9.	INCOME TAXES

We use the asset and liability method in accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse.

For the

three

-month periods ended

July 2, 2017

and

June 26, 2016,

we recognized

$179

and

$33,

respectively, in income tax expense. For the

six

-month periods ended

July 2, 2017

and

June 26, 2016,

we recorded

$266

and

$121,

respectively, in income tax expense. These are detailed as follows:

	Three-month periods ended					Six-month periods ended
	July 2 ,		June 26,			July 2 ,		June 26,
	201 7		2016			201 7		2016
Current Income Tax Provision:
Foreign	$	130	$	(41	)	$	151	$	(14	)
Federal		6		13			28		17
State		3		(7	)		8		8
Deferred Income Tax Provision		40		68			79		110
Total	$	179	$	33		$	266	$	121

The deferred income tax provision is primarily due to the recognition of deferred tax liabilities relating to goodwill and certain intangible assets that cannot be predicted to reverse for book purposes during our loss carryforward periods. The current income tax provision is primarily due to the income generated by our foreign operations and estimated U.S. federal alternative minimum taxes.

Our effective consolidated tax rates for the

six

-month periods ended

July 2, 2017

and

June 26, 2016

were:

	Six month periods ended
	July 2 ,			June 26,
	2017			2016

Income Before Income Taxes	$	3,021		$	844

Income Tax Provision		266			121

Effective Income Tax Rate		8.8	%		14.3	%

The overall effective tax rate is the result of the combination of income and losses in each of our tax jurisdictions, which is particularly influenced by the fact that we have recorded a full reserve against our deferred tax assets pertaining to cumulative historical losses for our U.S. operations and certain foreign subsidiaries, as management does

not

believe, at this time, that it is more likely than

not

that we will realize the benefit of these losses.

As of

December 31, 2016,

we have domestic and foreign net operating losses (“NOL”) totaling approximately

$70,976

and

$12,760,

respectively, and domestic tax credits of approximately

$1,704,

available to reduce future taxable income. Included in our NOL carryforwards are foreign loss carryforwards of approximately

$12,760,

nearly all of which can be carried forward indefinitely. The domestic NOL carryforward of

$70,976

expires from

2019

through

2034.

As a result of our operations, we file income tax returns in various jurisdictions including U.S. federal, U.S. state and foreign jurisdictions. We are routinely subject to examination by taxing authorities in these various jurisdictions. Our U.S. tax matters for the years

2002

through

2016

remain subject to examination by the Internal Revenue Service (“IRS”) and various state and local tax jurisdictions due to our NOL carryforwards. Our tax matters for the years

2009

through

2016

remain subject to examination by the respective foreign tax jurisdiction authorities.