Income before income taxes for the years ended and was as follows:

 

		Year Ending December 31,
(In thousands)		2016				2015				2014
U.S.		$	1,153			$	14,685			$	18,005
Foreign			13,222				28,990				9,128
Total income before income taxes		$	14,375			$	43,675			$	27,133

 

The provision for income taxes consisted of the following for the years ended and

 

		Year Ended December 31,
(In thousands)		2016				2015				2014
Current tax provision
U.S. Federal		$	9,749			$	15,678			$	11,319
U.S. State			334				1,810				1,351
Foreign			21,123				2,709				793
Total current tax provision			31,206				20,197				13,463
Deferred provision (benefit):
U.S. Federal			(5,062	)			(6,375	)			(172	)
U.S. State			(340	)			(899	)			(16	)
Foreign			(29,916	)			(2,619	)			730
Total deferred provision (benefit)			(35,318	)			(9,893	)			542
Total income tax provision (benefit)		$	(4,112	)		$	10,304			$	14,005

 

Deferred tax assets (liabilities), net, consisted of the following as of and

 

		December 31,
		2016				2015
(In thousands)
Deferred tax assets:
Foreign net operating loss carry-forwards		$	309			$	716
State net operating loss carry-forwards			279				2
Tax credit carry-forwards			4,694				976
Deferred revenue			370				446
Accrued expenses			2,517				1,450
Tax benefits on stock options			3,870				3,288
Research and development credits			469				1,759
Deductible state taxes			1,351				-
Other			601				3,775
Gross deferred tax assets			14,460				12,412
Deferred tax liabilities:
Property and equipment			(1,000	)			(654	)
Inventory			-				(3,990	)
Investments			-				(13,963	)
Intangibles			(34,046	)			(44,025	)
Gross deferred tax liabilities			(35,046	)			(62,632	)
Less: valuation allowance			(704	)			(2,277	)
Net deferred tax assets (liabilities)		$	(21,290	)		$	(52,497	)

 

 

The provision for income taxes varied from the income taxes provided based on the federal statutory rate as follows for the years ended and

 

		Year Ended December 31,
(In thousands)		2016				2015				2014
Federal tax at statutory rates			35.0	%			35.0	%			35.0	%
State taxes, net of federal tax benefit			-0.4	%			0.9	%			2.1	%
Foreign tax rate differential			-83.2	%			-16.8	%			-3.7	%
Changes in valuation allowance			-0.4	%			0.5	%			1.4	%
Nondeductible expenses			0.0	%			2.3	%			1.7	%
Stock based compensation			2.3	%			0.6	%			-0.1	%
Impact of intangible transfer			11.2	%			0.7	%			5.8	%
Impact of uncertain tax positions			3.0	%			1.8	%			-0.2	%
Adjustment to deferred tax asset			3.1	%			-1.6	%			0.5	%
Exchange gain/(loss)			-13.5	%			0.0	%			0.0	%
Subpart F income, net of FTC			11.5	%			2.3	%			9.1	%
Loan forgiveness			0.0	%			-2.3	%			0.0	%
Japanese R&D credit			-4.6	%			-1.6	%			0.0	%
Impact of subsidiary wind up			-11.2	%			0.0	%			0.0	%
Deductible and withholding taxes			3.2	%			0.0	%			0.0	%
Nondeductible interest			13.4	%			0.0	%			0.0	%
Changes in other tax matters			2.0	%			1.8	%			0.0	%
Effective tax rate			-28.6	%			23.6	%			51.6	%

 

The significant decrease in the net deferred tax liability shown above was primarily a result of the amortization of intangibles and the repurchase of intercompany treasury stock.

 

At and the Company had foreign net operating loss carry-forwards of million and million, respectively. The foreign NOLs in existence at do not expire. As of and the Company had material NOLs in the U.S. At and the Company had tax credit carry-forwards of million and million, respectively. These credit carry-forwards are scheduled to expire in and

 

As of and the Company had a valuation allowance on its deferred tax assets of million and million, respectively. The change in the valuation allowance was primarily due to adjustments to tax attributes in the U.S. and enacted statutory tax rate changes in the United Kingdom.

 

The remaining valuation allowance at and relates to deferred tax assets in the foreign jurisdictions. The Company will continue to evaluate its valuation allowance position in each jurisdiction on a regular basis. To the extent the Company determines that all or a portion of its valuation allowance is no longer necessary, the Company will recognize an income tax benefit in the period such determination is made for the reversal of the valuation allowance. Once the valuation allowance is eliminated in whole or in part, it will not be available to offset the Company’s future tax provision.

 

The Company has recorded a total income tax liability for uncertain tax positions (including interest) of approximately million and million, as of and respectively. The Company presently does not expect to settle any of this amount within the next months in cash and as such, has reflected the entire balance as other liabilities in the accompanying Consolidated Balance Sheets. The amount represents the aggregate tax effect of differences between tax return positions and the amounts otherwise recognized in the Company’s Consolidated Financial Statements. The liability for uncertain tax positions as of and mainly pertains to the Company’s interpretation of nexus in certain states related to revenue sourcing for state income tax purposes, as well as uncertain tax positions related to accrued expense items in the U.S. and related party interest in foreign jurisdictions.

 

A reconciliation of the beginning and ending amount of unrecognized tax benefits, excluding interest and penalties, for the years ended and is as follows:

 

		Year Ended December 31,
(In thousands)		2016				2015				2014
Balance at January 1		$	2,992			$	712			$	550
Increases for tax positions taken during prior periods			38				452				(91	)
Decreases in unrecognized tax benefits related to taxing authority correspondence			-				(280	)			-
Increases for tax positions taken during current period			195				2,108				253
Balance at December 31		$	3,225			$	2,992			$	712

 

 

The Company recognizes interest and penalties related to uncertain tax positions as a component of the income tax provision. During the Company recorded million of interest and penalties related to uncertain tax positions. During and the Company recorded an immaterial amount of interest and penalties related to uncertain tax positions. Of the unrecognized tax benefits noted above, approximately million would impact the effective tax rate if a future change were to occur. It is reasonably possible that the million of the liability for unrecognized tax benefits will decrease within the next months.

 

Currently tax years to remain open and subject to examination in the major tax jurisdictions in which tax returns are filed. The tax years - were examined by the U.S. tax authorities and resulted in no tax adjustments.