Income Taxes

The provision for income taxes for the years ended December 31, 2015, 2014 and 2013 consists of the following:



	2015		2014			2013
Current tax expense (benefit):
Federal	$	4,208	$	2,256		$	(2,274	)
State	1,238		516			502
Foreign	6,949		11,995			9,247
	12,395		14,767			7,475
Deferred income tax expense (benefit)	2,251		(284		)	7,218
Provision for income taxes	$	14,646	$	14,483		$	14,693

A reconciliation between income taxes computed at the statutory federal rate and the provision for income taxes for the years ended December 31, 2015, 2014 and 2013 follows:



	2015		2014		2013

Tax provision at statutory rate based on income before income taxes	35.0	%	35.0	%	35.0	%

State income taxes, net of federal tax benefit	3.2		1.7		1.8

Impact of repatriation of foreign earnings	2.5		—		—

New York State corporate tax reform	—		5.5		—

Stock-based compensation	—		(0.2	)	(0.5	)

Foreign income taxes	(3.6	)	(4.8	)	(3.1	)

Federal research credit	(2.0	)	(2.1	)	(2.8	)

Settlement of taxing authority examinations	(0.6	)	(3.7	)	(2.0	)

European permanent deduction	(2.1	)	(3.8	)	(2.4	)

Non deductible/non-taxable items	1.8		1.8		2.9

Other, net	(1.8	)	1.6		0.1

	32.4	%	31.0	%	29.0	%

The tax effects of the significant temporary differences which comprise the deferred income tax assets and liabilities at December 31, 2015 and 2014 are as follows:



	2015			2014
Assets:
Inventory	$	3,938		$	4,476
Net operating losses	6,421			10,207
Capitalized research and development	5,733			1,850
Deferred compensation	2,557			3,507
Accounts receivable	2,938			2,604
Compensation and benefits	7,365			6,003
Accrued pension	3,944			6,186
Research and development credit	7,094			6,198
Other	3,245			1,564
Foreign tax credit	—			2,283
Less: valuation allowances	(124		)	(293		)
	43,111			44,585

Liabilities:
Goodwill and intangible assets	122,623			120,012
Depreciation	11,999			14,041
State taxes	7,427			6,737
Contingent interest	203			272

	142,252			141,062

Net liability	$	(99,141	)	$	(96,477	)

Income before income taxes consists of the following U.S. and foreign income:



	2015		2014		2013

U.S. income	$	18,119	$	12,374	$	20,106
Foreign income	27,025		34,301		30,526

Total income	$	45,144	$	46,675	$	50,632

As of December 31, 2015, the amount of federal net operating loss carryforward was $18.0 million and begins to expire in 2026. As of December 31, 2015, the amount of federal research credit carryforward available was $7.1 million. These credits begin to expire in 2027.

In New York State, corporate tax reform enacted in March 2014 changed the tax rate of a manufacturing company such as our Company to essentially 0%. Previously recorded New York State net deferred tax assets of $2.3 million, including $3.3 million of future tax benefits associated with state tax credits, have been written off as a non-cash charge to income tax expense.

During the fourth quarter of 2015, the Company repatriated $9.3 million of 2015 foreign earnings and recorded a tax charge of $1.1 million. The repatriated earnings represented a portion of the current year earnings of certain foreign subsidiaries and affiliates and thus were not previously permanently reinvested. There has been no change in our longer term international plans as our intent to indefinitely reinvest foreign earnings accumulated through the year ended December 31, 2014 has not changed.

U.S. income and foreign withholding taxes have not been recognized on the excess of the amount for financial reporting over the tax basis of investments in foreign subsidiaries that are essentially permanent in duration. The amount of such temporary differences totaled $95.1 million as of December 31, 2015. It is not practicable given the complexities of the hypothetical foreign tax credit calculation to determine the tax liability on this temporary difference.

The Company is subject to taxation in the United States and various states and foreign jurisdictions. Taxing authority examinations can involve complex issues and may require an extended period of time to resolve. Our Federal income tax returns have been examined by the Internal Revenue Service (“IRS”) for calendar years ending through 2013.

We recognize tax liabilities in accordance with the provisions for accounting for uncertainty in income taxes. Such guidance prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.

The following table summarizes the activity related to our unrecognized tax benefits for the years ending December 31,:



	2015			2014			2013

Balance as of January 1,	$	581		$	1,689		$	1,587

Increases for positions taken in prior periods	100			45			70

Increases for positions taken in current periods	—			—			1,132

Decreases in unrecorded tax positions related to settlement with the taxing authorities	—			(1,073		)	(1,010		)

Decreases in unrecorded tax positions related to lapse of statute of limitations	(65		)	(80		)	(90		)

Balance as of December 31,	$	616		$	581		$	1,689

If the total unrecognized tax benefits of $0.6 million at December 31, 2015 were recognized, it would reduce our annual effective tax rate. The amount of interest accrued in 2015 related to these unrecognized tax benefits was not material and is included in the provision for income taxes in the consolidated statements of comprehensive income.