11. Income Taxes

        The Tax Cuts and Jobs Act (Tax Reform) was enacted on December 22, 2017 and has multiple provisions that impact our tax expense. The significant impacts of Tax Reform include a reduction in the U.S. federal corporate tax rate from 35 percent to 21 percent, a requirement for companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred, additional limitations on deductions for executive compensation, the opportunity to fully expense (take 100 percent bonus depreciation) qualified property, reduction of the Orphan Drug Credit, repeal of the Section 199 deduction for domestic manufacturing activities, and creation of new taxes on certain foreign sourced earnings.

        On December 22, 2017, the SEC staff issued Staff Accounting Bulletin No. 118 to address the application of U.S. GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed in reasonable detail to complete the accounting for certain income tax effects of Tax Reform. As a result of changes under Tax Reform, we have recognized a provisional amount of $71.0 million of additional tax expense in our consolidated financial statements for the year ended December 31, 2017. The additional tax expense is primarily due to the revaluing of our ending net deferred tax assets at December 31, 2017 because of the reduction in the U.S. corporate income tax rate under Tax Reform. While we have substantially completed our provisional analysis of the income tax effects of Tax Reform, and recorded a reasonable estimate of such effects, the ultimate impact may differ from these provisional amounts, possibly materially, due to, among other things, further refinement of our calculations, additional analysis, changes in assumptions, and actions we may take as a result of Tax Reform.

        While Tax Reform provides for a modified territorial tax system beginning in 2018, it also includes a new U.S. tax base erosion provision, the tax on global intangible low-taxed income (GILTI). Beginning in 2018, the GILTI provision of Tax Reform will require us to include in our U.S. income tax return foreign subsidiary earnings in excess of an allowable return on the foreign subsidiary's tangible assets in our U.S. income tax return beginning in 2018. We have elected to account for the GILTI tax in the period in which it is incurred, and do not expect any significant impacts from this tax.

        We previously asserted that all undistributed earnings of foreign subsidiaries are permanently reinvested, and we have therefore not provided for U.S. deferred taxes on unremitted earnings. As required by Tax Reform, we are subject to a one-time transition tax of $1.8 million on our unremitted foreign earnings. After payment of the transition tax, our foreign earnings will have been taxed by the United States, and we do not anticipate any other material taxes on our undistributed earnings of foreign subsidiaries upon a future repatriation. Due to this change in facts, we conclude that our undistributed foreign earnings are no longer permanently reinvested.

        Components of income tax expense (benefit) consist of the following (in millions):

                                                                                                                                                                                    

        Presented below is a reconciliation of income tax expense computed at the statutory federal tax rate to income tax expense as reported (in millions):

                                                                                                                                                                                    

        Components of the net deferred tax assets are as follows (in millions):

                                                                                                                                                                                    

        Unrecognized tax benefits as of December 31, 2017 and 2016, were $0.5 million, and included $0.3 million of tax benefits that, if recognized, would impact our effective tax rate. We record interest and penalties related to uncertain tax positions as a component of income tax expense. As of both December 31, 2017 and 2016, we have not accrued any interest expense relating to uncertain tax positions. It is reasonably possible that this position will be effectively settled during the next twelve months, at which time some or all of the benefit may be recognized. We are unaware of any additional positions for which it is reasonably possible that the total amount of unrecognized tax benefits will significantly increase or decrease within the next twelve months.

        We are subject to federal and state taxation in the United States and various foreign jurisdictions. We are no longer subject to income tax examinations by the Internal Revenue Service and substantially all other major jurisdictions for tax years prior to 2011. At December 31, 2017, we had a gross federal net operating loss carryforward of $1.0 million which is fully reserved with a valuation allowance. We had approximately $54.3 million of gross state net operating loss carryforwards which will expire at various dates between the years 2029 and 2037. We expect that these carryforwards will expire unused, so the related deferred tax asset has been reserved with a full valuation allowance.