Components of the Company’s income (loss) before income taxes are as follows (in thousands):

	Year Ended December 31,
	2018			2017			2016
Income (loss) before income taxes:
Canada	$	(796	)	$	(2,036	)	$	(1,872	)
U.S.		39,356			37,327			20,422
Other		22,742			40,843			13,972
Total	$	61,302		$	76,134		$	32,522

Components of the Company’s income tax provision (benefit) are as follows (in thousands):

	Year Ended December 31,
	2018			2017			2016
Current
Canada	$	75		$	146		$	43
U.S.		8,095			9,434			9,678
Other		8,113			6,807			2,564
		16,283			16,387			12,285
Deferred
Canada		—			—			—
U.S.		(2,272	)		2,396			(2,378	)
Other		(3,804	)		(4,956	)		612
		(6,076	)		(2,560	)		(1,766	)
Total	$	10,207		$	13,827		$	10,519

The Company is incorporated in Canada and therefore uses the Canadian statutory rate for income tax disclosure. The reconciliation of the statutory Canadian tax rate to the effective tax rate related to income before income taxes is as follows (in thousands, except percentage data):

	Year Ended December 31,
	2018			2017			2016
Statutory Canadian tax rate		29.00	%		29.00	%		28.50	%
Expected income tax provision at Canadian statutory tax rate	$	17,778		$	22,079		$	9,269
International tax rate differences		(4,474	)		(2,038	)		891
U.S. state income taxes, net		831			674			503
Withholding and other taxes		550			484			441
Permanent differences and other		1,015			1,582			84
Section 199 deduction		—			(1,148	)		(1,063	)
Foreign-derived intangible income		(1,628	)		—			—
Tax credits		(1,250	)		(984	)		(1,095	)
Statutory tax rate changes		(285	)		2,823			(856	)
Uncertain tax positions		190			(1,607	)		(103	)
Change in valuation allowance		(262	)		(354	)		1,202
Acquisition contingent consideration adjustments		833			149			762
Transaction costs		172			1,011			649
Provision to return differences		(385	)		225			(93	)
Benefit from share-based compensation		(931	)		(837	)		(72	)
Gain on Laser Quantum acquisition		—			(6,586	)		—
UK patent box		(1,947	)		(1,646	)		—
Reported income tax provision	$	10,207		$	13,827		$	10,519
Effective tax rate		16.7	%		18.2	%		32.3	%

On December 22, 2017, the President of the United States signed into law the Tax Reform Act. The Tax Reform Act significantly changed U.S. tax law by, among other things, lowering corporate income tax rates, implementing a territorial tax system, providing a one-time transition tax on the repatriation of foreign earnings (the “Toll Charge”), creating a new limitation on deductible interest expense and modifying the limitation on officer compensation. The Tax Reform Act permanently reduced the U.S. corporate income tax rate from a maximum of 35% to a flat 21% rate, effective January 1, 2018.

As a result of the Tax Reform Act, the Company revalued its deferred tax assets and liabilities as of December 31, 2017 at the new 21% U.S. federal corporate income tax rate. Because of the ownership structure of the Company, the Company’s foreign entities outside the U.S. are not considered controlled foreign corporations of the U.S. company, as defined under U.S. tax principles, and accordingly, the accumulated earnings of these foreign subsidiaries are not subject to the one-time Toll Charge or global intangible low-taxed income (the “GILTI”) under the Tax Reform Act. In addition, the Company is not currently subject to the base erosion anti-abuse tax (the “BEAT”) as the Company’s revenue is below the threshold requirement under the Tax Reform Act.

During the year ended December 31, 2018, there were no changes made to the provisional amounts recognized in 2017 in connection with the enactment of the Tax Reform Act. The accounting for the income tax effects of the Tax Reform Act is completed as of December 31, 2018.

Deferred income taxes result principally from temporary differences in the recognition of certain revenue and expense items and operating loss and tax credit carryforwards for financial and tax reporting purposes. Significant components of the Company’s deferred tax assets and liabilities as of December 31, 2018 and 2017 are as follows (in thousands):

	December 31,
	2018			2017
Deferred tax assets:
Losses	$	9,385		$	9,407
Compensation related deductions		4,780			3,687
Inventories		4,170			3,400
Tax credits		2,785			2,594
Unrealized currency gains/losses		—			183
Restructuring related liabilities		202			172
Warranty		35			768
Other		885			—
Total deferred tax assets		22,242			20,211
Valuation allowance on deferred tax assets		(12,884	)		(12,811	)
Net deferred tax assets	$	9,358		$	7,400
Deferred tax liabilities:
Depreciation	$	(1,867	)	$	(1,353	)
Amortization		(20,258	)		(23,496	)
Unrealized currency gains/losses		(373	)		—
Other		—			(1,171	)
Total deferred tax liabilities	$	(22,498	)	$	(26,020	)
Net deferred income tax assets (liabilities)	$	(13,140	)	$	(18,620	)

In determining its income tax provisions, the Company calculated deferred tax assets and liabilities for each separate jurisdiction. The Company then considered a number of factors, including positive and negative evidence related to the realization of its deferred tax assets, to determine whether a valuation allowance should be recognized with respect to its deferred tax assets.

In 2018, the Company recorded an additional $0.4 million valuation allowance associated with an increase in deferred tax assets in Canada. In 2018, the Company released valuation allowance of $0.3 million recorded on net operating losses and other timing items in certain tax jurisdictions. In 2017, the Company released valuation allowance of $0.4 million recorded on net operating losses and other timing items in certain tax jurisdictions.

