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INCOME TAXES | 12 Months Ended
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Dec. 31, 2016
INCOME TAXES |
INCOME TAXES | 11. INCOME TAXES The components of income before income taxes for the years ended December 31, 2016, 2015 and 2014 are as follows (in thousands):
|  | 2016 |  | 2015 |  | 2014 |
Domestic |  | $ | 28,047 |  | $ | 50,563 |  | $ | 57,767 |
Foreign |  |  | 17,327 |  |  | 5,638 |  |  | 28,401 |
Total |  | $ | 45,374 |  | $ | 56,201 |  | $ | 86,168 |
The following is a reconciliation from the tax computed at statutory income tax rates to the Company’s income tax expense for the years ended December 31, 2016, 2015, and 2014 (in thousands):
|  | 2016 |  | 2015 |  | 2014 |
Tax computed at statutory U.S. federal income tax rates |  | $ | 15,782 |  | $ | 19,652 |  | $ | 30,160 |
Non controlling interest |  |  | (2,893) |  |  | (2,807) |  |  | (1,229) |
Foreign tax rate differential |  |  | (3,074) |  |  | 1,659 |  |  | (5,757) |
Over (under) provided in prior periods |  |  | 1,069 |  |  | 652 |  |  | (401) |
Nondeductible expenses |  |  | 1,134 |  |  | 1,113 |  |  | 757 |
Goodwill Impairment |  |  | 2,622 |  |  | — |  |  | — |
Capitalized transactions costs |  |  | 3,138 |  |  | — |  |  | — |
Change in tax reserves |  |  | 2,561 |  |  | 2,564 |  |  | 2,153 |
State Taxes, net of federal benefit |  |  | 1,853 |  |  | 935 |  |  | 1,252 |
Change in valuation allowance |  |  | (7,292) |  |  | (5,949) |  |  | (2,549) |
Foreign tax credit expiration |  |  | 4,179 |  |  | 6,396 |  |  | 2,999 |
Other, net |  |  | 2,081 |  |  | (78) |  |  | 763 |
Total Income Tax Expense |  | $ | 21,160 |  | $ | 24,137 |  | $ | 28,148 |
The components of income tax expense (benefit) for the years ended December 31, 2016, 2015 and 2014 are as follows (in thousands):
\ |  |  |  |  |  |  |  |  |  |
|  | 2016 |  | 2015 |  | 2014 |
Current: |  |  |  |  |  |  |  |  |  |
United States—Federal |  | $ | 15,763 |  | $ | (1,308) |  | $ | 14,761 |
United States—State |  |  | 505 |  |  | (383) |  |  | 1,347 |
Foreign |  |  | 10,528 |  |  | 7,959 |  |  | 12,153 |
Total current income tax expense |  | $ | 26,796 |  | $ | 6,268 |  | $ | 28,261 |
Deferred: |  |  |  |  |  |  |  |  |  |
United States—Federal |  | $ | (1,880) |  | $ | 16,760 |  | $ | 5,205 |
United States—State |  |  | (291) |  |  | 1,636 |  |  | 466 |
Foreign |  |  | (3,465) |  |  | (527) |  |  | (5,784) |
Total deferred income tax expense (benefit) |  |  | (5,636) |  |  | 17,869 |  |  | (113) |
Consolidated: |  |  |  |  |  |  |  |  |  |
United States—Federal |  | $ | 13,883 |  | $ | 15,452 |  | $ | 19,966 |
United States—State |  |  | 214 |  |  | 1,253 |  |  | 1,813 |
Foreign |  |  | 7,063 |  |  | 7,432 |  |  | 6,369 |
Total income tax expense |  | $ | 21,160 |  | $ | 24,137 |  | $ | 28,148 |
The significant components of deferred tax assets and liabilities are as follows as of December 31, 2016 and 2015 (in thousands):
|  | 2016 |  | 2015 |
Deferred tax assets: |  |  |  |  |  |  |
Receivables reserve |  | $ | 1,470 |  | $ | 702 |
Temporary differences not currently deductible for tax |  |  | 8,918 |  |  | 7,236 |
Deferred compensation |  |  | 2,461 |  |  | 2,135 |
Foreign tax credit carryforwards |  |  | — |  |  | 4,180 |
Pension |  |  | 1,085 |  |  | 1,153 |
Net operating losses |  |  | 29,571 |  |  | 4,463 |
Total deferred tax asset |  |  | 43,505 |  |  | 19,869 |
Deferred tax liabilities: |  |  |  |  |  |  |
Property, plant and equipment, net |  | $ | 41,136 |  | $ | 43,718 |
Intangible assets, net |  |  | 6,122 |  |  | 13,743 |
Total deferred tax liabilities |  |  | 47,258 |  |  | 57,461 |
Valuation allowance |  |  | (42,462) |  |  | (7,814) |
Net deferred tax liabilities |  | $ | (46,215) |  | $ | (45,406) |
Deferred tax assets and liabilities are reflected in the accompanying consolidated balance sheets as follows (in thousands):
|  | 2016 |  | 2015 |
Deferred tax assets: |  |  |  |  |  |  |
Current |  | $ | — |  | $ | — |
Long term |  |  | 407 |  |  | — |
Total deferred tax asset |  | $ | 407 |  | $ | — |
Deferred tax liabilities: |  |  |  |  |  |  |
Current |  | $ | — |  | $ | — |
Long term |  |  | (46,622) |  |  | (45,406) |
Total deferred tax liabilities |  | $ | (46,622) |  | $ | (45,406) |
Net deferred tax liabilities |  | $ | (46,215) |  | $ | (45,406) |
