(

) Income Taxes

Income before income taxes consists of the following:

	December 31,
	2015		2014		2013

Domestic	$	71,323	$	37,211	$	23,068
International		18,242		8,295		21,939
Total	$	89,565	$	45,506	$	45,007

The provision for income taxes consist of the following provisions/(benefits):

	December 31,
	2015			2014			2013
Current:
Federal	$	2,577		$	2,572		$	630
State		-			-			15
International		10,076			512			5,980
		12,653			3,084			6,625
Deferred:
Federal	$	22,005		$	(14,965	)	$	7,014
International		(2,269	)		(746	)		1,093
		19,736			(15,711	)		8,107
Total	$	32,389		$	(12,627	)	$	14,732

The provision/(benefit) for income taxes differs from the statutory federal income tax rate of 35% for 2015, 2014 and 2013 as follows:

	December 31,
	2015			2014			2013

Income tax provision at U.S federal statutory rate	$	31,347		$	15,927		$	15,752
Effect of foreign income taxed at rates other than the U.S. federal statutory rate		989			751			242
Foreign income inclusions		5,017			2,742			-
Tax credits		(4,685	)		(2,692	)		(250	)
Changes in tax laws		-			-			(1,155	)
Tax audit settlements		-			(3,948	)		-
Net change in valuation allowance		303			(26,543	)		(97	)
Permanent items and other		(582	)		1,136			240
Total	$	32,389		$	(12,627	)	$	14,732

Foreign income inclusions represent distributions from foreign subsidiaries which give rise to newly recognized foreign tax credits. Tax audit settlements in 2014 included the final settlement of the European tax dispute concerning 2003 transactions. Net change in the valuation allowance in 2014 included the benefit of $26,902 for the remaining release of the domestic valuation allowance attributable to foreign tax credits, offset by $142 for state deferred taxes and $217 for foreign deferred taxes subject to valuation allowances.

The components of deferred tax assets and liabilities as of December 31, 2015 and 2014 relate to temporary differences and carryforwards as follows:

	December 31,
	2015			2014
Deferred tax assets:
Inventory	$	3,032		$	3,313
Foreign tax credit carryforwards		3,990			19,925
Environmental		2,795			2,993
Net operating loss carryforwards (foreign)		1,191			3,381
Employee benefits		14,978			18,879
Research & experimentation tax credit carryforwards		-			480
Alternative minimum tax credit carryforwards		1,306			2,773
Property, plant and equipment		4,188			3,898
Other		6,251			5,605
Total gross deferred tax assets		37,731			61,247
Valuation allowance		(3,141	)		(5,053	)
Total deferred tax assets	$	34,590		$	56,194

Deferred tax liabilities:
Property, plant and equipment		(11,472	)		(9,649	)
Intangibles and other		(8,192	)		(10,487	)
Unremitted foreign earnings		(208	)		(726	)
Foreign tax allocation reserve		(2,071	)		(1,856	)
Other		(1,123	)		(1,978	)
Total deferred tax liabilities	$	(23,066	)	$	(24,696	)
Net deferred tax assets	$	11,524		$	31,498


Classified as follows in the consolidated balance sheet:
Non-current deferred tax asset		19,259			41,747
Non-current deferred tax liability		(7,735	)		(10,249	)
	$	11,524		$	31,498

The Company elected to retrospectively apply recent accounting guidance requiring that all deferred tax balances be classified as noncurrent. Accordingly, all current deferred tax assets and current deferred tax liabilities have been classified as noncurrent for 2015 and the 2014 balance sheet has been reclassified to reflect retrospective treatment of this accounting standards update.

During 2014, the Company received updated customer projections that impact current and future years’ U.S. taxable income in amounts and type that supported full utilization of existing federal foreign tax credit carryforwards. As a result, the Company released $26,902 of valuation allowance against these foreign tax credits. The Company expects to maintain a domestic valuation allowance against state tax credits and deferred tax assets due to restrictive rules regarding realization. The Company expects to maintain a valuation allowance against certain foreign deferred tax assets, primarily NOL carryforwards, until such time as the Company attains an appropriate level of future profitability in the appropriate jurisdictions and is able to conclude that it is more likely than not that its foreign deferred tax assets are realizable.

The domestic valuation allowance for the years ended December 31, 2015, 2014 and 2013 decreased $381, $26,760 and $3, respectively. The 2015 decrease in the domestic valuation allowance is due to domestic state items. The 2014 decrease in the domestic valuation allowance was allocated as follows: the valuation allowance decreased $26,902 for the release of valuation allowance due to domestic profitability and increased $142 due to

domestic state items. The 2013 decrease in the domestic valuation allowance is due to domestic state items.

