The 2017 Tax Act that was signed into law on December 22, 2017 significantly changed existing U.S. corporate income tax laws by, among other things, lowering the corporate tax rate from 35% to 21%, limiting the deductibility of interest expense and executive compensation, implementing a modified territorial tax system, and imposing a one-time mandatory deemed Transition Tax on undistributed foreign earnings which have not been previously taxed. Undistributed foreign earnings in the form of cash and cash equivalents have been taxed at a rate of 15.5% and all other earnings were taxed at a rate of 8.0%.

On December 22, 2017, the SEC issued SAB 118, which allowed the Company to record provisional amounts related to the 2017 Tax Act and provided a measurement period of up to one year from the enactment date for companies to complete their accounting under ASC Topic 740. During the fiscal year ended January 31, 2018, the Company recorded a provisional tax expense of $45.0 million. The provisional amount related to the Transition Tax, which will be paid in installments over eight years, was $28.2 million based on an estimate of foreign earnings of $279.9 million. The provisional amount related to the re-measurement of certain deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future was $8.3 million. The provisional change to deferred taxes related to withholding and U.S. income taxes was $8.5 million based on unremitted foreign earnings of $236.8 million, which are earmarked for future repatriation. As of December 21, 2018, the Company completed its accounting for the tax effects of the enactment and recorded immaterial adjustments to the Transition Tax and no adjustment to the re-measurement of certain deferred tax assets and liabilities based on the change in tax rate. The Company also recorded a $8.0 million reduction to deferred tax liability related to withholding and U.S. income taxes on unremitted foreign earnings. Lastly, the Company has finalized its policy election to account for the tax on GILTI as a period cost and therefore has not recorded deferred taxes related to GILTI.

FASB issued ASU 2018-02, “Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income,” which permits companies to reclassify disproportionate tax effects in accumulated other comprehensive income caused by the 2017 Tax Act to retained earnings. The Company early adopted ASU 2018-02 during the fourth quarter of fiscal 2018 (see Note 2 – Recent Accounting Pronouncements) and, as a result, the Company made the election to reclassify the income tax effects of the 2017 Tax Act from AOCI to retained earnings. The adoption of this standard did not have a material impact on the Company’s consolidated results of operations or financial position.

Income before provision for income taxes for the fiscal year ended January 31, 2019, 2018, and 2017 on a legal entity basis consists of the following (in thousands):

	2019		2018		2017
U.S. income before taxes	$	6,795	$	11,731	$	26,299
Non-U.S. income before taxes		54,938		30,411		25,155
Income before income taxes	$	61,733	$	42,142	$	51,454

The Company conducts business globally and, as a result, is subject to income taxes in the U.S. federal, state, local and foreign jurisdictions. In the normal course of business, the Company is subject to examinations by taxing authorities in many countries, such as Germany, Hong Kong, Switzerland and the United States. The Company is no longer subject to income tax examination for years ended prior to January 31, 2015, with few exceptions.

Cash paid for income taxes during fiscal 2019, 2018, and 2017 was $9.5 million, $20.4 million and $22.8 million respectively.

The provision (benefit) for income taxes for the fiscal years ended January 31, 2019, 2018 and 2017 consists of the following components (in thousands):

	2019			2018		2017
Current:
U.S. Federal	$	6,665		$	31,599	$	14,079
U.S. State and Local		3,556			960		1,117
Non-U.S.		8,775			7,145		5,091
		18,996			39,704		20,287
Deferred:
U.S. Federal		(12,706	)		16,671		(4,231	)
U.S. State and Local		(2,339	)		622		(167	)
Non-U.S.		(3,789	)		370		426
		(18,834	)		17,663		(3,972	)
Provision for income taxes	$	162		$	57,367	$	16,315

Significant components of the Company’s deferred income tax assets and liabilities for the fiscal years ended January 31, 2019 and 2018 are as follows (in thousands):

	2019 Deferred Taxes					2018 Deferred Taxes
	Assets			Liabilities		Assets			Liabilities
Net operating loss carryforwards	$	9,738		$	—	$	10,589		$	—
Inventory		1,848			—		2,199			—
Unprocessed returns		980			—		955			—
Receivables allowances		336			—		227			—
Deferred compensation		14,953			—		12,985			—
Unrepatriated earnings		—			3,540		—			11,690
Depreciation/amortization		—			1,212		—			4,440
Other provisions/accruals		1,498			—		63			—
Deferred occupancy costs		1,222			—		—			—
Miscellaneous		271			—		—			199
		30,846			4,752		27,018			16,329
Valuation allowance		(5,257	)		—		(8,960	)		—
Total deferred tax assets and liabilities	$	25,589		$	4,752	$	18,058		$	16,329

As of January 31, 2019, the Company had no U.S. federal net operating loss carryforwards and had U.S. state and foreign net operating loss carryforwards of $4.7 million and $37.1 million, respectively, with expiration dates ranging from 1-10 years and some foreign jurisdictions with an indefinite carryforward period. Of the foreign net operating losses, $14.3 million are related to Switzerland and the remaining is related to China, Germany, and other foreign countries.