As of December 31, 2016, additional components within the reconciliation of the tax expense from statutory income rates became significant to the financial statements; therefore the presentation of the 2015 and 2014 balances have been adjusted accordingly for comparative purposes. As of December 31, 2016, the Company estimated that it had gross federal, state and foreign net operating loss (“NOL”) carryforwards of $3.3 million, $8.9 million and $74.7 million respectively. Of these, $83.5 million will expire between 2017 and 2036 and $3.4 million may be carried forward indefinitely. The Company assesses available positive and negative evidence to estimate if sufficient future taxable income will be generated to realize the existing deferred tax assets. A significant piece of negative evidence evaluated is cumulative losses incurred in certain reporting jurisdictions over the three-year period ended December 31, 2016. Other negative evidence examined includes, but is not limited to, losses expected in early future years, a history of tax benefits expiring unused, uncertainties whose unfavorable resolution would adversely affect future results, and brief carryback, carry forward periods. On the basis of this evaluation, the Company believed it was more likely than not that the benefit from some of these state and foreign deferred taxes would not be realized. In recognition of this risk at December 31, 2015, the Company provided a valuation allowance of $2.0 million and $1.7 million for its state and foreign NOL carryforwards, respectively. Some of the foreign entities acquired in 2016 maintained a full valuation allowance on their NOLs and other deferred tax assets. Where the business combination did not provide any positive evidence for which the Company could recognize these assets, a $41.9 million valuation allowance was established as part of purchase accounting. At December 31, 2016, our state and foreign NOL carryforward valuation allowance was $0.5 million and $27.8 million for state and foreign NOL carryforwards, respectively. The remaining valuation allowance of $14.1 million has been applied to the other foreign deferred taxes for entities with a full valuation allowance at December 31, 2016. As of December 31, 2015, the Company had $4.1 million of foreign tax credits, with a corresponding valuation allowance, which fully expired during the year ended December 31, 2016 and the valuation allowance was released. The Company has approximately $288.6 million of undistributed earnings of its foreign subsidiaries that as of December 31, 2016 are considered to be indefinitely reinvested and accordingly, no U.S. federal or state income taxes have been provided thereon. Determination of the amount of unrecognized deferred U.S. income tax liability is not practicable because of the complexities associated with its hypothetical calculation as such liability, if any, is dependent on circumstances existing if and when such remittance occurs. The Company had net unrecognized tax benefits (including interest and penalty) of $20.0 million as of December 31, 2016, $18.9 million as of December 31, 2015 and, $16.5 million as of December 31, 2014. The net increase of the reserve during the year ended December 31, 2016 was attributable to an increase in tax positions for prior periods of $1.4 million, an increase in tax positions for the current period of $2.3 million, partially offset by a settlement of a prior year position of $0.8 million, and lapse in statutes of limitation of $1.8 million. The following shows the activity related to unrecognized tax benefits (not including interest and penalty) during the three years ended December 31, 2016 (in thousands):
Gross unrecognized tax benefits at December 31, 2013 |  |  | 14,050 |
Increase in unrecognized tax benefits taken during a prior period |  |  | 177 |
Increase in unrecognized tax benefits taken during the current period |  |  | 1,498 |
Lapse in statute of limitations |  |  | (226) |
Settlements |  |  | — |
Gross unrecognized tax benefits at December 31, 2014 |  |  | 15,499 |
Increase in unrecognized tax benefits taken during a prior period |  |  | — |
Increase in unrecognized tax benefits taken during the current period |  |  | 1,717 |
Lapse in statute of limitations |  |  | — |
Settlements |  |  | — |
Gross unrecognized uncertain tax benefits at December 31, 2015 |  |  | 17,216 |
Increase in unrecognized tax benefits taken during a prior period |  |  | 561 |
Increase in unrecognized tax benefits taken during the current period |  |  | 2,321 |
Lapse in statute of limitations |  |  | (1,673) |
Settlements |  |  | (521) |
Gross unrecognized uncertain tax benefits at December 31, 2016 |  | $ | 17,904 |
The Company’s accounting policy is to classify interest and penalties related to income tax matters as part of income tax expense. The accrued amounts for interest and penalties are $2.1 million as of December 31, 2016, and $1.7 million as of December 31, 2015, and $1.0 million as of December 31, 2014. All $20.0 million of unrecognized tax benefits (including interest and penalty) would affect the effective tax rate if recognized. The Company and its subsidiaries file income tax returns in the U.S. and in various, state and local and foreign jurisdictions. The statute of limitations related to the consolidated U.S. federal income tax return is closed for all tax years up to and including 2012. The expiration of the statute of limitations related to the various state and foreign income tax returns that the Company and subsidiaries file varies by jurisdiction.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32559-109319 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32718-109319 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32537-109319 + Details
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