Income Taxes

The provision (benefit) for income taxes related to continuing operations was as follows:



	Year Ended December 31,
(In thousands)	2016			2015			2014
Current:
U.S. Federal	$	(37,854	)	$	(32,272	)	$	17,086
State	20			(34		)	2,170
Foreign	10,440			11,411			9,925
Total current	(27,394		)	(20,895		)	29,181
Deferred:
U.S. Federal	2,670			(2,624		)	12,237
State	(181		)	179			(174		)
Foreign	863			1,942			(196		)
Total deferred	3,352			(503		)	11,867
Total income tax expense (benefit)	$	(24,042	)	$	(21,398	)	$	41,048

The total provision (benefit) was allocated to the following components of income (loss):



	Year Ended December 31,
(In thousands)	2016			2015			2014
Income (loss) from continuing operations	$	(24,042	)	$	(21,398	)	$	41,048
Income from discontinued operations	—			—			12,475
Total provision (benefit)	$	(24,042	)	$	(21,398	)	$	53,523

Income (loss) from continuing operations before income taxes was as follows:



	Year Ended December 31,
(In thousands)	2016			2015			2014
U.S.	$	(76,805	)	$	(122,082	)	$	88,964
Foreign	12,051			9,856			31,093
Income (loss) from continuing operations before income taxes	$	(64,754	)	$	(112,226	)	$	120,057

The effective income tax rate is reconciled to the statutory federal income tax rate as follows:



	Year Ended December 31,
	2016		2015		2014
Income tax expense (benefit) at federal statutory rate	(35.0	%)	(35.0	%)	35.0	%
Nondeductible expenses	2.8	%	2.8	%	2.9	%
Worthless stock deduction - Brazil	(14.4	%)	—	%	—	%
Goodwill and other asset impairments	3.5	%	15.7	%	—	%
Manufacturing deduction	0.8	%	1.8	%	(1.9	%)
Different rates on earnings of foreign operations	(1.2	%)	(3.6	%)	(4.3	%)
Change in valuation allowance	6.9	%	2.8	%	2.1	%
Uncertain tax positions	—	%	(2.2	%)	0.6	%
State tax expense (benefit), net	(2.5	%)	(1.5	%)	1.0	%
Other items, net	2.0	%	0.1	%	(1.2	%)
Total income tax expense (benefit)	(37.1	%)	(19.1	%)	34.2	%

Our effective tax rate in 2016 includes a $9.3 million benefit associated with a worthless stock deduction and related impacts from restructuring the investment in our Brazilian subsidiary, partially offset by a $4.5 million charge for increases to the valuation allowance for certain deferred tax assets which may not be realized (primarily related to our Australian subsidiary and certain U.S. state net operating losses). Our effective tax rate for 2015 was primarily impacted by the impairment of non-deductible goodwill. In addition, the 2015 income tax provision also includes a $4.6 million charge for increases to the valuation allowance for certain deferred tax assets which may not be realized (primarily related to our Australian subsidiary and certain U.S. state net operating losses). These 2015 charges were partially offset by a $4.4 million benefit associated with the forgiveness of certain inter-company balances due from our Brazilian subsidiary and a $2.2 million benefit from the release of U.S. tax reserves, following the expiration of statutes of limitation.

Temporary differences and carryforwards which give rise to deferred tax assets and liabilities at December 31, 2016 and 2015 are as follows:



(In thousands)	2016			2015
Deferred tax assets:
Net operating losses	$	18,771		$	14,800
Capitalized inventory costs	12,378			6,717
Stock based compensation	6,955			6,460
Accruals not currently deductible	4,883			6,157
Unrealized foreign exchange losses, net	3,087			3,013
Foreign tax credits	3,269			2,558
Other	1,871			599
Total deferred tax assets	51,214			40,304
Valuation allowance	(21,847		)	(16,780		)
Total deferred tax assets, net of allowances	29,367			23,524
Deferred tax liabilities:
Accelerated depreciation and amortization	(43,225		)	(38,034		)
Original issue discount on Convertible Notes due 2021	(8,553		)	—
Tax on unremitted earnings	(8,555		)	(7,181		)
Other	(6,030		)	(2,856		)
Total deferred tax liabilities	(66,363		)	(48,071		)
Total net deferred tax liabilities	$	(36,996	)	$	(24,547	)

Non-current deferred tax assets	$	1,747		$	1,821
Non-current deferred tax liabilities	(38,743		)	(26,368		)
Net deferred tax liabilities	$	(36,996	)	$	(24,547	)

For state income tax purposes, we have net operating loss carryforwards (“NOLs”) of approximately $240.5 million available to reduce future state taxable income. These NOLs expire in varying amounts beginning in 2018 through 2030. Foreign NOLs of approximately $26.4 million are available to reduce future taxable income, some of which expire beginning in 2017.

The realization of our net deferred tax assets is dependent on our ability to generate taxable income in future periods. At December 31, 2016 and December 31, 2015, we have recorded a valuation allowance in the amount of $21.8 million and $16.8 million, respectively, primarily related to certain U.S. state and foreign NOL carryforwards, including Brazil and Australia, which may not be realized.

Unremitted foreign earnings permanently reinvested abroad upon which deferred income taxes have not been provided aggregated approximately $161.7 million and $142.8 million at December 31, 2016 and 2015, respectively. It is not practicable to determine the amount of federal income taxes, if any, that might become due if such earnings are repatriated. We have the ability and intent to leave these foreign earnings permanently reinvested abroad.

We file income tax returns in the United States and several non-U.S. jurisdictions and are subject to examination in the various jurisdictions in which we file. We are no longer subject to income tax examinations for U.S. federal and substantially all state jurisdictions for years prior to 2012 and for substantially all foreign jurisdictions for years prior to 2008. We are currently under examination by the United States federal tax authorities for tax years 2014 and 2015 and by the State of Texas for tax years 2012 through 2015. In addition, we are under examination by various tax authorities in other countries. We fully cooperate with all audits, but defend existing positions vigorously. These audits are in various stages of completion and certain foreign jurisdictions have challenged the amount of taxes due for certain tax periods. We evaluate the potential exposure associated with various filing positions and record a liability for tax contingencies as circumstances warrant. Although we believe all tax positions are reasonable and properly reported in accordance with applicable tax laws and regulations in effect during the periods involved, the final determination of tax audits and any related litigation could be materially different than that which is reflected in historical income tax provisions and tax contingency accruals.

A reconciliation of the beginning and ending provision for uncertain tax positions is as follows:



(In thousands)	2016			2015			2014
Balance at January 1	$	419		$	3,786		$	2,175
Additions (reductions) for tax positions of prior years	477			(95		)	1,604
Additions (reductions) for tax positions of current year	—			—			7
Reductions for settlements with tax authorities	—			(575		)	—
Reductions for lapse of statute of limitations	(231		)	(2,697		)	—
Balance at December 31	$	665		$	419		$	3,786

Approximately $0.5 million of unrecognized tax benefits at December 31, 2016, if recognized, would favorably impact the effective tax rate. In 2015, we recognized a $2.2 million benefit to the income tax provision relating to uncertain tax positions for which the applicable statutes of limitation expired.

We recognize accrued interest and penalties related to uncertain tax positions in operating expenses. We recognized an insignificant amount of interest and penalties in 2016 and approximately $0.1 million and $0.4 million during 2015 and 2014, respectively. We had approximately $0.1 million and $0.1 million accrued for interest and penalties at December 31, 2016 and 2015, respectively.