The foreign valuation allowance for the years ended December 31, 2015, 2014 and 2013 decreased $1,531, increased $1,923, and decreased $48, respectively.

The 2015 decrease in the foreign valuation allowance was allocated as follows: the valuation allowance increased $684 for foreign income and decreased $2,215 for deferred tax amounts, the reclass of Zenara valuation allowance for assets held for sale into other current liabilities, and currency translation adjustments included in other comprehensive income (“OCI”).

The 2014 increase in the foreign valuation allowance was allocated as follows: the valuation allowance increased $217 for foreign income and increased $1,706 for deferred tax amounts and currency translation adjustments included in OCI. The 2013 decrease in the foreign valuation allowance was allocated as follows: the valuation allowance decreased $94 for foreign income and increased $46 for deferred tax amounts and currency translation adjustments included in OCI.

Under the tax laws of the various jurisdictions in which the Company operates, NOLs may be carried forward or back, subject to statutory limitations, to reduce taxable income in future or prior years. Foreign NOLs are approximately $12,716, of which $1,322 are attributable to NOLs acquired during 2010. NOLs in most foreign jurisdictions will carry forward indefinitely.

As of December 31, 2015, $3,990 of domestic federal foreign tax credits and $1,306 of alternative minimum tax credits are available as credits against future U.S. income taxes on worldwide income, subject to certain limitations. Under U.S. tax laws, domestic federal foreign tax credits will expire in 2016 and 2018, and the alternative minimum tax credit carryforwards have no expiration date.

In 2015 and 2014, the Company repatriated $9,850 and $5,442, respectively, of cash from its foreign subsidiaries in order to reduce its credit and currency exposure for cash held in foreign currencies or in non-U.S. banks and utilized the excess cash for debt reduction. Due in part to a continuing desire to limit credit and currency exposure related to cash held in foreign currencies or in non-U.S. banks, the Company determined that it is likely that a portion of the undistributed earnings of its foreign subsidiaries will be repatriated to the U.S. in the future. Accordingly, the Company has provided a deferred tax liability of $208 on certain undistributed foreign earnings as of December 31, 2015. Subject to limitations, U.S. income tax on such foreign earnings, when actually repatriated, may be reduced or eliminated by unrecognized foreign tax credits that may be generated in connection with the repatriation or by existing foreign tax credit carryforwards or other tax attributes. The Company monitors available evidence and its plans for foreign earnings and expects to continue to provide deferred taxes based on the tax liability that would be due upon repatriation of amounts not considered permanently reinvested.

The following table summarizes the activity related to the Company’s unrecognized tax benefits as of December 31, 2015, 2014 and 2013:

	2015			2014			2013

Balance at January 1	$	1,643		$	3,922		$	3,967
Gross increases related to current period tax positions		281			275			257
Gross decreases related to prior period tax positions		(52	)		(1,149	)		(427	)
Expirations of statute of limitations for the assessment of taxes		(241	)		(106	)		(37	)
Settlements		-			(1,113	)		-
Foreign currency translation		(139	)		(186	)		162
Balance at December 31	$	1,492		$	1,643		$	3,922

Of the total balance of unrecognized tax benefits at December 31, 2015, $1,492, if recognized, would affect the effective tax rate.

Gross interest and penalties at December 31, 2015, 2014 and 2013 of $475, $489 and $5,005, respectively, related to the above unrecognized tax benefits are not reflected in the table above. In 2015, 2014 and 2013, the Company accrued $58, $337 and $219, respectively, of interest and penalties in the income statement. Consistent with prior periods, the Company recognizes interest and penalties within its income tax provision.

Tax years 2012 and forward in the U.S. are open to examination by the IRS. The Company is also subject to examinations in its material non-U.S. jurisdictions for 2009 and later years.

The Company is also subject to audits in various states for various years in which it has filed income tax returns.

Previous state audits have resulted in immaterial adjustments. In the majority of states where the Company files, the Company is subject to examination for tax years 2011 and forward.

During the fourth quarter of 2014, the Company entered into a final settlement with a tax authority, without any admission of fault or breach of laws, in order to avoid further litigation concerning intercompany transactions from 2003. The settlement required the Company to pay $1,487 in tax and interest during the fourth quarter of 2014 in full satisfaction of all liabilities for this matter, and in response the tax authority withdrew all pending litigation and renounced any outstanding claims. The settlement did not impose any penalties on the Company. Therefore, in the fourth quarter of 2014 the Company decreased its remaining reserve for unrecognized tax benefits for this matter by $4,137.

In the next twelve months,

the Company may increase its reserve for unrecognized tax benefits for intercompany transactions and acquired tax attributes by approximately $500. This could affect the effective tax rate.