Entity information:
Income Taxes
The Company’s income before income taxes, by tax jurisdiction, consisted of the following:
 
 
Year ended December 31,
 
 
2017
 
2016
 
2015
 
 
(dollars in thousands)
Income (loss) before income taxes:
 
 
 
 
 
 
Domestic
 
$
(3,880
)
 
$
(14,630
)
 
$
(9,750
)
Foreign
 
8,860

 
(1,760
)
 
16,770

  Income (loss) before income taxes
 
$
4,980

 
$
(16,390
)
 
$
7,020

Current income tax benefit (expense):
 
 
 
 
 
 
Federal
 
$
(7,680
)
 
$
(1,170
)
 
$
550

State and local
 
(240
)
 
(970
)
 
(610
)
Foreign
 
(2,190
)
 
(2,560
)
 
(3,580
)
  Total current income tax expense
 
(10,110
)
 
(4,700
)
 
(3,640
)
Deferred income tax benefit (expense):
 
 
 
 
 
 
Federal
 
(3,000
)
 
3,800

 
3,840

State and local
 
(390
)
 
450

 
(40
)
Foreign
 
3,750

 
4,180

 
1,120

  Total deferred income tax benefit
 
360

 
8,430

 
4,920

Income tax benefit (expense)
 
$
(9,750
)
 
$
3,730

 
$
1,280


The components of deferred taxes at December 31, 2017 and 2016 are as follows:
 
 
As of December 31,
 
 
2017
 
2016
 
 
(dollars in thousands)
Deferred tax assets:
 
 
 
 
Receivables, net
 
$
460

 
$
1,440

Inventories
 
3,280

 
6,300

Accrued liabilities and other long-term liabilities
 
10,600

 
13,670

Tax loss and credit carryforwards
 
12,930

 
6,070

Gross deferred tax asset
 
27,270

 
27,480

Valuation allowances
 
(10,560
)
 
(7,220
)
Net deferred tax asset
 
16,710

 
20,260

Deferred tax liabilities:
 
 
 
 
Property and equipment, net
 
(4,300
)
 
(5,230
)
Goodwill and other intangibles, net
 
(19,710
)
 
(30,250
)
Other
 
(3,280
)
 
(1,140
)
Gross deferred tax liability
 
(27,290
)
 
(36,620
)
Net deferred tax (liability) asset
 
$
(10,580
)
 
$
(16,360
)

The Company has an on-going analysis against certain deferred tax assets in the U.S. Based on positive evidence and economic outlook, the Company maintains it is more likely than not the U.S. deferred tax assets will be realized and therefore does not require a valuation allowance as of December 31, 2017.
The following is a reconciliation of our provision for income taxes to income tax expense computed at the U.S. federal statutory rate:
 
 
Year ended December 31,
 
 
2017
 
2016
 
2015
 
 
(dollars in thousands)
U.S. federal statutory rate
 
35
%
 
35
%
 
35
%
Tax at U.S. federal statutory rate
 
$
1,740

 
$
(5,730
)
 
$
2,460

State and local taxes, net of federal tax benefit
 
340

 
340

 
650

Differences in statutory foreign tax rates
 
(3,680
)
 
(1,230
)
 
(4,350
)
Unrecognized tax benefits
 
(3,950
)
 
(1,260
)
 
(2,950
)
Tax holiday(1)
 
(950
)
 
(460
)
 
(1,190
)
Withholding taxes
 
300

 
300

 
590

Tax credits
 
(590
)
 
70

 
(300
)
Net change in valuation allowance
 
3,020

 
1,600

 
1,480

Spin-off related restructuring costs
 
—

 
—

 
2,450

Transaction Costs
 
1,610

 
2,670

 
—

Tax Reform
 
11,850

 
—

 
—

Other, net
 
60

 
(30
)
 
(120
)
Income tax expense (benefit)
 
$
9,750

 
$
(3,730
)
 
$
(1,280
)

