INCOME TAXES

Income before the impact of income taxes for the years ended December 31 consisted of the following:



	2017		2016		2015
U.S.	$	190,480	$	103,798	$	94,242
Foreign	361,391		262,767		247,375
Total	$	551,871	$	366,565	$	341,617

The Company's provision for income taxes for the years ended December 31 consisted of the following:



	2017			2016			2015
Current:
Federal	$	(85,761	)	$	(41,407	)	$	(30,334	)
State	(2,387		)	(4,750		)	(6,616		)
Foreign	(93,254		)	(72,600		)	(69,793		)
Total current	$	(181,402	)	$	(118,757	)	$	(106,743	)
Deferred:
Federal	$	(12,459	)	$	8,709		$	6,303
State	(649		)	383			312
Foreign	(9,773		)	3,816			538
Total deferred	$	(22,881	)	$	12,908		$	7,153
Provision for income taxes	$	(204,283	)	$	(105,849	)	$	(99,590	)

A reconciliation of income tax expense at the U.S. federal statutory income tax rate to the recorded tax provision for the years ended December 31, is as follows:



	2017			2016			2015
Tax at statutory rate	$	(193,155	)	$	(128,298	)	$	(119,566	)
Non-U.S. rate differential — net	25,795			16,718			15,931
State income taxes — net	(3,413		)	(2,640		)	(2,094		)
Equity Based Stock - Tax Benefit	14,015			—			—
Effect of 2017 U.S. Tax Cuts and Jobs Act	(48,126		)	—			—
Effect of changes in enacted tax rates on deferred tax assets and liabilities	(1,281		)	(111		)	(153		)
Nondeductible stock compensation expense	(319		)	(296		)	(338		)
Other nondeductible expenses	(2,350		)	(2,307		)	(1,039		)
Federal and state tax credits	9,210			9,840			8,837
Change in reserves, including interest and penalties	(4,350		)	1,105			(1,522		)
Change in valuation allowance	51			26			(620		)
Other — net	(360		)	114			974
	$	(204,283	)	$	(105,849	)	$	(99,590	)

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, are as follows:



	2017			2016			2015
Property, plant and equipment	$	(20,191	)	$	(14,122	)	$	(8,031	)
Inventory provisions	13,437			19,710			14,566
Allowances and accrued liabilities	3,588			5,434			2,590
Other tax credits	10,294			5,027			3,763
Deferred compensation	(5,223		)	9,215			5,891
Net operating loss carryforwards	3,993			7,885			923
Valuation allowance	(284		)	(662		)	(678		)
Net deferred tax assets	$	5,614		$	32,487		$	19,024

On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the "Tax Act"). The Tax Act makes broad and complex changes to the U.S. tax code including, but not limited to, (1) reducing the U.S. federal corporate tax rate from 35% to 21%, (2) requiring a one-time transition tax on certain undistributed earnings of foreign subsidiaries that is payable over eight years, (3) generally eliminating U.S. federal income taxes on dividends from foreign subsidiaries, and (4) bonus depreciation that will allow for full expensing of qualified property.

The Securities and Exchange Commission ("SEC") staff issued Staff Accounting Bulleting ("SAB") 118, which provides guidance on accounting for the tax effects of the Tax Act. SAB 118 provides a measurement period that should not extend beyond one year from the Tax Act enactment date for companies to complete the accounting under ASC 740. In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the Tax Act for which the accounting under ASC 740 is complete. To the extent that a company's accounting for certain income tax effects of the Tax Act is incomplete but it is able to determine a reasonable estimate, it must record a provisional estimate in the financial statements. If a company cannot determine a provisional estimate to be included in the financial statements, it should continue to apply ASC 740 on the basis of the provisions of the tax laws that were in effect immediately before the enactment of the Tax Act.

