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Income Taxes | 12 Months Ended
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Dec. 31, 2015
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes
(In thousands) | 2015 |  | 2014 |  | 2013
Components of income before income taxes* |  |  |  |  |
U.S. income | $ | 60,753 |  |  | $ | 58,209 |  |  | $ | 48,621 |
Non-U.S. income | 50,273 |  |  | 68,986 |  |  | 71,512 |
Income before income taxes | $ | 111,026 |  |  | $ | 127,195 |  |  | $ | 120,133 |
Provision for income taxes* |  |  |  |  |
Current |  |  |  |  |
Federal | $ | 21,253 |  |  | $ | 23,659 |  |  | $ | 18,656 |
State | 2,389 |  |  | 1,349 |  |  | 1,492 |
Non-U.S. | 22,979 |  |  | 21,101 |  |  | 18,453 |
Total current provision | 46,621 |  |  | 46,109 |  |  | 38,601 |
Deferred |  |  |  |  |
Federal | 3,813 |  |  | (3,650 | ) |  | (3,582 | )
State | (213 | ) |  | 317 |  |  | (483 | )
Non-U.S. | (5,814 | ) |  | (1,732 | ) |  | 609 |
Total deferred provision | (2,214 | ) |  | (5,065 | ) |  | (3,456 | )
Provision for income taxes | $ | 44,407 |  |  | $ | 41,044 |  |  | $ | 35,145 |
*The components of income before income taxes and the provision for income taxes relate to continuing operations. MSA’s European reorganization continued during 2015. The reorganization is designed to drive optimal performance by aligning certain strategic planning and decision making into a single location enabled by a common IT platform. During 2015, the Company incurred $7.7 million of charges associated with exit taxes related to our European reorganization. Included in discontinued operations is tax expense of $0.6 million in 2015, $0.6 million in 2014 and $1.4 million in 2013. Cash flows from operations in the Consolidated Statement of Cash Flows include a deferred income tax provision (benefit) from discontinued operations of $0.5 million, $(0.3) million and $0.2 million in 2015, 2014 and 2013, respectively. Reconciliation of the U.S. federal income tax rates for continuing operations to our effective tax rate:
| 2015 |  | 2014 |  | 2013
U.S. federal income tax rate | 35.0 | % |  | 35.0 | % |  | 35.0 | %
State income taxes—U.S. | 1.3 |  |  | 0.8 |  |  | 0.6 |
Taxes on non-U.S. income | (2.1 | ) |  | (2.2 | ) |  | (4.5 | )
Taxes on non-U.S. income - European reorganization | 6.9 |  |  | — |  |  | — |
Research and development credit | (1.1 | ) |  | (0.7 | ) |  | (1.5 | )
Manufacturing deduction credit | (1.6 | ) |  | (1.0 | ) |  | (1.1 | )
Valuation allowances | 1.7 |  |  | (0.6 | ) |  | 0.5 |
Other | (0.1 | ) |  | 1.0 |  |  | 0.3 |
Effective income tax rate | 40.0 | % |  | 32.3 | % |  | 29.3 | %
Components of deferred tax assets and liabilities:
| December 31,
(In thousands) | 2015 |  | 2014
Deferred tax assets |  |  |
Book expenses capitalized for tax | $ | 5,476 |  |  | $ | 6,336 |
Post-retirement benefits | 17,838 |  |  | 23,335 |
Inventory reserves | 2,487 |  |  | 3,147 |
Vacation allowances | 816 |  |  | 932 |
Net operating losses and tax credit carryforwards | 7,394 |  |  | 7,479 |
Post employment benefits | 3,488 |  |  | 2,382 |
Foreign tax credit carryforwards | 8,266 |  |  | 11,231 |
Stock options | 10,587 |  |  | 10,157 |
Product Liability | 6,253 |  |  | 3,918 |
Basis of capital assets | 912 |  |  | 1,009 |
Warranties | 3,666 |  |  | 3,210 |
Reserve for doubtful accounts | 2,320 |  |  | 1,948 |
Accrued payroll | 4,172 |  |  | 4,319 |
Other | 7,782 |  |  | 5,801 |
Total deferred tax assets | 81,457 |  |  | 85,204 |
Valuation allowances | (5,153 | ) |  | (3,763 | )
Net deferred tax assets | 76,304 |  |  | 81,441 |
Deferred tax liabilities |  |  |
Property, plant and equipment | (10,938 | ) |  | (9,269 | )
Pension | (18,947 | ) |  | (22,195 | )
Intangibles | (43,789 | ) |  | (30,180 | )
Other | (1,047 | ) |  | (2,053 | )
Total deferred tax liabilities | (74,721 | ) |  | (63,697 | )
Net deferred taxes | $ | 1,583 |  |  | $ | 17,744 |
At December 31, 2015, we had net operating loss carryforwards of approximately $45.0 million, all of which are in non-U.S. tax jurisdictions. Net operating loss carryforwards without a valuation allowance of $0.1 million will expire in 2020. The remainder either have a valuation allowance or may be carried forward for a period of at least six years. The change in valuation allowance for the year of $1.4 million is primarily due to our inability to recognize deferred tax assets on certain foreign entities that continue to generate losses. No deferred U.S. income taxes have been provided on undistributed earnings of non-U.S. subsidiaries, which amounted to $408.5 million as of December 31, 2015. These earnings are considered to be reinvested for an indefinite period of time. Because we currently do not have any plans to repatriate these funds, we cannot determine the impact of local taxes, withholding taxes and foreign tax credits associated with the future repatriation of such earnings and, therefore, cannot reasonably estimate the associated tax liability. In cases where we intend to repatriate a portion of the undistributed earnings of our foreign subsidiaries, we provide U.S. income taxes on such earnings. A reconciliation of the change in the tax liability for unrecognized tax benefits for the years ended December 31, 2015 and 2014 is as follows:
(In thousands) | 2015 |  | 2014
Beginning balance | $ | 9,857 |  |  | $ | 5,888 |
Adjustments for tax positions related to the current year | 8,203 |  |  | 4,072 |
Adjustments for tax positions related to prior years | (4,887 | ) |  | 3 |
Statute expiration | (103 | ) |  | (106 | )
Ending balance | $ | 13,070 |  |  | $ | 9,857 |
The total amount of unrecognized tax benefits, if recognized, would reduce our future effective tax rate. We have recognized tax benefits associated with these liabilities in the amount of $2.1 million and $5.2 million at December 31, 2015 and 2014, respectively. We recognize interest related to unrecognized tax benefits in interest expense and penalties in operating expenses. Our liability for accrued interest and penalties related to uncertain tax positions was $0.8 million at December 31, 2014. During 2015, we increased interest related to uncertain tax positions by $0.1 million. Our liability for accrued interest and penalties related to uncertain tax positions was $0.9 million at December 31, 2015. We file a U.S. federal income tax return along with various state and foreign income tax returns. Examinations of our U.S. federal returns have been completed through 2010, with the 2011 tax year closed by statute. Various state and foreign income tax returns may be subject to tax audits for periods after 2009.

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