__________________________
(1) Tax holiday related to Thailand which expired on December 31, 2017.
The Company has recorded deferred tax assets on $0.6 million of various state operating loss carryforwards and $44.9 million of various foreign operating loss carryforwards. The majority of the state tax loss carryforwards expire between 2029 - 2037 and the majority of foreign losses have indefinite carryforward periods.
The Company made cash payments for federal and state income taxes of $1.0 million and $2.2 million for the years ended December 31, 2017 and 2016, respectively. Cash payments made for foreign income taxes of $6.7 million and $2.6 million, for the years ended December 31, 2017 and 2016, respectively.
In general, it is the practice and intention of the Company to reinvest the earnings of its non-U.S. subsidiaries in those operations, that position has not changed following incurring the transition tax under the 2017 Tax Cuts and Jobs Act. No deferred taxes have been provided for withholding taxes or other taxes that would result upon repatriation of our foreign investments to the United States. Furthermore, in light of provisions in the Tax Cuts and Jobs Act (the “Act”), the financial reporting over tax basis in our foreign investments is insignificant as of December 31, 2017.
Unrecognized Tax Benefits
The Company has approximately $7.3 million and $8.9 million of unrecognized tax benefits (“UTBs”) as of December 31, 2017 and 2016, respectively. If the unrecognized tax benefits were recognized, the impact to the Company’s effective tax rate would be to reduce reported income tax expense for the years ended December 31, 2017 and 2016 approximately $7.3 million and $8.9 million, respectively.
A reconciliation of the change in the UTBs and related accrued interest and penalties for the years ended December 31, 2017 and 2016 is as follows:
 
 
Unrecognized
Tax Benefits
 
 
(dollars in thousands)
Balance at December 31, 2015
 
$
4,570

Tax positions related to current year:
 
 
Additions
 
1,690

Reductions
 
—

Tax positions related to prior years:
 
 
Additions
 
2,870

Reductions
 
—

Lapses in the statutes of limitations
 
(1,120
)
Cumulative Translation Adjustment
 
840

Balance at December 31, 2016
 
$
8,850

Tax positions related to current year:
 
 
Additions
 
—

Reductions
 
—

Tax positions related to prior years:
 


Additions
 
50

Reductions
 
(30
)
Settlements
 
—

Lapses in the statutes of limitations
 
(2,110
)
Cumulative Translation Adjustment
 
550

Balance at December 31, 2017
 
$
7,310


The Company recognizes interest accrued related to UTBs and penalties as income tax expense. Related to the unrecognized tax benefits noted above, the Company has accrued penalties and interest of $2.1 million during 2017 and recognized a liability for interest and penalties of $3.4 million as of December 31, 2017. During 2016, the Company has accrued penalties and interest of $(0.2) million and recognized a liability for interest and penalties of $5.6 million.

The decrease in UTBs and liabilities for interest and penalties for tax positions related to prior years is primarily related to the roll-off of certain statutes of limitations and changes in currency exchange rates during 2017.
Income tax returns are filed in multiple domestic and foreign jurisdictions, which are subject to examinations by taxing authorities. As of December 31, 2017, the Company is subject to U.S. federal tax examination for tax years 2015 through 2017.  The Company is subject to state, local, and foreign income tax examinations for tax years 2010 through 2017.  The Company does not believe that the results of these examinations will have a significant impact on the Company’s tax position or its effective tax rate. 
Management monitors changes in tax statutes and regulations and the issuance of judicial decisions to determine the potential impact to unrecognized tax benefits. As of December 31, 2017, the Company estimated that approximately $7.4 million of unrecognized tax benefits in foreign jurisdictions is expected to be released in the next twelve months.
Other Matters
On December 22, 2017, the Tax Cuts and Jobs Act (the “Act”) was signed into law. The Act changed many aspects of corporate income taxation, including the reduction of the corporate income tax rate from 35% to 21% and imposition of a one-time tax on deemed repatriated earnings of foreign subsidiaries.
The SEC issued a Staff Accounting Bulletin No. 118 (“SAB 118”), which allows a provisional estimate 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 the Act. SAB 118 allows for adjustments to provisional amounts during a measurement period of up to one year. In accordance with SAB 118, the Company has made reasonable estimates related to the liability associated with the transition tax, the remeasurement of U.S. deferred tax balances and other deferred tax adjustments based on provisions of the Act. As a result, the Company has recognized income tax expense of $11.9 million associated with these items in 2017.
The Company is continuing to evaluate how the provisions of the Act will be accounted for under ASC 740, “Income Taxes”. The analysis is provisional and is subject to change due to the additional time required to accurately calculate and review the complex tax law. The Company will assess any regulatory guidance that may be issued which could have an impact on the provisional estimates. The Company will continue to gather information and perform additional analysis on these estimates, including, but not limited to, the amount of earnings and profits subject to the transition tax, the calculation of foreign tax credits, remeasurement of U.S deferred taxes and other deferred tax adjustments until the filing of its associated federal and state income tax returns. Any measurement period adjustments will be reported as a component of provision for incomes taxes in the reporting period the amounts are determined.