Income Taxes (Tables)

12 Months Ended

Dec. 31, 2016

Components of Provision for Income Taxes

Significant components of the provision for income taxes are as follows (in thousands):

	Year Ended December 31,
	2016		2015		2014
Current:
Federal	$	3,733	$	6,394	$	10,973
State		720		772		1,846
Foreign		1,207		1,165		876
Total current		5,660		8,331		13,695

Deferred:
Federal		3,487		1,057		550
State		642		170		112
Foreign		261		270		-
Total deferred		4,390		1,497		662
Total provision for income taxes	$	10,050	$	9,828	$	14,357

Components of Pretax Income

The components of pretax income for the years ended December 31, 2016, 2015 and 2014 are as follows (in thousands):

		Year Ended December 31,
		2016		2015		2014
Domestic	$	24,564	$	26,958	$	33,937
Foreign		5,945		5,877		3,583
Total	$	30,509	$	32,835	$	37,520

Deferred Tax Assets and Liabilities

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred taxes as of December 31, 2016 and 2015 are as follows (in thousands):

	December 31,
	2016		2015
Deferred tax assets:
Accrued liabilities	$	1,710	$	1,164
Bad debt reserve		497		290
Net operating losses		893		1,051
Deferred compensation		3,851		3,375
Intangibles		3,624		646
Total deferred tax assets		10,575		6,526
Deferred tax liabilities:
Prepaid expenses		965		1,380
Accounting method change		3,096		-
Goodwill and intangibles		18,172		12,570
Fixed assets		1,195		1,039
Total deferred tax liabilities		23,428		14,989
Net deferred tax liability	$	12,853	$	8,463

Reconciliation of Statutory to Effective Income Tax Rate

The federal corporate statutory tax rate is reconciled to the Company’s effective income tax rate as follows:

	Year Ended December 31,
	2016		2015		2014
Federal statutory rate	35.0	%	35.0	%	35.0	%
State taxes, net of federal benefit	3.9		4.0		4.5
Effect of foreign operations	(2.1)		(2.6)		(1.0)
Stock compensation	2.4		3.4		2.6
Non-deductible acquisition costs	-		0.3		0.7
Research and development tax credit	(5.0)		(9.0)		(3.3)
U.S. domestic production deduction	(1.4)		(1.0)		(0.9)
Other	0.1		(0.2)		0.7
Effective tax rate	32.9	%	29.9	%	38.3	%

Gross Unrecognized Tax Benefits

The following table is a reconciliation of beginning and ending balances of total amounts of gross unrecognized tax benefits (in thousands):

	December 31,
	2016		2015
Balance at beginning of year	$	957	$	545
Unrecognized tax benefits related to current year		207		460
Reductions for tax positions of prior years		-		(48	)
Balance at end of year	$	1,164	$	957