A valuation allowance is required to be established unless management determines it is more likely than not that the Company will ultimately utilize the tax benefit associated with a deferred tax asset. The Company has foreign valuation allowances of $5.3 million, which are primarily related to net operating loss carryforwards.

Management will continue to evaluate the appropriate level of valuation allowance on all deferred tax assets considering such factors as prior earnings history, expected future earnings, carryback and carryforward periods, and tax and business strategies that could potentially enhance the likelihood of realization of the deferred tax assets.

The provision for income taxes for the fiscal years ended January 31, 2019, 2018, and 2017 differs from the U.S. federal statutory rate due to the following (in thousands):

	Fiscal Year Ended January 31,
	2019			2018			2017
Provision for income taxes at the U.S. statutory rate	$	12,964		$	14,248		$	18,009
Lower effective non-U.S. income tax rate		(1,303	)		(4,378	)		(4,725	)
Change in valuation allowance		(2,138	)		136			828
U.S. tax provided on earnings of non-U.S. subsidiaries		—			—			541
Change in liabilities for uncertain tax positions, net		(1,346	)		(381	)		215
State and local taxes, net of federal benefit		962			626			617
Impact of 2017 Tax Act		(7,446	)		45,002			—
Excess tax deficiencies from stock-based compensation		(118	)		1,094			—
Other permanent differences		(1,759	)		978			979
Other, net		346			42			(149	)
Total provision for income taxes	$	162		$	57,367		$	16,315

Due to the 2017 Tax Act, the Company had a U.S. federal statutory rate of 21.0% for its fiscal year ended January 31, 2019, a blended rate of 33.8% for fiscal year ended January 31, 2018, and a rate of 35.0% for fiscal year ended January 31, 2017. The effective tax rate for fiscal 2019 was 0.3%, primarily due to the impact of the 2017 Tax Act and the release of certain foreign valuation allowances. The effective tax rate for fiscal 2018 was 136.1%, primarily due to the impact of the 2017 Tax Act and excess tax deficiencies related to stock-based compensation, partially offset by foreign profits being taxed in lower taxing jurisdictions. The effective tax rate for fiscal 2017 was 31.7%, primarily as a result of foreign profits being taxed in lower taxing jurisdictions, partially offset by no tax benefit being recognized on certain earnings of foreign subsidiaries and U.S. tax provided on earnings of non-U.S. subsidiaries.

A windfall tax benefit of $0.1 million and a shortfall tax expense of $1.1 million were recorded in income tax expense during fiscal years 2019 and 2018, respectively. Shortfall tax expense of $0.3 million was recorded in additional paid-in-capital during fiscal year 2017.

A reconciliation of the beginning and ending amounts of gross unrecognized tax benefits (exclusive of interest) for the fiscal years ended January 31, 2019, 2018 and 2017 are as follows (in thousands):

	2019			2018			2017
Beginning balance	$	2,354		$	2,619		$	2,481
Tax positions taken in the current year		234			180			142
Tax positions taken in prior years		(774	)		148			—
Lapse of statute of limitations		(122	)		(630	)		—
Settlements		(236	)		(149	)		—
Non-U.S. currency exchange fluctuations		(105	)		186			(4	)
Ending balance	$	1,351		$	2,354		$	2,619

Included in the balances at January 31, 2019, January 31, 2018 and January 31, 2017 are $1.2 million, $2.3 million and $2.6 million, of unrecognized tax benefits which would impact the Company’s effective tax rate, if recognized. Interest and penalties, if any, related to unrecognized tax benefits are recorded as income tax expense in the consolidated statement of operations. As of January 31, 2019, January 31, 2018 and January 31, 2017, the Company had $0.7 million, $0.8 million and $0.7 million, respectively of accrued interest (net of tax benefit) and penalties related to unrecognized tax benefits. During fiscal years 2019, 2018 and 2017, the Company accrued $0.0 million, $0.1 million and $0.1 million of interest (net of tax benefit) and penalties.