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Income Taxes | 12 Months Ended
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Dec. 31, 2016
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES The jurisdictional components of income before taxes consist of the following:
|  | December 31,
(in thousands) |  | 2016 |  | 2015 |  | 2014
Income before income taxes: |  |  |  |  |  |
Domestic |  | $ | 44,446 |  |  | $ | 52,313 |  |  | $ | 43,345 |
Foreign |  | 17,743 |  |  | 14,554 |  |  | 17,260 |
|  | $ | 62,189 |  |  | $ | 66,867 |  |  | $ | 60,605 |
The components of income tax expense (benefit) consist of the following:
|  | December 31,
(in thousands) |  | 2016 |  | 2015 |  | 2014
Current: |  |  |  |  |  |
Domestic |  | $ | 11,958 |  |  | $ | 13,293 |  |  | $ | 13,495 |
Foreign |  | 5,491 |  |  | 4,614 |  |  | 3,382 |
State |  | 2,075 |  |  | 2,947 |  |  | 2,685 |
|  | 19,524 |  |  | 20,854 |  |  | 19,562 |
Deferred: |  |  |  |  |  |  |  |  |
Domestic |  | 1,580 |  |  | 3,481 |  |  | (600 | )
Foreign |  | 934 |  |  | (718 | ) |  | 540 |
State |  | 106 |  |  | 41 |  |  | (48 | )
|  | 2,620 |  |  | 2,804 |  |  | (108 | )
Total income taxes |  | $ | 22,144 |  |  | $ | 23,658 |  |  | $ | 19,454 |
The difference between income tax expense (benefit) for financial statement purposes and the amount of income tax expense computed by applying the domestic statutory income tax rate of 35% to income before income taxes consists of the following:
|  | December 31,
(in thousands) |  | 2016 |  | 2015 |  | 2014
Domestic statutory rate at 35% |  | $ | 21,766 |  |  | $ | 23,403 |  |  | $ | 21,212 |
Increase (reduction) from: |  |  |  |  |  |  |  |  |
Jurisdictional rate differences |  | (1,936 | ) |  | (2,192 | ) |  | (2,119 | )
Valuation allowance |  | 1,731 |  |  | 797 |  |  | 353 |
Stock based compensation |  | 275 |  |  | 257 |  |  | 199 |
U.S. state taxes |  | 1,295 |  |  | 1,942 |  |  | 1,649 |
Domestic production deduction |  | (618 | ) |  | (518 | ) |  | (1,321 | )
R&D credit |  | (329 | ) |  | (475 | ) |  | (614 | )
Other, net |  | (40 | ) |  | 444 |  |  | 95 |
Provision for income taxes |  | $ | 22,144 |  |  | $ | 23,658 |  |  | $ | 19,454 |
Effective tax rate |  | 36 | % |  | 35 | % |  | 32 | %
Deferred income taxes arise from temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. The components of the Company’s deferred income tax assets and liabilities consist of the following:
|  | December 31,
(in thousands) |  | 2016 |  | 2015
Deferred income tax assets: |  |  |  |
Inventory basis difference |  | $ | 1,568 |  |  | $ | 2,241 |
Accounts receivable reserve |  | 231 |  |  | 529 |
Depreciation |  | — |  |  | 110 |
Stock based compensation |  | 937 |  |  | 968 |
Pension liability |  | 3,947 |  |  | 2,481 |
Employee benefit accrual |  | 1,481 |  |  | 2,038 |
Product liability and warranty reserves |  | 1,600 |  |  | 1,517 |
Expenses not currently deductible for tax purposes |  | 28 |  |  | 60 |
Foreign net operating loss |  | 3,513 |  |  | 2,726 |
State net operating loss |  | 102 |  |  | 49 |
Other |  | 94 |  |  | 194 |
Total deferred income tax assets |  | $ | 13,501 |  |  | $ | 12,913 |
Less: Valuation allowance |  | (3,382 | ) |  | (1,651 | )
Net deferred income tax assets |  | $ | 10,119 |  |  | $ | 11,262 |
Deferred income tax liabilities: |  |  |  |  |  |
Inventory basis differences |  | $ | (16 | ) |  | $ | (310 | )
Depreciation |  | (5,289 | ) |  | (4,624 | )
Intangible assets |  | (10,046 | ) |  | (7,934 | )
Deferred revenue |  | — |  |  | — |
Expenses not currently deductible for tax purposes |  | (593 | ) |  | (642 | )
Total deferred income tax liabilities |  | $ | (15,944 | ) |  | $ | (13,510 | )
Net deferred income taxes |  | $ | (5,825 | ) |  | $ | (2,248 | )
