Income Taxes

Components of the Company’s income before income taxes and adjustment for noncontrolling interests are as follows:



	Year Ended December 31,
	2016		2015		2014
Domestic	$	121,301	$	117,388	$	83,577
Foreign	73,459		35,600		4,706
	$	194,760	$	152,988	$	88,283

The Company’s income tax expense consists of the following:



	Year Ended December 31,
	2016		2015			2014
Current
Federal	$	22,109	$	26,240		$	10,655
State	1,063		1,218			1,843
Foreign	22,067		16,458			21,496

Deferred
Federal	1,828		6,410			17,528
State	904		281			40
Foreign	6,350		(9,389		)	(8,752		)
	$	54,321	$	41,218		$	42,810

The following schedule reconciles the U.S. statutory federal rate to the income tax provision:



	Year Ended December 31,
	2016			2015			2014
Tax at U.S. statutory rate	$	68,166		$	53,546		$	30,899
State and local taxes	2,564			3,441			2,203
Tax credits	(10,348		)	(8,139		)	(23,956		)
Changes in tax law	8,813			3,630			(128		)
Effect of foreign tax rates	(19,600		)	(6,465		)	(767		)
Nonrecurring permanent items	—			(11,300		)	—
Stock compensation (ASU 2016-09)	(5,305		)	—			—
Other change in tax reserves	116			(368		)	2,803
Valuation allowance	9,112			11,638			28,985
Other, net	803			(4,765		)	2,771
Income tax provision	$	54,321		$	41,218		$	42,810
Effective income tax rate	27.9		%	26.9		%	48.5		%

Nonrecurring permanent items relate to the impact of the gain on the Shenya acquisition and realized exchange losses.

Payments, net of refunds, for income taxes for the years ended December 31, 2016, 2015 and 2014 were $38,334, $55,547 and $19,152, respectively.

Deferred tax assets and liabilities reflect the estimated tax effect of accumulated temporary differences between the basis of assets and liabilities for tax and financial reporting purposes, as well as net operating losses, tax credit and other carryforwards. Significant components of the Company’s deferred tax assets and liabilities as of December 31, 2016 and 2015 were as follows:



	2016			2015
Deferred tax assets:
Pension, postretirement and other benefits	$	78,194		$	75,690
Capitalized expenditures	1,001			498
Net operating loss and tax credit carryforwards	132,057			127,136
All other items	29,826			33,777
Total deferred tax assets	241,078			237,101
Deferred tax liabilities:
Property, plant and equipment	(30,310		)	(30,121		)
Intangibles	(16,210		)	(17,415		)
All other items	(7,623		)	(8,169		)
Total deferred tax liabilities	(54,143		)	(55,705		)
Valuation allowances	(149,757		)	(137,011		)
Net deferred tax assets	$	37,178		$	44,385

As of December 31, 2016, the Company’s foreign subsidiaries, primarily in France, Brazil, Italy and Germany, have operating loss carryforwards aggregating $311,000, with indefinite expiration periods. Other foreign subsidiaries in China, Mexico, Netherlands, Poland, Spain, India and Korea have operating losses aggregating $83,000, with expiration dates beginning in 2017. The Company has tax credit carryforwards totaling $11,000 in Poland with expiration dates beginning in 2017. The Company and its domestic subsidiaries have anticipated tax benefits of state net operating losses and credit carryforwards of $12,200 with expiration dates beginning in 2017.

The Company continues to maintain a valuation allowance related to our net deferred tax assets in several foreign jurisdictions. As of December 31, 2016, the Company had valuation allowances of $149,757 related to tax loss and credit carryforwards and other deferred tax assets in several foreign jurisdictions. The Company’s valuation allowance increased in 2016 as a result of current year losses with no benefit in certain foreign jurisdictions. The Company’s current and future provision for income taxes is significantly impacted by the initial recognition of and changes in valuation allowances in certain countries. The Company intends to maintain these allowances until it is more likely than not that the deferred tax assets will be realized. The Company’s future provision for income taxes will include no tax benefit with respect to losses incurred and no tax expense with respect to income generated in these countries until the respective valuation allowance is eliminated.

Deferred income taxes have not been provided on approximately $475,000 of undistributed earnings of foreign subsidiaries as such amounts are considered indefinitely reinvested. It is not practical to estimate any additional income taxes and applicable withholding taxes that would be payable on remittance of such undistributed earnings.

As of December 31, 2016, the Company had $7,851 ($8,893 including interest and penalties) of total unrecognized tax benefits, all of which represented the amount of unrecognized tax benefits that, if recognized, would affect the effective income tax rate.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:



	Year Ended December 31,
	2016			2015			2014
Balance at beginning of period	$	7,753		$	8,738		$	7,012
Tax positions related to the current period
Gross additions	516			818			1,210
Gross reductions	—			—			—
Tax positions related to prior years
Gross additions	31			1,639			1,902
Gross reductions	(70		)	(405		)	(1,106		)
Settlements	(379		)	(1,405		)	(280		)
Lapses on statutes of limitations	—			(1,632		)	—
Balance at end of period	$	7,851		$	7,753		$	8,738

The Company, or one of its subsidiaries, files income tax returns in the United States and other foreign jurisdictions. The Internal Revenue Service completed an examination of the Company’s U.S. income tax returns through 2011. The statute of limitations for U.S. state and local jurisdictions is closed for taxable years ending prior to 2012. The Company’s major foreign jurisdictions are Brazil, Canada, China, France, Germany, Italy, Mexico, and Poland. The Company is no longer subject to income tax examinations in major foreign jurisdictions for years prior to 2012.

During the next twelve months, it is reasonably possible that, as a result of audit settlements and the conclusion of current examinations, the Company may decrease the amount of its gross unrecognized tax benefits by approximately $517, of which an immaterial amount, if recognized, could impact the effective tax rate.

The Company classifies all tax related interest and penalties as income tax expense. The Company has recorded in liabilities $1,042 and $827 as of December 31, 2016 and 2015, respectively, for tax related interest and penalties on its consolidated balance sheet.