Note 8 — Income Taxes

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

	Year Ended December 31,
(In thousands)	2015			2014			2013

Current tax expense (benefit):
U.S. Federal	$	(32,272	)	$	17,086		$	24,275
State		(34	)		2,170			1,595
Foreign		11,411			9,925			7,085
Total current		(20,895	)		29,181			32,955

Deferred tax expense (benefit):
U.S. Federal		(2,624	)		12,237			(2,057	)
State		179			(174	)		(598	)
Foreign		1,942			(196	)		(1,575	)
Total deferred		(503	)		11,867			(4,230	)

Total provision (benefit)	$	(21,398	)	$	41,048		$	28,725

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

	Year Ended December 31,
(In thousands)	2015			2014		2013

Income (loss) from continuing operations	$	(21,398	)	$	41,048	$	28,725
Income from discontinued operations		-			12,475		5,072

Total provision (benefit)	$	(21,398	)	$	53,523	$	33,797

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

	Year Ended December 31,
(In thousands)	2015			2014		2013

U.S.	$	(122,082	)	$	88,964	$	65,310
Foreign		9,856			31,093		16,037

Income (loss) from continuing operations before income taxes	$	(112,226	)	$	120,057	$	81,347

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

	Year Ended December 31,
	2015			2014			2013


Income tax expense (benefit) at federal statuatory rate		(35.0	%)		35.0	%		35.0	%
Nondeductible expenses		2.8	%		2.9	%		4.3	%
Goodwill impairment		15.7	%		-			-
Manufacturing deduction		1.8	%		(1.9	%)		(2.5	%)
Different rates on earnings of foreign operations		(3.6	%)		(4.3	%)		(4.6	%)
Change in valuation allowance		2.8	%		2.1	%		3.0	%
Uncertain tax positions		(2.2	%)		0.6	%		(0.8	%)
State tax expense (benefit), net		(1.5	%)		1.0	%		0.5	%
Other		0.1	%		(1.2	%)		0.4	%

Total income tax expense (benefit)		(19.1	%)		34.2	%		35.3	%

The Company’s effective tax rate in 2015 was primarily impacted by the impairment of non-deductible goodwill. In 2015, the income tax provision also includes 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. In addition, the 2015 income tax provision includes a $4.6 million charge for increases to the valuation allowance for certain deferred tax assets, primarily related to our Australian subsidiary and certain U.S. state net operating losses, which may not be realized, as well as a $1.6 million charge relating to management’s election to carry back the 2015 U.S. federal tax losses to prior years.

Temporary differences and carryforwards which give rise to deferred tax assets and liabilities at December 31, 2015 and 2014 are as follows:

(In thousands)	2015			2014

Deferred tax assets:
Net operating losses	$	14,800		$	15,097
Capitalized inventory costs		6,717			4,250
Stock based compensation		6,460			5,467
Accruals not currently deductible		6,157			9,401
Unrealized foreign exchange		3,013			3,145
Foreign tax credits		2,558			862
Other		599			1,214
Total deferred tax assets		40,304			39,436
Valuation allowance		(16,780	)		(15,353	)
Total deferred tax assets, net of allowances		23,524			24,083

Deferred tax liabilities:
Accelerated depreciation and amortization		(38,034	)		(40,308	)
Tax on unremitted earnings		(7,181	)		(6,680	)
Other		(2,856	)		(3,025	)
Total deferred tax liabilities		(48,071	)		(50,013	)

Total net deferred tax liabilities	$	(24,547	)	$	(25,930	)

Non current deferred tax assets	$	1,821		$	1,857
Non current deferred tax liabilities		(26,368	)		(27,787	)
Net deferred tax liabilities	$	(24,547	)	$	(25,930	)

For state income tax purposes, we have net operating loss carryforwards (“NOLs”) of approximately $212.8 million available to reduce future state taxable income. These NOLs expire in varying amounts beginning in year 2018 through 2030. Foreign NOLs of approximately $14.2 million are available to reduce future taxable income, some of which expire beginning in 2016.

The realization of our net deferred tax assets is dependent on our ability to generate taxable income in future periods. At December 31, 2015 and December 31, 2014, we have recorded a valuation allowance in the amount of $16.8 million and $15.4 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 $142.8 million and $133.3 million at December 31, 2015 and 2014, 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 2011 and for substantially all foreign jurisdictions for years prior to 2007. We are not currently under examination by any United States federal or state tax authorities, however, 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)	2015			2014		2013

Balance at January 1	$	3,786		$	2,175	$	2,753
Additions (reductions) for tax positions of prior years		(95	)		1,604		(650	)
Additions for tax positions of current year		-			7		72
Reductions for settlements with tax authorities		(575	)		-		-
Reductions for lapse of statute of limitations		(2,697	)		-		-
Balance at December 31	$	419		$	3,786	$	2,175

Approximately $0.1 million of unrecognized tax benefits at December 31, 2015, 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.

The Company recognizes accrued interest and penalties related to uncertain tax positions in operating expenses. During the year ended December 31, 2015 and 2014, the Company recognized approximately $0.1 million and $0.4 million, respectively in interest and penalties. In 2013, there was no interest and penalties recognized. The Company had approximately $0.1 million and $0.4 million for interest and penalties accrued at December 31, 2015 and 2014, respectively.