INCOME TAXES

The components of income (loss) before income taxes are as follows:



	Years Ended
	December 31, 2015		December 31, 2014		December 31, 2013
	(in thousands)
U.S.	$	23,235	$	3,375	$	25,648
Foreign	35,060		53,851		(26,161		)
Income (loss) before income taxes	$	58,295	$	57,226	$	(513	)

The provision for income taxes consists of the following:



		Years Ended
		December 31, 2015			December 31, 2014			December 31, 2013
		(in thousands)
Federal	Current	$	3,854		$	(4,739	)	$	4,805
	Deferred	15,806			10,013			(10,220		)
State	Current	230			241			35
	Deferred	(355		)	2,522			(124		)
Foreign	Current	11,246			8,009			25,362
	Deferred	612			5,972			1,684
Provision for income taxes		$	31,393		$	22,018		$	21,542

The Company's effective tax rate differs from the U.S. Federal statutory income tax rate as follows:



	Years Ended
	December 31, 2015		December 31, 2014		December 31, 2013
U.S. Federal statutory income tax rate	35.00	%	35.00	%	35.00	%
State tax	(1.41	)	2.85		3.56
Effect of foreign operations	16.49		2.13		(3,979.63	)
Recognition of tax credits	(4.28	)	(5.27	)	875.54
Change of valuation allowance	(0.32	)	(2.14	)	(295.93	)
Transaction costs	6.98		3.86		—
Audit settlements and IRS refunds	(0.26	)	1.06		(828.85	)
Other, net (1)	1.64		0.96		(4.15	)
Effective tax provision rate	53.84	%	38.45	%	(4,194.46	)%


(1)	Other included items such as US permanent differences, return to provision true up, unrecognized tax benefit, and nondeductible stock compensation.

Deferred income taxes

The tax effects of temporary differences that constitute significant portions of the deferred tax assets and deferred tax liabilities are presented below:



	December 31, 2015			December 31, 2014
	(in thousands)
Deferred income tax assets:
Net operating losses	$	31,402		$	37,634
Research and development, foreign tax and other tax credits	71,381			55,408
Accrued liabilities	26,534			37,380
Fixed assets	49,067			54,348
Intangible assets	10,103			11,977
Deferred income	10,648			10,319
Share-based compensation	2,590			3,291
Unrealized foreign exchange translation	3,854			2,424
Other	1,307			2,363
Total deferred income tax assets	206,886			215,144
Deferred income tax liabilities:
Foreign losses subject to recapture	(11,510		)	(12,164		)
Total deferred tax liabilities	(11,510		)	(12,164		)
Less valuation allowance	(37,579		)	(40,372		)
Net deferred income tax assets	$	157,797		$	162,608
Reported as:
Current deferred tax assets(1)	$	—		$	45,518
Current deferred tax liabilities(2)	—			(182		)
Non-current deferred tax assets(3)	157,929			117,278
Non-current deferred tax liabilities(4)	(132		)	(6		)
Net deferred income tax assets	$	157,797		$	162,608

_________________________________________


(1)	Included within Prepaids and other current assets on the consolidated balance sheets.


(2)	Included within Accrued and other liabilities on the consolidated balance sheets.


(3)	Included within Other assets on the consolidated balance sheets.


(4)	Included within Other long-term liabilities on the consolidated balance sheets.

The valuation allowance is based on our assessment that it is more likely than not that the tax benefit of certain deferred tax assets will not be realized in the foreseeable future. The Company has provided allowances on the deferred tax assets relating to state and some foreign net operating losses and state tax credits for year ended December 31, 2015.

The table of deferred tax assets and liabilities shown above excludes deferred tax assets that arose directly from tax deductions related to equity compensation in excess of compensation recognized for financial reporting. The Company recognizes excess tax benefits from stock-based awards in additional paid-in capital if an incremental tax benefit is realized from a reduction in taxes payable, after all other available tax attributes have been utilized. The Company accounts for the indirect effects of stock-based awards on other tax attributes, such as research tax credits, through the consolidated statements of operations. The tax benefit realized from excess stock options exercised and restricted stock units vested during 2015 were $1.6 million.

As of December 31, 2015, the Company had not recognized deferred income taxes on a cumulative total of $269.0 million of undistributed earnings for certain non-U.S. subsidiaries. Determining the unrecognized deferred tax liability related to investments in our non-U.S. subsidiaries that are indefinitely reinvested is not practicable. The Company estimates that our domestic cash needs will be met from our ongoing business operations.

As of December 31, 2015, the Company had federal, state, and non-U.S. net operating loss carryforwards for income tax purposes of $17.5 million, $482.6 million, and $134.9 million, respectively, some of which will begin to expire in 2031, 2016 and 2016, respectively. The U.S. net operating loss carryforwards relate to acquisitions and, as a result, are limited in the amount that can be recognized in any one year. Approximately $122.4 million of the non-U.S. net operating loss carryforwards have no expiration date. Additionally, the Company had federal, state and non-U.S. tax credit carryforwards of $76.0 million, $25.3 million, and $44.6 million, respectively. A portion of the federal and state credits will begin to expire in 2019 and 2016 respectively. The non-U.S. tax credit carryforwards have no expiration date.

Unrecognized tax benefits

The Company recognizes uncertain tax positions only to the extent that management believes that it is more-likely-than-not that the position will be sustained. The reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:



	Years Ended
	December 31, 2015			December 31, 2014			December 31, 2013
	(in thousands)
Beginning gross unrecognized tax benefits	$	122,825		$	119,506		$	72,692
Increases in balances related to tax positions taken during the current periods	1,647			8,181			13,201
Increases in balances related to tax positions taken during the prior periods	316			7,453			58,253
Decreases in balances related to tax positions taken during the prior periods	(6,644		)	(9,537		)	(13,836		)
Lapse of statute of limitation	(516		)	(2,418		)	(7,152		)
Settlements and effective settlements	—			(360		)	(3,652		)
Ending gross unrecognized tax benefits	$	117,628		$	122,825		$	119,506

Included in the unrecognized tax benefits at December 31, 2015, 2014 and 2013, are $87.0 million, $88.1 million and $87.5 million, respectively, of tax benefits that, if recognized, would affect the effective tax rate.

The Company recognizes interest and penalties related to unrecognized tax benefits in its income tax provision. In the years ended December 31, 2015, 2014, and 2013, the Company recognized expense related to interest and penalties in the consolidated statements of operations of $2.2 million, $1.2 million, and $2.8 million, respectively. The total amount of interest and penalties accrued on the consolidated balance sheets as of December 31, 2015 and 2014 was $6.9 million and $5.2 million, respectively.

The timing of resolutions and closures of tax audits is highly unpredictable. Given the uncertainty, it is reasonably possible that certain tax audits may be concluded within the next 12 months that could materially impact the balance of our gross unrecognized tax benefits. An estimate of the range of increase or decrease that could occur in the next twelve months cannot be made. However, the estimated impact to tax expense and net income from the resolution and closure of tax exams is not expected to be significant within the next 12 months.

The Company files U.S. federal, state, and foreign income tax returns in many jurisdictions with varying statutes of limitations. For U.S. federal and most state tax filings, we are no longer subject to examination for periods prior to 2004. For tax filings in significant foreign jurisdictions, we are no longer subject to examination for periods prior to 2005.