Note 7 – Income Taxes

Income from continuing operations before income taxes was generated in the following jurisdictions. For the year ended December 31, 2015, 2014, and 2013, domestic income excludes taxable intercompany dividend income of $10,000, $30,650, and $30,752, respectively.


	For the year ended December 31,
	2015			2014			2013
Domestic	$	(5,007	)	$	(3,294	)	$	(2,024	)
Foreign		55,905			41,214			16,138

Total	$	50,898		$	37,920		$	14,114

The provision for income taxes consists of the following:


	For the year ended December 31,
	2015			2014			2013
Current:
Federal	$	0		$	0		$	11
State		1			42			22
Foreign		9,140			4,688			3,121

Total current		9,141			4,730			3,154

Deferred:
Federal		338			(497	)		338
State		(135	)		361			(289	)
Foreign		(640	)		715			(56	)

Total deferred		(437	)		579			(7	)

Total	$	8,704		$	5,309		$	3,147

The U.S. federal corporate tax rate varies with taxable income. Our U.S. statutory rate for 2015 was 34%. For 2014, and 2013, our U.S. statutory rate was 35%. The differences between the income tax provisions computed using the statutory federal income tax rate and the provisions for income taxes reported in the consolidated statements of operations are as follows:


	For the years ended December 31,
	2015			2014			2013
Expected tax at statutory rate	$	17,305		$	13,272		$	4,940
Foreign taxes at other rates		(12,487	)		(9,107	)		(2,520	)
US tax on foreign earnings, net of foreign tax credits		1,968			(9	)		212
Valuation reserves on NOL carryforwards		469			2			6
State income taxes, net of federal benefit		26			140			(310	)
Disallowed expenses and other		1,423			1,011			819

Total	$	8,704		$	5,309		$	3,147

Current deferred tax assets and long-term deferred tax liabilities are presented as separate line items in the balance sheet. Long-term deferred tax assets of $6,216 and $6,885 as of December 31, 2015 and 2014, respectively, are included in other assets, net of accumulated amortization. Current deferred tax liabilities as of December 31, 2015 and 2014 of $1,752 and $1,235, respectively, are included in other accrued expenses. Deferred income tax balances are comprised of the following:


	As of December 31,
	2015			2014
Deferred tax assets:
U.S. foreign tax credit	$	3,309		$	5,516
Stock and long-term compensation plans		2,817			1,693
Foreign NOL & other carryforwards		13,771			2,629
US state NOL carryforwards		248			263
US alternative minimum tax		395			395
Deferred revenue		672			752
Reserve for uncertain tax issues		(560	)		(560	)
Amortization and depreciation		627			434
US tax on unremitted foreign earnings		(137	)		(955	)
Accrued expenses and other		288			124

Total gross deferred tax assets		21,430			10,291
Less: Valuation allowance		(13,719	)		(2,500	)

Net deferred income tax assets	$	7,711		$	7,791

Deferred tax liabilities:
Swiss tax allowances	$	851		$	1,235
Deferred revenue		901			0
Intangible assets		8,008			213

Deferred tax liabilities	$	9,760		$	1,448

Current deferred tax assets and liabilities are netted by tax jurisdiction. Similarly, long-term deferred tax assets and liabilities are netted by tax jurisdiction.

Earnings of certain subsidiaries are deemed available for distribution. At December 31, 2015 and 2014, unremitted foreign earnings available for distribution are $22,672, and $19,849, respectively. The deferred tax liability for the incremental U.S. tax to be paid upon remittance as dividends at December 31, 2015 and 2014 was $137 and $955, respectively.

The earnings of certain designated subsidiaries remain permanently invested. At December 31, 2015 and 2014, total unremitted foreign earnings considered permanently invested are $131,327 and $83,122, respectively. It is not practicable to estimate the incremental U.S. tax liability which would be incurred if these earnings were repatriated.

At December 31, 2015, we held $30,018 of cash in banks in the United States and $48,504 of cash in banks outside of the United States. Of the cash in banks outside of the United States, $45,520 is not subject to significant repatriation restrictions, but may be subject to tax upon repatriation. Cash in banks outside of the United States includes $29,335 held in tax jurisdictions where we consider retained earnings to be available for distribution and $19,169 held in jurisdictions where we consider retained earnings to be permanently invested.

A portion of tax benefits related to certain restricted stock and stock options are credited to additional paid-in capital. For the years ended December 31, 2015, 2014, and 2013, credits to additional paid-in capital were $318, $253, and $3,318, respectively

U.S. foreign tax credit carryforwards expiring in 2023 were $3,309 at December 31, 2015. We have not provided a valuation reserve for the foreign tax credits as we believe it is more likely than not they will be realized due to our tax strategy to distribute foreign earnings to utilize foreign tax credits prior to expiration.

At December 31, 2015, we had foreign and state net operating loss (NOL) carryforwards and other foreign deductible carryforwards as shown in the following table;


	Carryforward		Deferred Tax Asset		Valuation Allowance			Expiration
NOL Carryforward
Canada	$	28,691	$	7,379	$	(7,379	)		2027-2035
Other foreign		3,850		1,241		(1,056	)		None
U.S. states		4,853		248		(133	)		2019-2027

		37,394		8,868		(8,568	)

Other Carryforwards
Canada		21,682		4,184		(4,184	)		None
Other foreign		2,846		967		(967	)		2016-2022

		24,528		5,151		(5,151	)

	$	61,922	$	14,019	$	(13,719	)

The net change in the valuation allowance for the years ended December 31, 2015, 2014, and 2013, were increases of $11,219, $101, and $115, respectively. This valuation allowance is reviewed on a regular basis and adjustments made as appropriate. The increase in the valuation allowance in 2015 reflects NOL and other carryforwards related to the Silanis acquisition further described in Note 4. The change in the valuation allowance also reflects other factors including, but not limited to, changes in our assessment of our ability to use existing NOLs and other deduction carryforwards, changes in currency rates, and adjustments to reflect differences between the actual returns filed and the estimates we made at financial reporting dates. The company expects to generate adequate taxable income to realize deferred tax assets in foreign jurisdictions where no valuation allowance exists.

We had no accrued interest or penalties for income tax liabilities at December 31, 2015. Our policy is to record interest expense and penalties on income taxes as income tax expense.

ASC 740, Income Taxes sets a “more likely than not” criterion for recognizing the tax benefit of uncertain tax positions. We have identified one such exposure concerning cost allocations related to the implementation of our worldwide strategy related to the ownership of our intellectual property for which we had a reserve of $560 at December 31, 2015 and 2014. The reserve is an offset to our U.S. deferred tax asset.

Our primary tax jurisdictions and the earliest tax year subject to audit are presented in the following table.


Australia			2005
Austria			2008
Belgium			2008
Canada			2011
Netherlands			2009
Singapore			2007
Switzerland			2013
United States			2005