15.	INCOME TAXES:

The components of Income tax expense (benefit) from continuing operations are as follows (in thousands):

	Year Ended December 31,
	2016			2015			2014

Current:
Federal	$	(740	)	$	(5,076	)	$	4,336
State		(102	)		26			334
Total current income tax expense (benefit)		(842	)		(5,050	)		4,670
Deferred:
Federal		(3,541	)		(8,855	)		305
State		(373	)		1,954			(324	)
Total deferred income tax benefit		(3,914	)		(6,901	)		(19	)
	$	(4,756	)	$	(11,951	)	$	4,651

The difference between the Company’s effective income tax rate and the federal statutory income tax rate of

35%

is explained as follows (dollar amounts in thousands):

	Year Ended December 31,
	2016			2015			2014

Income tax benefit at federal statutory rate of 35%	$	(4,907	)	$	(14,470	)	$	(532	)
State benefit, net of federal income tax effect		(362	)		(866	)		(96	)
Federal and state income tax credits		(154	)		(6,684	)		(91	)
Disallowed domestic manufacturing deduction		-			630			-
Change in valuation allowance		1,155			5,210			9
Uncertain income tax positions		(4	)		2,082			5
Goodwill impairment (nondeductible)		-			1,849			5,623
Nondeductible expenses		63			91			207
Nontaxable adjustment to contingent consideration		(580	)		103			(611	)
Other		33			104			137
Income tax expense (benefit)	$	(4,756	)	$	(11,951	)	$	4,651
Effective income tax rate		(33.9	) %		(28.9	) %		305.6	%

The income tax effect of temporary differences that give rise to significant portions of deferred income tax assets and liabilities is presented below (in thousands):

	December 31,
	2016			2015

Deferred income tax assets:
Costs and estimated earnings in excess of billings on uncompleted contracts, net	$	1,270		$	2,888
Accrued employee benefits		5,025			5,946
Inventories		563			2,618
Trade receivable, net		199			266
Net operating loss carryforwards		15,637			7,843
Tax credit carryforwards		5,069			4,791
Other assets		1,830			2,737
Other		1,018			520
		30,611			27,609
Valuation allowance		(8,217	)		(7,057	)
		22,394			20,552
Deferred income tax liabilities:
Property and equipment		(22,380	)		(24,229	)
Intangible assets		(819	)		(980	)
Prepaid expenses		(477	)		(467	)
		(23,676	)		(25,676	)

Net deferred income tax liabilities	$	(1,282	)	$	(5,124	)

In assessing the ability to realize deferred income tax assets, management considers whether it is more likely than not that some portion or all of the deferred income tax assets will not be realized. The ultimate realization of deferred income tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred income tax liabilities, projected future taxable income, taxable income in carryback periods and tax planning strategies in making this assessment. Because the Company has a recent history of generating cumulative losses, management did not consider projections of future taxable income as persuasive evidence for the recoverability of its deferred income tax assets. The Company believes it is more likely than not it will realize the benefits of its deductible differences as of

December

31,

2016,

net of any valuation allowance.

As of

December

31,

2016,

the Company had approximately

$40.0

million of federal net operating loss carryforwards, which expire on various dates between

2035

and

2036,

and

$3.3

million of federal income tax credit carryforwards, which expire on various dates between

2023

and

2036.

As of

December

31,

2016,

the Company also had approximately

$46.9

million of state net operating loss carryforwards, which expire on various dates between

2019

and

2036,

and state income tax credit carryforwards of

$4.2

million, which begin to expire in

2017.

During the year ended

December

31,

2016,

the Company determined that it no longer considers the earnings of its Mexican subsidiary to be indefinitely reinvested outside the United States. This change was made to allow the Company to more efficiently manage its cash balances and working capital. The change did not have a significant effect on the Company’s income taxes.

The Company files income tax returns in the United States Federal jurisdiction, in a limited number of foreign jurisdictions and in many state jurisdictions. Internal Revenue Service examinations have been completed for years prior to

2011.

With few exceptions, the Company is no longer subject to United States Federal, state or foreign income tax examinations for years before

2012.

A summary of the changes in the unrecognized income tax benefits is presented below (in thousands):

	Year Ended December 31,
	2016		2015			2014

Unrecognized income tax benefits, beginning of year	$	4,874	$	2,313		$	6,207
Decreases for settlements		-		-			(3,265	)
Decreases for lapse in statute of limitations		-		(1,199	)		(115	)
Decreases for positions taken in current year		-		-			(615	)
Increases for positions taken in prior years		-		3,716			101
Increases for positions taken in the current year		-		44			-
Unrecognized income tax benefits, end of year	$	4,874	$	4,874		$	2,313

It is reasonably possible that the total amounts of unrecognized income tax benefits will change in the following

twelve

months as a result of the lapse of tax statutes of limitation; however, actual results could differ from those currently expected. Effectively all of the unrecognized income tax benefits would affect the Company’s effective income tax rate if recognized at some point in the future.

The Company recognizes interest and penalties related to uncertain income tax positions in Income tax expense. As of

December

31,

2016

and

2015,

the Company had approximately

$0.1

million of accrued interest related to uncertain income tax positions. Total interest for uncertain income tax positions did not change materially in

2016

and decreased by approximately

$0.1

million in

2015

and

2014.