ 10.7 million , $ 1 1.2 million and $ 12.0 million in 2012 , 201 1 and 2010 , respectively . New Accounting Pronouncements During the year ended December 31, 2012 , the Company did not change any of its existing accounting policies and no accounting pronouncements were issued that are expected to have a significant ef fect on the condensed consolidated financial statements. The following accounting pronouncements were adopted and became ef fective with respect to the Company in 2012 and 201 1 : In May 201 1, the Financial Accounting Standards Board ("F ASB") issued Accounting Standards Update (“ASU”) No. 201 1-04 accounting guidance related to fair value measurements ASC 820 - Fair V alue Measur ement . The new guidance provides clarification to existing standards, and also provides new required disclosures, primarily related to Level 3 fair value measurements. This guidance became ef fective for the Company on January 1, 2012. The adoption of this guidance did not have a material impact on the condensed consolidated financial statements. In June 201 1, the F ASB issued ASU No. 201 1-05 accounting guidance related to the presentation requirements for components of comprehensive income ASC 220 - Compr ehensive Income . This update defers only those changes in update ASU No. 201 1-05 that relate to the presentation of reclassification adjustments. All other requirements in update ASU No. 201 1-05 are not af fected by this update, including the requirement to report comprehensive income either in a single continuous financial statement or in two separate but consecutive financial statements. ASU No. 201 1-05 and 201 1-12 are ef fective for fiscal years (including interim periods) beginning after December 15, 201 1. This guidance is ef fective for the Company and the Company has presented other T able of Contents