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Income taxes
 12 Months Ended
Dec. 31, 2019
Income Tax Disclosure [Abstract]  
Income taxes Income taxes  
The components of income before income taxes are as follows:
(In thousands)
 
Years Ended December 31,

 
2019
 
2018
 
2017
Domestic
 
$
98,476

 
$
56,068

 
$
46,308

Foreign
 
82,068

 
120,385

 
101,072

Total
 
$
180,544

 
$
176,453

 
$
147,380


The provision for income taxes charged to operations is as follows:
(In thousands)
 
Years Ended December 31,

 
2019
 
2018
 
2017
Current tax expense:
 
 
 
 
 
 
U.S. federal
 
$
18,212

 
$
15,898

 
$
91,043

State
 
2,705

 
2,963

 
348

Foreign
 
10,156

 
14,273

 
9,352

Total current
 
$
31,073

 
$
33,134

 
$
100,743

Deferred tax benefit:
 
 
 
 
 
 
U.S. federal
 
$
(9,168
)
 
$
(10,724
)
 
$
(4,796
)
State
 
(1,218
)
 
1,134

 
(151
)
Foreign
 
(3,045
)
 
(2,148
)
 
(827
)
Total deferred
 
$
(13,431
)
 
$
(11,738
)
 
$
(5,774
)
Change in valuation allowance
 
751

 
—

 
—

Total provision
 
$
18,393

 
$
21,396

 
$
94,969


Deferred tax liabilities (assets) at December 31, 2019 and 2018 were as follows:
(In thousands)
 
December 31,

 
2019
 
2018
Capitalized software
 
$
12,202

 
$
16,756

Depreciation and amortization
 
11,756

 
12,964

Intangible assets
 
13,490

 
13,492

Right of use asset
 
9,833

 
—

Unrealized gain on derivative instruments
 
1,176

 
1,871

Undistributed earnings of foreign subsidiaries
 
3,482

 
3,449

Gross deferred tax liabilities
 
51,939

 
48,532

Operating loss carryforwards
 
(87,074
)
 
(83,013
)
Vacation and other accruals
 
(4,979
)
 
(5,391
)
Inventory valuation and warranty provisions
 
(2,317
)
 
(2,576
)
Doubtful accounts and sales provisions
 
(860
)
 
(890
)
Unrealized exchange loss
 
(1,052
)
 
(1,735
)
Deferred revenue
 
(7,708
)
 
(8,199
)
Operating lease liabilities
 
(10,426
)
 
—

Accrued expenses
 
(262
)
 
(848
)
Global intangible low-taxed income
 
(3,444
)
 
(4,339
)
Stock-based compensation
 
(5,809
)
 
(5,216
)
Research and development tax credit carryforward
 
—

 
(258
)
Capital loss carryforward
 
—

 
(250
)
Foreign tax credit carryforward
 
(674
)
 
(42
)
Outside basis difference on asset held for sale
 
(10,762
)
 
—

Cumulative translation adjustment on undistributed earnings
 
(985
)
 
(912
)
Other
 
(2,072
)
 
(1,776
)
Gross deferred tax assets
 
(138,424
)
 
(115,445
)
Valuation allowance
 
85,516

 
79,624

Net deferred tax liability
 
$
(969
)
 
$
12,711


A reconciliation of income taxes at the U.S. federal statutory income tax rate to our effective tax rate follows:

 
Years Ended December 31,

 
2019
 
2018
 
2017
U.S. federal statutory rate
 
21
 %
 
21
 %
 
35
 %
Foreign taxes greater (less) than federal statutory rate
 
—

 
(4
)
 
(12
)
Outside basis difference on asset held for sale
 
(6
)
 
—

 
—

Research and development tax credits
 
(3
)
 
(2
)
 
(3
)
Enhanced deduction for certain research and development expenses
 
(3
)
 
(4
)
 
(3
)
State income taxes, net of federal tax benefit
 
—

 
2

 
—

Nondeductible officer compensation
 
1

 
—

 
—

Change in intercompany prepaid tax asset
 
—

 
(1
)
 
(2
)
Foreign-derived intangible income deduction
 
(3
)
 
(1
)
 
—

Global intangible low-taxed income inclusion ("GILTI")
 
1

 
2

 
—

Amortization of intangible assets
 
—

 
—

 
1

Remeasurement of U.S. deferred tax balance
 
—

 
—

 
(10
)
Transition tax on deferred foreign income
 
1

 
1

 
54

Global intangible low-taxed income deferred
 
—

 
(2
)
 
—

Foreign tax on undistributed foreign earnings
 
—

 
(1
)
 
3

Other
 
1

 
1

 
1

Effective tax rate
 
10
 %
 
12
 %
 
64
 %

The Tax Cuts and Jobs Act was enacted on December 22, 2017 (the "Act"). The Act reduced the US federal corporate tax rate from 35% to 21%, requires companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred, and creates new taxes on certain foreign sourced earnings. In 2018 and 2017, we recorded tax expense related to the enactment-date effects of the Act that included recording the one-time transition tax liability related to undistributed earnings of certain foreign subsidiaries that were not previously taxed, adjusting deferred tax assets and liabilities and recognizing the effects of electing to account for GILTI in deferred taxes. As of December 31, 2017, we recognized a provisional amount of $69.9 million, which was included as a component of income tax expense from continuing operations. During 2018, we reduced the provisional amounts recorded at December 31, 2017 by $4.2 million and included these adjustments as a reduction of income tax expense from continuing operations.

