Income Taxes (Tables)

12 Months Ended

Dec. 31, 2017

Components of Provision for Income Taxes

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

	Year Ended December 31,
	2017		2016		2015
Current:
Federal	$	9,095	$	3,733	$	6,394
State		1,262		720		772
Foreign		2,345		1,207		1,165
Total current		12,702		5,660		8,331

Deferred:
Federal		(3,726)		3,487		1,057
State		(684)		642		170
Foreign		270		261		270
Total deferred		(4,140)		4,390		1,497
Total provision for income taxes	$	8,562	$	10,050	$	9,828

Components of Pretax Income

The components of pretax income for the years ended December 31, 2017, 2016 and 2015 are as follows (in thousands):

	Year Ended December 31,
	2017		2016		2015
Domestic	$	21,285	$	24,564	$	26,958
Foreign		5,858		5,945		5,877
Total	$	27,143	$	30,509	$	32,835

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, 2017 and 2016 are as follows (in thousands):

	December 31,
	2017		2016
Deferred tax assets:
Accrued liabilities	$	2,027	$	1,710
Bad debt reserve		328		497
Net operating losses		483		893
Deferred compensation		2,579		3,851
Intangibles		4,097		3,624
Total deferred tax assets		9,514		10,575
Deferred tax liabilities:
Prepaid expenses		902		965
Accounting method change		1,366		3,096
Goodwill and intangibles		13,975		18,172
Fixed assets		631		1,195
Total deferred tax liabilities		16,874		23,428
Net deferred tax liability	$	7,360	$	12,853

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,
	2017		2016		2015
Federal statutory rate	35.0	%	35.0	%	35.0	%
State taxes, net of federal benefit	3.3		3.9		4.0
Effect of foreign operations	1.9		(2.1)		(2.6)
Foreign toll charge - U.S. tax reform	4.1		0.0		0.0
Stock compensation	1.9		2.4		3.4
Non-deductible acquisition costs	0.0		0.0		0.3
Research and development tax credit	(1.0)		(5.0)		(9.0)
U.S. domestic production deduction	(1.6)		(1.4)		(1.0)
Adjustment to deferred tax rate - U.S. tax reform	(12.3)		0.0		0.0
Other	0.2		0.1		(0.2)
Effective tax rate	31.5	%	32.9	%	29.9	%

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,
	2017		2016
Balance at beginning of year	$	1,164	$	957
Additions based on tax positions related to current year		464		-
Additions based on tax positions related to prior years		1,151		207
Reductions for tax positions of prior years		(99)		-
Balance at end of year	$	2,680	$	1,164