As of December 31, 2016, the Company had foreign deferred tax assets consisting of foreign net operating losses and other tax benefits available to reduce future taxable income in a foreign jurisdiction. These foreign jurisdictions’ net operating loss carryforwards are in the approximate amount of $10,200,000 with an unlimited carryforward period, and $900,000 with a carryforward expiring in 2035. The Company also has U.S. state net operating loss carryforwards in the amount of $2,600,000 which will expire between 2017 and 2028. The company recorded a valuation allowance as of December 31, 2016 and 2015 due to uncertainties related to the ability to utilize some of the deferred income tax assets, primarily consisting of certain U.S. state NOLs and income tax credits, and international NOLs, before they expire. The valuation allowance is based on estimates of taxable income in the various jurisdictions in which we operate and the period over which deferred income tax assets will be recoverable. The realization of net deferred income tax assets recorded as of December 31, 2016 is primarily dependent upon the ability to generate future taxable income in certain U.S. states and international jurisdictions. Deferred income taxes have not been provided on the future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and the respective tax bases of the Company’s foreign subsidiaries, based on the determination that such differences are essentially permanent in duration in that the earnings of the subsidiaries are expected to be indefinitely reinvested in foreign operations. As of December 31, 2016, the cumulative undistributed earnings of these subsidiaries approximated $173,844,000. If these earnings were not considered indefinitely reinvested, deferred income taxes would have been recorded after the consideration of foreign tax credits. At this time, it is not practicable to estimate the amount of additional income taxes that might be payable on those earnings, if distributed. Unrecognized tax benefits in the amount of $235,000 and $301,000 for 2016 and 2015, respectively, are included in other non-current liabilities on the balance sheet. The unrecognized tax benefits, if recognized, would favorably impact our effective tax rate in a future period. We do not expect our unrecognized tax benefits disclosed above to change significantly over the next 12 months.
|  | December 31,
|  | 2016 |  | 2015
Balance as of beginning of year |  | $ | 301,000 |  |  | $ | 388,000 |
Additions for tax positions related to the current year |  | 51,000 |  |  | 63,000 |
Additions for tax positions related to prior years |  | — |  |  | — |
Reduction due to lapse of statute of limitations |  | (117,000 | ) |  | (150,000 | )
Balance as of end of year |  | $ | 235,000 |  |  | $ | 301,000 |
The Company adopted the policy to include interest and penalty expense related to income taxes as interest and other expense, respectively. As of December 31, 2016, no interest or penalties has been accrued. The Company’s open tax years for its federal and state income tax returns are for the tax years ended 2012 through 2016. The Company’s open tax years for its foreign income tax returns are for the tax years ended 2012 through 2016. On March 2016, the FASB issued ASU No. 2016-09, "Compensation-Stock Compensation," to simplify the accounting and reporting for employee share-based payments. Currently excess gains on exercises of stock are not expensed as additional expense, but are typically adjusted through the Additional Paid In Capital account. The amendment requires, the expensing of excess gains when they occur. This may result in some fluctuations in our quarterly tax rates. We are adopting beginning in 2017 and the change will be reflected on our consolidated financial statements beginning in fiscal year 2017.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32559-109319 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32718-109319 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32537-109319 + Details
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