While we completed our accounting of the Tax Act in the fourth quarter of 2018 based on the regulatory guidance issued at that time, the Department of Treasury interpretive guidance initiatives are ongoing. The U.S. Treasury Department has issued final interpretive guidance relating to certain provisions of the Tax Act and proposed additional guidance related to the same provisions. We will account for the impact of additional guidance in the period in which any new guidance is released, if appropriate. During 2019, we recorded a $2.6 million net tax expense related to an increase in the 2017 one-time deemed repatriation tax on accumulated foreign earnings as a result of final tax regulations issued in 2019.

As of December 31, 2019, we had federal tax credit carryforwards of $0.7 million which expire during the years 2021 to 2029. Certain of these carryforwards are subject to limitations following a change in ownership. We do not expect to utilize certain of these carryforwards and have recorded a valuation allowance of $0.6 million against those credits at December 31, 2019.
As of December 31, 2019, 14 of our subsidiaries had available, for income tax purposes, foreign net operating loss carryforwards of an aggregate of approximately $981 million, of which $973 million expires during the years 2020 to 2038 and $8 million of which may be carried forward indefinitely. Our tax valuation allowance relates primarily to our ability to realize certain of these foreign net operating loss carryforwards.
Effective January 1, 2010, a new tax law in Hungary provided for an enhanced deduction for the qualified research and development expenses of NI Hungary Software and Hardware Manufacturing Kft. (“NI Hungary”). During the three months ended December 31, 2009, we obtained confirmation of the application of this new tax law for the qualified research and development expenses of NI Hungary. Based on the application of this new tax law to the qualified research and development expense of NI Hungary, we do not expect to have sufficient future taxable income in Hungary to realize the benefits of NI Hungary’s deferred tax assets. Therefore, we had a full valuation allowance against those assets at December 31, 2019.
    
Earnings from our operations in Malaysia are free of tax under a tax holiday effective January 1, 2013. This tax holiday expires in 2037. If we fail to satisfy the conditions of the tax holiday, this tax benefit may be terminated early. The tax holiday resulted in income tax benefits of $3.4 million and $4.0 million for the years ended December 31, 2019 and 2018, respective1y. The impact of the tax holiday on a per share basis for each of the years ended December 31, 2019 and 2018 was a benefit of $0.03 per share.
We have not provided for foreign withholding or distribution taxes on approximately $5.3 million of certain non-U.S. subsidiaries' undistributed earnings as of December 31, 2019. These earnings would become subject to withholding or distribution taxes of approximately $679,000, if they were remitted to the parent company as dividends. We intend to permanently reinvest these undistributed earnings.
We account for uncertainty in income taxes recognized in our financial statements using prescribed recognition thresholds and measurement attributes for financial statement disclosure of tax positions taken or expected to be taken on our tax returns. A reconciliation of the beginning and ending amount of unrecognized tax benefit is as follows:
໿
(In thousands)
 
December 31, 2019
 
December 31, 2018
Balance at beginning of period
 
$
9,775

 
$
10,158

Additions based on tax positions related to the current year
 
776

 
1,486

Reductions for tax positions of prior years
 
—

 
(1,208
)
Additions for tax positions of prior years
 
390

 
1,207

Reductions as a result of settlement with taxing authorities
 
(725
)
 
—

Reductions as a result of the closing of open tax periods
 
(3,564
)
 
(1,868
)
Balance at end of period
 
$
6,652

 
$
9,775


All of our unrecognized tax benefits at December 31, 2019 would affect our effective income tax rate if recognized. As of December 31, 2019, it is reasonably possible that we will recognize tax benefits in the amount of $2.8 million in the next twelve months due to the closing of open tax years. The nature of the uncertainty is related to deductions taken on returns that have not been examined by the applicable tax authority.  
We recognize interest and penalties related to income tax matters in income tax expense. During the years ended December 31, 2019 and 2018, we recognized interest expense related to uncertain tax positions of approximately $0.4 million and $0.6 million, respectively.
The tax years 2013 through 2019 remain open to examination by the major taxing jurisdictions to which we are subject.   The Internal Revenue Service concluded an examination of our U.S. income tax returns for 2010 and 2011 in the third quarter of 2014.