Valuation allowance continues to be provided on the remaining balances of certain U.S. state net operating losses and certain foreign tax attributes that the Company has determined that it is more likely than not that they will not be realized. In conjunction with the Company’s ongoing review of its actual results and anticipated future earnings, the Company continuously reassesses the possibility of releasing the valuation allowance currently in place on its deferred tax assets.

As of December 31, 2018, the Company had net operating loss carryforwards of $3.7 million (tax effected) available to reduce future taxable income. Of this amount, approximately $0.7 million relates to the U.S. and expires through 2037; and $3.0 million relates to Canada and expires starting in 2033. In addition, the Company had capital loss carryforwards of $5.7 million, which had a full valuation allowance. Of this amount, $5.2 million and $0.5 million related to Canada and the U.K, respectively.

As of December 31, 2017, the Company had net operating loss carryforwards of $3.7 million (tax effected) available to reduce future taxable income. Of this amount, approximately $1.0 million relates to the U.S. and expires through 2036; and $2.7 million relates to Canada and expires starting in 2032. In addition, the Company had capital loss carryforwards of $5.7 million, which had a full valuation allowance. Of this amount, $5.2 million and $0.5 million related to Canada and the U.K, respectively.

As of December 31, 2018, the Company had tax credit carryforwards of approximately $2.8 million available to reduce income taxes in future years. Approximately $0.9 million relates to the U.S. state tax credits, of which $0.8 million will expire through 2033 and $0.1 million can be carried forward indefinitely. The remaining $1.9 million tax credit carryforwards were related to Canada, of which $1.2 million expires through 2022 and $0.7 million can be carried forward indefinitely.

As of December 31, 2017, the Company had tax credit carryforwards of approximately $2.6 million available to reduce income taxes in future years. Approximately $0.7 million relates to the U.S. state tax attributes, of which $0.6 million will expire through 2032 and $0.1 million can be carried forward indefinitely. The remaining $1.9 million tax credit carryforwards were related to Canada, of which $1.2 million expires through 2022 and $0.7 million can be carried forward indefinitely.

Income and foreign withholding taxes have not been recognized on the excess of the amount for financial reporting purposes over the tax basis of investments in foreign subsidiaries that are essentially permanent in nature. This amount becomes taxable upon a repatriation of assets from a subsidiary or a sale or liquidation of a subsidiary. The amount of undistributed earnings of foreign subsidiaries totaled $135.6 million as of December 31, 2018. However, these undistributed earnings are generally not subject to the repatriation taxes under the Tax Reform Act. The estimated unrecognized income tax and foreign withholding tax liability on this temporary difference is approximately $0.3 million.

As of December 31, 2018, the Company’s total amount of gross unrecognized tax benefits was $4.7 million, of which $3.6 million would favorably affect the effective tax rate if benefited. Over the next twelve months, the Company may need to record up to $0.5 million of previously unrecognized tax benefits due to statute of limitations closures. The Company believes there are no jurisdictions in which the outcome of unresolved issues or claims is likely to be material to its results of operations, financial position or cash flows. Furthermore, the Company believes that it has adequately provided for all income tax uncertainties.

As of December 31, 2017, the Company’s total amount of gross unrecognized tax benefits was $4.1 million, of which $3.4 million would favorably affect the effective tax rate if benefited. Over the next twelve months, the Company may need to record up to $0.2 million of previously unrecognized tax benefits due to statute of limitations closures. The Company believes there are no jurisdictions in which the outcome of unresolved issues or claims is likely to be material to its results of operations, financial position or cash flows. Furthermore, the Company believes that it has adequately provided for all income tax uncertainties.

The reconciliation of the total amounts of unrecognized tax benefits is as follows (in thousands):

Balance at December 31, 2015	$	5,490
Additions based on tax positions related to the current year		561
Additions for tax positions of prior years		88
Reductions to tax positions of prior years		(45	)
Reductions to tax positions resulting from a lapse of the applicable statute of limitations		(842	)
Settlements with tax authorities		(290	)
Balance at December 31, 2016		4,962
Additions based on tax positions related to the current year		991
Additions for tax positions of prior years		496
Reductions to tax positions of prior years		(28	)
Reductions to tax positions resulting from a lapse of the applicable statute of limitations		(1,577	)
Settlements with tax authorities		(755	)
Balance at December 31, 2017		4,089
Additions based on tax positions related to the current year		394
Additions for tax positions of prior years		655
Reductions to tax positions of prior years		(69	)
Reductions to tax positions resulting from a lapse of the applicable statute of limitations		(239	)
Settlements with tax authorities		(105	)
Balance at December 31, 2018	$	4,725

The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. As of December 31, 2018 and 2017, the Company had approximately $0.5 million and $0.4 million, respectively, of accrued interest and penalties related to uncertain tax positions. During the years ended December 31, 2018 and 2017, the Company recognized less than $0.1 million of expense for an increase in interest and penalties related to uncertain tax positions.

The Company files income tax returns in Canada, the U.S., and various foreign jurisdictions. Generally, the Company is no longer subject to U.S. or foreign income tax examinations, including transfer pricing tax audits, by tax authorities for the years before 2009.

The Company’s income tax returns may be reviewed by tax authorities in the following countries for the following periods under the appropriate statute of limitations: