16 .	INCOME TAXES:

The components of

Income tax benefit from continuing operations are as follows (in thousands):

	Year Ended December 31,
	201 7			201 6			201 5

Current :
Federa l	$	(454	)	$	(740	)	$	(5,076	)
Stat e		49			(102	)		35
Total current income tax benefi t		(405	)		(842	)		(5,041	)
Deferred :
Federa l		(766	)		(2,883	)		(5,524	)
Stat e		71			(373	)		2,042
Total deferred income tax benefi t		(695	)		(3,256	)		(3,482	)
	$	(1,100	)	$	(4,098	)	$	(8,523	)

December

22,

2017,

the Tax Cuts and Jobs Act of

2017

was signed into law making significant changes to the Internal Revenue Code. Changes include, but are

not

limited to, a federal corporate income tax rate decrease from

35%

21%

effective for tax years beginning after

December

31,

2017,

the transition of U.S. international taxation from a worldwide tax system to a territorial system, and a

one

-time transition tax on the mandatory deemed repatriation of cumulative foreign earnings as of

December

31,

2017.

The Company has estimated its provision for income taxes in accordance with the Act and guidance available as of the date of this filing and as a result has recorded

$0.9

million as additional income tax expense in the

fourth

quarter of

2017,

the period in which the legislation was enacted. The provisional amount related to the remeasurement of certain deferred income tax assets and liabilities, based on the rates at which they are expected to reverse in the future, was

$0.6

million. The provisional amount related to the

one

-time transition tax on the mandatory deemed repatriation of foreign earnings was

$0.2

million based on cumulative foreign earnings of

$1.1

million.

December

22,

2017,

Staff Accounting Bulletin

No.

118

("SAB

118"

) was issued to address the application of U.S. GAAP in situations when a registrant does

not

have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Act. In accordance with SAB

118,

the Company has determined that the

$0.6

million of the deferred income tax expense recorded in connection with the remeasurement of certain deferred tax assets and liabilities and the

$0.2

million of current tax expense recorded in connection with the transition tax on the mandatory deemed repatriation of foreign earnings was a provisional amount and a reasonable estimate as of

December

31,

2017.

Additional work is necessary for a more detailed analysis of the Company’s deferred income tax assets and liabilities and its historical foreign earnings as well as potential correlative adjustments. Any subsequent adjustment to these amounts will be recorded to current income tax expense when the analysis is complete.

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,
	201 7			201 6			201 5

Income tax benefit at federal statutory rate of 35 %	$	(3,322	)	$	(3,755	)	$	(9,133	)
State benefit, net of federal income tax effec t		(472	)		(286	)		(440	)
Federal and state income tax credit s		36			(154	)		(5,060	)
Disallowed domestic manufacturing deductio n		-			-			630
Change in valuation allowanc e		1,570			585			2,059
Excess income tax shortfall on share-based compensatio n		765			-			-
Effect of Tax Cuts and Jobs Act of 201 7		874			-			-
Uncertain income tax position s		(562	)		(4	)		1,275
Goodwill impairment (nondeductible )		-			-			1,849
Nondeductible expense s		63			63			91
Nontaxable adjustment to contingent consideratio n		-			(580	)		103
Othe r		(52	)		33			103
Income tax benefi t	$	(1,100	)	$	(4,098	)	$	(8,523	)
Effective income tax rat e		(11.6	)%		(37.8	)%		(32.4	)%

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 ,
	201 7			201 6

Deferred income tax assets :
Costs and estimated earnings in excess of billings on uncompleted contracts, ne t	$	-		$	1,270
Accrued employee benefit s		2,806			5,025
Inventorie s		296			563
Trade receivable, ne t		105			199
Net operating loss carryforward s		9,850			15,637
Tax credit carryforward s		5,478			5,069
Other asset s		1,201			1,830
Othe r		81			1,018
		19,817			30,611
Valuation allowanc e		(10,413	)		(8,217	)
		9,404			22,394
Deferred income tax liabilities :
Costs and estimated earnings in excess of billings on uncompleted contracts, ne t		(110	)		-
Property and equipmen t		(9,524	)		(22,380	)
Intangible asset s		(433	)		(819	)
Prepaid expense s		(278	)		(477	)
		(10,345	)		(23,676	)

Net deferred income tax liabilitie s	$	(941	)	$	(1,282	)

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,

2017,

net of any valuation allowance.

As of

December

31,

2017,

the Company had approximately

$35.9

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

2035

and

2036,

and

$3.0

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

2023

and

2036.

As of

December

31,

2017,

the Company also had approximately

$51.5

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

2018.

During the year ended

December

31,

2016,

the Company determined that it

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. With few exceptions, the Company is

longer subject to United States Federal

, state or foreign income tax examinations for years before

2013.

A summary of the changes in the unrecognized

income tax benefits is presented below (in thousands):

	Year Ended December 31,
	201 7			201 6		201 5

Unrecognized income tax benefits, beginning of yea r	$	4,874		$	4,874	$	2,313
Decreases for lapse in statute of limitation s		(520	)		-		(1,199	)
Increases for positions taken in prior year s		-			-		3,716
Decreases for positions taken in prior years		(238	)		-		-
Increases for positions taken in the current yea r		-			-		44
Unrecognized income tax benefits, end of yea r	$	4,116		$	4,874	$	4,874

The Company does

not

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

twelve

months; 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,

2017

and

2016,

the Company had

and

$0.1

million, respectively, of accrued interest related to uncertain income tax positions. Total interest for uncertain income tax positions did

not

change materially in

2017

2016

and decreased by approximately

$0.1

million in

2015.