The income tax provision includes the following:

 

 

 

State income tax benefits from loss carryforwards to future years were recognized as deferred tax assets in the and fiscal years.

 

The Company continuously evaluates the liquidity and capital requirements of its operations in the United States and of its foreign subsidiaries. As a result of such evaluations, the Company repatriated and in cash from Nelco Products Pte Ltd. in the and fiscal years, respectively.

 

The Company’s pre-tax earnings from the United States and foreign locations are as follows:

 

 

The Company’s effective income tax rate differs from the statutory U.S. Federal income tax rate as a result of the following:

 

The Company had federal net operating loss carryforwards of in the and fiscal years, state net operating loss carryforwards of approximately and in the and fiscal years, respectively, and total net foreign operating loss carryforwards of approximately and in the and fiscal years, respectively. The foreign net operating loss carryforwards were not utilized in the fiscal year and the Company has set up a valuation allowance for such carryforwards. The state net operating loss carryforwards will expire in through

 

The Company had foreign tax credit carryforwards of and at and respectively, which expire in As of and research and development and other credits were and respectively.

 

The Company had New York State investment tax credit carryforwards of and in the and fiscal years, respectively.  The New York State investment tax credits expired in fiscal year  The Company had Kansas tax credits of in both fiscal years and for which no benefit has been provided. The Company does not believe that realization of the principal portion of the Kansas tax credit or the investment tax credit carryforward is more likely than not.  The Kansas credits do not have expiration dates.  The Company had Arizona tax credits of in both fiscal years and for which no benefit has been provided.

 

The deferred tax asset valuation allowance of as of relates to foreign net operating losses and state tax credit carryforwards for which the Company does not expect to realize any tax benefit. During the fiscal year, the valuation allowance decreased by primarily due to the expiration of the New York State investment tax credit carryforwards for which no tax benefit was recognized. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts for income tax purposes.

 

Significant components of the Company's deferred tax assets and liabilities as of and were as follows:

 

 

On the Consolidated Balance Sheets, the deferred tax asset, net of valuation allowance, of at was included in other assets and the deferred tax asset, net of valuation allowance, of at was included in prepaid expenses and other current assets.

 

At and the Company had gross unrecognized tax benefits of and respectively, included in other liabilities. If any portion of the unrecognized tax benefits at were recognized, the Company’s effective tax rate would change.

 

As discussed in Note on the Company early adopted Accounting Standards Update - on a prospective basis. The early adoption of this guidance did not impact the Company’s results of operations, cash flows or financial condition. 

A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows:

The amount of unrecognized tax benefits increase or decrease in the future for various reasons, including adding or subtracting amounts for current year tax positions, expiration of statutes of limitations on open income tax years, changes in the Company’s judgment about the level of uncertainty, status of tax examinations, and legislative changes. Changes in prior period tax positions are the result of a re-evaluation of the probability of realizing the benefit of a particular tax position based on new information. It is reasonably possible that none of the unrecognized tax benefits will be recognized in the fiscal year upon the expiration of statutes of limitations.

 

A list of open tax years by major jurisdiction follows:

 

 

The Company had approximately and of accrued interest and penalties as of and respectively. The Company’s policy is to include applicable interest and penalties related to unrecognized tax benefits as a component of current income tax expense.

 

The New York State Department of Taxation is examining the Company’s tax returns for the and fiscal years.