The Company's accounting for the Deemed Repatriation Transition Tax ("Transition Tax") element of the Tax Act is incomplete. However, the Company was able to make reasonable estimates of certain effects and, therefore, recorded provisional adjustments. The Transition Tax is a tax on previously untaxed accumulated and current earnings and profits ("E&P") of certain of the Company's foreign subsidiaries. To calculate the amount of the Transition Tax, the Company must determine, in addition to other factors, the amount of post-1986 E&P of the relevant subsidiaries, as well as the amount of non-U.S. income taxes paid on such earnings. In connection with the Company's initial analysis of the impact of the Tax Act, it has recorded a discrete net tax expense of $49,407. This net expense consists of $47,000 in federal Transition Tax, $1,126 of associated state tax expense both of which are provisional amounts, and a $1,281 reduction in the valuation of net deferred tax assets related to the decrease in the U.S. federal tax rate. The $47,000 in federal Transition Tax is payable over 8 years, accordingly, $44,366 of this amount is included within other long-term liabilities and the remainder is included in income taxes payable on the Consolidated Balance Sheets in the period ending December 31, 2017.

The Company previously considered the earnings in its non-U.S. subsidiaries to be indefinitely reinvested and, accordingly, recorded no deferred income taxes. The Company is currently analyzing its global working capital and cash requirements and the potential tax liabilities attributable to a repatriation. The Company has yet to determine whether it plans to change its prior assertion and repatriate earnings. Accordingly, the Company has not recorded any deferred taxes attributable to its investments in its foreign subsidiaries except for a $2,225 deferred tax liability for certain withholding and dividend taxes related to possible distributions from non-U.S. subsidiaries to their non-U.S. parents. The Company will record the tax effects of any change in its prior assertion in the period that it completes its analysis and is able to make a reasonable estimate, and disclose any unrecognized deferred tax liability for temporary differences related to its foreign investments, if practicable. While the Transition Tax resulted in the reduction of the excess of the amount for financial reporting over the tax basis in the Company's foreign subsidiaries to approximately $0 and subjected approximately $1,266,000 of undistributed foreign earnings to tax, an actual repatriation from its non-U.S. subsidiaries could still be subject to additional foreign withholding taxes and U.S. state taxes. At December 31, 2016, the cumulative undistributed earnings in non-U.S. subsidiaries were approximately $936,000.

As of December 31, 2017, 2016 and 2015, the Company has state tax credit carry-forwards of $10,294, $5,027 and $3,740, respectively. The state tax credit carry-forwards begin expiring in 2020. In addition, at December 31, 2017, the Company has net operating loss carry-forwards available for future periods of $2,896 related to its UK subsidiary. The UK net operating loss can be carried-forward indefinitely.

The Company's acquisition of Menara in 2016 included net operating loss carry-forwards of $22,242. As of December 31, 2017, the Company has $16,202 of these net operating loss carry-forwards remaining. No valuation allowance has been provided for these carry-forwards as the Company expects to be able to fully utilize them to offset future income.

The following is a tabular reconciliation of the total amounts of unrecognized tax benefits:



	2017			2016			2015
Balance at January 1	$	6,403		$	7,579		$	6,494
Change in prior period positions	(2,240		)	(1,876		)	33
Additions for tax positions in current period	6,207			700			1,052
Balance at December 31	$	10,370		$	6,403		$	7,579

Substantially all of the liability for uncertain tax benefits related to various federal, state and foreign income tax matters, would benefit the Company's effective tax rate, if recognized.

Estimated penalties and interest related to the underpayment of income taxes are ($155), $(163) and $437 for the years ended December 31, 2017, 2016 and 2015, respectively, and are included within the provision for income taxes. Total accrued penalties and interest related to the underpayment of income taxes are $789 and $944 at December 31, 2017 and 2016, respectively.

The Company's uncertain tax positions are related to tax years that remain subject to examination by the relevant taxing authorities. If realized, all of the Company's uncertain tax positions would affect its effective tax rate. Certain of the Company's uncertain tax positions are expected to settle within one year. Open tax years by major jurisdictions are:




• United States		2016 — 2017
• Germany		2013 — 2017
• Russia		2015 — 2017