The Company uses the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to reverse.

On December 22, 2017, the President of the United States signed into law the Tax Cuts and Jobs Act (“Tax Reform Act”). The legislation significantly changed U.S. tax law by, among other things, lowering corporate income tax rates, assessing a one-time transition tax on a deemed repatriation of non-previously taxed earnings of foreign subsidiaries, and implementing a territorial tax system.

While the Tax Reform Act provides for a territorial tax system, beginning in 2018, it includes two new U.S. tax base erosion provisions, the global intangible low-taxed income (“GILTI”) provisions and the base-erosion and anti-abuse tax (“BEAT”) provisions.

The GILTI provisions require the Company to include in its U.S. income tax return any foreign subsidiary earnings in excess of an allowable return on the foreign subsidiary’s tangible assets. The Company recorded less than $0.1 million and $0.1 million of income tax expense as a result of GILTI for the years ended December 31, 2019 and 2018, respectively. The Company has elected to account for GILTI tax in the period in which it is incurred, and therefore has not provided any deferred tax impacts of GILTI in its consolidated financial statements.

The BEAT provisions in the Tax Reform Act eliminate the deduction of certain base-erosion payments made to related foreign corporations, and impose a minimum tax if greater than regular tax. The BEAT tax had no impact on the Company's consolidated financial statements.



	2019			2018			2017
Current:
U.S. Federal	$	11,279		$	9,402		$	16,882
State	3,551			3,144			2,479
Foreign	1,539			(1,191		)	2,687
Total current	16,369			11,355			22,048
Deferred:
U.S. Federal	2,917			4,158			(7,466		)
State	509			1,047			1,246
Foreign	(123		)	(424		)	(885		)
Total deferred	3,303			4,781			(7,105		)
Provision for income taxes	$	19,672		$	16,136		$	14,943

The provision for income taxes from continuing operations differs from the federal statutory rate of 21% for the years ended December 31, 2019 and 2018 and 35% for the year ended December 31, 2017 due to the following (in thousands):



	2019					2018					2017
Statutory rate	17,800			21.0	%	16,788			21.0	%	27,268			35.0	%
State taxes, less federal effect	3,219			3.8	%	3,242			4.1	%	2,442			3.1	%
Federal tax credits	(1,967		)	(2.3	)%	(3,680		)	(4.6	)%	(373		)	(0.5	)%
Excess tax benefit on stock based compensation	(961		)	(1.1	)%	(2,288		)	(2.9	)%	(1,415		)	(1.8	)%
Uncertain tax positions	(260		)	(0.3	)%	(3,051		)	(3.8	)%	(148		)	(0.2	)%
Executive compensation	1,132			1.3	%	1,369			1.7	%	160			0.2	%
Change in valuation allowance	88			0.1	%	844			1.1	%	660			0.8	%
Net operating loss (NOL) write down	—			—	%	1,640			2.1	%	—			—	%
Change in Indemnification Asset	—			—	%	643			0.8	%	—			—	%
Tax effect of Tax Reform Act	—			—	%	—			—	%	(12,535		)	(16.1	)%
Domestic manufacturer's deduction	—			—	%	—			—	%	(1,578		)	(2.0	)%
Other	621			0.7	%	629			0.7	%	462			0.7	%
	$	19,672		23.2	%	$	16,136		20.2	%	$	14,943		19.2	%



	2019			2018
Depreciation	$	10,421		$	9,886
Goodwill	38,540			35,813
Intangible assets	9,610			9,907
Foreign withholding tax	700			1,182
Other	7,826			696
Gross deferred tax liabilities	67,097			57,484
Equity compensation	(9,963		)	(10,420		)
Other	(20,049		)	(13,529		)
Gross deferred tax assets	(30,012		)	(23,949		)
Valuation allowances	3,160			2,995
Deferred tax assets, net of valuation allowances	(26,852		)	(20,954		)
Net deferred tax liabilities	$	40,245		$	36,530

At December 31, 2019, the Company had total net operating loss carry forwards of $11.5 million, which included $0.5 million for federal, $10.8 million for state, and $0.2 million for foreign income tax purposes. The federal and state net operating loss carry forwards expire between 2020 and 2039. The foreign net operating loss carry forwards expire in 2022. The Company recognized a total of $0.7 million of deferred tax assets, net of the federal tax benefit, related to these net operating losses prior to any valuation allowances, which included $0.1 million of federal and $0.6 million of state deferred tax assets.

Deferred taxes include net deferred tax assets relating to certain state and foreign tax jurisdictions. A reduction of the carrying amount of deferred tax assets by a valuation allowance is required if it is more likely than not that such assets will not be realized. The Company derecognized net operating loss carry forwards, and the corresponding valuation allowances of $1.7 million in Germany and Brazil since it exited both markets in 2018. In 2019, a valuation allowance was recorded in China. The following sets forth a reconciliation of the beginning and ending amount of the Company’s valuation allowance (in thousands):



	2019			2018			2017
Balance as of January 1	$	2,995		$	2,242		$	1,362
Cost charged to the tax provision	173			2,597			1,505
Reductions	(10		)	(1,750		)	(820		)
Currency translation	2			(94		)	195
Balance as of December 31	$	3,160		$	2,995		$	2,242

At December 31, 2019, the Company had approximately $35.1 million of undistributed earnings of foreign subsidiaries. On December 22, 2017, the President of the United States signed into law the Tax Cuts and Jobs Act “Tax Reform Act”. The legislation assessed a one-time tax on a deemed repatriation of non-previously taxed earnings of foreign subsidiaries. In 2019, $10.0 million, net of $0.5 million of withholding tax, of previously taxed income was repatriated. The Company expects to repatriate an additional $13.3 million in cash to the U.S., net of $0.7 million of withholding

tax. The funds will be used for general corporate purposes. The Company continues to maintain its assertion that all remaining foreign earnings will be indefinitely reinvested. Any excess earnings could be used to grow the Company's foreign operations through launches of new capital projects or additional acquisitions. Determination of the amount of unrecognized deferred U.S. income tax liability related to our remaining unremitted foreign earnings is not practicable due to the complexities associated with its hypothetical calculation.



	2019			2018			2017
Balance as of January 1	$	329		$	3,536		$	3,466
Additions for tax positions of the current year	—			15			99
Additions for tax positions of prior years	—			—			—
Reductions for tax positions of prior years for:
Settlements and changes in judgment	—			—			(422		)
Lapses of applicable statute of limitations	(329		)	(3,060		)	—
Divestitures and foreign currency translation	—			(162		)	393
Balance as of December 31	$	—		$	329		$	3,536

In 2019, the Company did not have any unrecognized tax benefits that would affect the effective tax rate, if recognized as of December 31, 2020. In 2018, the unrecognized tax benefit of $0.3 million would affect the effective tax rate, if recognized as of December 31, 2019. In 2019 and 2018, unrecognized tax benefits of $0.3 million and $3.1 million, respectively, were reversed as a result of the lapse of the statute of limitations in the respective period. In 2018, the corresponding indemnification asset was also reversed in pretax income. The Company classifies accrued interest and penalties related to unrecognized tax benefits in income tax expense.

The Company and its U.S. subsidiaries file a U.S. federal consolidated income tax return. Foreign and U.S. state jurisdictions have statute of limitations generally ranging from four to ten years. The Company's U.S. federal consolidated income tax return is under examination for 2015 through 2018.