Income (loss) from continuing operations before income taxes and income from equity method investments		2017				2016				2015
United States		$	(35,173	)		$	76,199			$	97,094
Non-U.S.			93,872				91,226				41,251
Total		$	58,699			$	167,425			$	138,345

 

Components of the provision for income tax expense (benefit)		2017				2016				2015
Current:
U.S. federal		$	444			$	14,515			$	24,180
State			21				2,789				2,955
Non-U.S.			29,557				27,788				22,075
			30,022				45,092				49,210
Deferred:
U.S. federal			(8,318	)			6,444				8,096
State			(1,473	)			1,102				1,269
Non-U.S.			(11,145	)			(2,202	)			(2,720	)
			(20,936	)			5,344				6,645
Total		$	9,086			$	50,436			$	55,855

 

Reconciliation of effective income tax		2017				2016				2015
Statutory U.S. federal income tax rate		$	20,545			$	58,599			$	48,421
State income taxes, net of federal benefit			(1,018	)			2,135				3,281
Foreign dividend repatriation			276				519				388
Foreign rate differential			(9,565	)			(3,386	)			1,547
Impact of option valuation			(1,381	)			(1,879	)			1,211
Interest income not taxable in the U.S.			(626	)			(525	)			(1,243	)
Change in valuation allowance			(3,694	)			(2,219	)			480
Tax impact of special charges, net			-				173				1,678
Research and development tax credit			(647	)			(2,291	)			(71	)
Section 199 manufacturing deduction			-				(1,658	)			(2,036	)
Royal Adhesives transaction costs			2,271				-				-
Other			2,925				968				2,199
Total		$	9,086			$	50,436			$	55,855

 

Deferred income tax balances at each year-end related to:		2017				2016
Deferred tax assets:
Employee benefit costs		$	36,824			$	46,249
Foreign tax credit carryforward			27,197				11,593
Tax loss carryforwards			24,096				19,902
Other			25,123				20,612
Gross deferred tax assets			113,240				98,356
Less: valuation allowance			(9,273	)			(11,929	)
Net deferred tax assets			103,967				86,427
Deferred tax liability:
Depreciation and amortization			(336,260	)			(66,589	)
Net deferred tax assets (liabilities)		$	(232,293	)		$	19,838

 

The difference between the change in the deferred tax assets in the balance sheet and the deferred tax provision is primarily due to the defined benefit pension plan adjustment recorded in accumulated other comprehensive income (loss) and Royal Adhesives purchase a

 

Valuation allowances principally relate to foreign net operating loss carryforwards where the future potential benefits do meet the more-likely-than- realization test. The decrease in the valuation allowance of during is due primarily to the release of the valuation allowance

 

Deferred tax assets and liabilities are measured using the currently enacted tax rates that apply to taxable income in effect for the years in which those deferred tax assets and liabilities are expected to be realized or settled. We record a valuation allowance to reduce deferred tax assets to the amount that is believed more-likely-than- to be realized. We believe it is more-likely-than- that carryback potential, reversal of deferred tax liabilities and forecasted income, will be sufficient to fully recover the net deferred tax assets already offset by a valuation allowance. In the event that all or part of the gross deferred tax assets are determined to be realizable in the future, an adjustment to the valuation allowance would be charged to earnings in the period such determination is made.

 

U.S. income taxes have been provided on approximately of undistributed earnings of non-U.S. subsidiaries. We intend to indefinitely reinvest these undistributed earnings. Cash available in the United States has historically been sufficient and we expect it will continue to be sufficient to fund U.S. cash flow requirements. In the event these earnings are later distributed to the U.S., such distributions would likely result in additional U.S. tax that be offset, at least in part, by associated foreign tax credits.

 

While non-U.S. operations have been profitable overall, there are cumulative tax losses of in various countries.

 

The U.S. has a foreign tax credit carryforward of The credits will expire between and Projected foreig

 

The table below sets forth the changes to our gross unrecognized tax benefit as a result of uncertain tax positions, excluding accrued interest, for the fiscal years ended and

 

		2017				2016
Balance at beginning of year		$	4,165			$	4,870
Tax positions related to the current year:
Additions			613				774
Additions due to acquisitions			4,823				-
Tax positions related to prior years:
Additions			2,120				209
Reductions			(1,585	)			(377	)
Settlements			(708	)			(131	)
Lapses in applicable statutes of limitation			(541	)			(1,180	)
Balance at end of year		$	8,887			$	4,165

 

Included in the balance of unrecognized tax benefits as of are potential benefits of that, if recognized, would affect the effective tax rate.

 

We report accrued interest and penalties related to unrecognized tax benefits in income tax expense.

 

We are subject to U.S. federal income tax as well as income tax in numerous state and foreign jurisdictions. We are longer subject to U.S. federal tax examination for years prior to  or Swiss income tax examination for years prior to During the U.S. tax authorities opened an audit for the years ended