Income Taxes

The Company is required to recognize the impact of a tax position that is more likely than not to be sustained upon examination based upon the technical merits of the position, including resolution of any appeals. An evaluation was performed for the tax years which remain subject to examination by major tax jurisdictions as of December 31, 2016, which are the years ended December 31, 2009 through December 31, 2015. The Company has occasionally been assessed interest or penalties by major tax jurisdictions; these assessments historically have not materially impacted the Company’s financial results. Interest expense assessed by tax jurisdictions is included with interest expense and assessed penalties are included in selling, general and administrative expenses.

The Company evaluates uncertain tax positions for recognition and measurement in the consolidated financial statements. To recognize a tax position, the Company determines whether it is more likely than not that the tax positions will be sustained upon examination, including resolution of any related appeals or litigation, based on the technical merits of the position. A tax position that meets the more likely than not threshold is measured to determine the amount of benefit to be recognized in the consolidated financial statements. The amount of tax benefit recognized with respect to any tax position is measured as the largest amount of benefit that is greater than 50 percent likely of being realized upon settlement. The Company had an uncertain tax position of $5.7 million at December 31, 2016 due to uncertainty in special provisions in foreign tax jurisidictions. There were no uncertain tax positions for the years ended December 31, 2015 and 2014. If it is more likely than not that the related tax benefits will not be realized, a valuation allowance would be established to reduce deferred tax assets. As of December 31, 2016 and 2015, the Company determined that a valuation allowance was not necessary.

A reconciliation of the beginning and ending amount of liabilities associated with uncertain tax positions for the year ended December 31, 2016 is as follows:



	2016
	(In thousands)
Balance at beginning of year	$	—
Additions for tax positions related to the current year	—
Additions for tax positions in prior years	3,628
Additions related to acquisitions	2,089
Balance at end of year	$	5,717

It is reasonably possible that the Company's existing liabilities for unrecognized tax benefits may increase or decrease in the year ending December 31, 2017, primarily due to the progression of any audits and the expiration of statutes of limitation. However, the Company cannot reasonably estimate a range of potential changes in its existing liabilities for unrecognized tax benefits due to various uncertainties, such as the unresolved nature of any possible audits. As of December 31, 2016, if recognized, $5.7 million of the Company's unrecognized tax benefits, including interest and penalties, would favorably impact the effective tax rate.

Income before income taxes consisted of the following:



	Year Ended December 31,
	2016		2015		2014
	(In thousands)
Domestic	$	33,543	$	107,158	$	124,571
Foreign	82,325		142,613		154,809
Total	$	115,868	$	249,771	$	279,380

The income tax provision (benefit) consists of the following:



	Year Ended December 31,
	2016			2015			2014
	(In thousands)
Current:
Federal	$	8,461		$	33,017		$	43,652
Foreign	15,246			28,229			30,022
Total current	23,707			61,246			73,674
Deferred:
Federal	1,121			(1,611		)	(5,916		)
Foreign	(2,181		)	(1,872		)	2,910
Total deferred	(1,060		)	(3,483		)	(3,006		)
Total	$	22,647		$	57,763		$	70,668

The difference between the effective income tax rate reflected in the provision for income taxes and the U.S. federal statutory rate was as follows:



	Year Ended December 31,
	2016		2015		2014
Federal income tax statutory rate	35.0	%	35.0	%	35.0	%
Foreign income tax rate differential	(11.7	)	(7.3	)	(6.0	)
Foreign development tax incentive	(0.9	)	(1.3	)	(1.6	)
Manufacturing benefit	(1.1	)	(1.4	)	(1.7	)
Foreign intellectual property tax benefit	(1.0	)	(0.8	)	—
Other	(0.8	)	(1.1	)	(0.4	)
Effective income tax rate	19.5	%	23.1	%	25.3	%

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Based upon existing market conditions and the Company’s earnings prospects, it is anticipated that all deferred tax assets will be realized in future years. If it is more likely than not that the related tax benefits will not be realized, a valuation allowance would be established to reduce deferred tax assets. As of December 31, 2016 and 2015, the Company determined that a valuation allowance was not necessary. Significant components of the Company’s net deferred tax assets (liabilities) are as follows:



	December 31,
	2016			2015
	(In thousands)
Net current deferred tax assets:
Inventory	$	11,674		$	11,062
Inventory reserve	9,857			8,926
Allowance for doubtful accounts	1,311			1,578
Reserve for accrued liabilities	840			1,205
Other	815			1,842
Net current deferred tax assets	24,497			24,613
Net non-current deferred tax liability:
Property, plant and equipment	(9,552		)	(10,583		)
Stock options	6,052			6,898
Other	1,699			708
Net non-current deferred tax liabilities	(1,801		)	(2,977		)
Net deferred tax asset	$	22,696		$	21,636

Undistributed earnings of the Company’s foreign subsidiaries are considered to be indefinitely reinvested and, accordingly, no provision for U.S. federal income taxes has been provided thereon. The estimate of undistributed earnings of the Company’s foreign subsidiaries amounted to $854 million as of December 31, 2016. Upon distribution of those earnings in the form of dividends or otherwise, the Company may be subject to both U.S. income taxes (subject to an adjustment for foreign tax credits) and withholding taxes payable to the various foreign countries. Determination of the amount of unrecognized deferred U.S. income tax liability is not practicable.

The Company paid $23.0 million, $61.7 million and $69.9 million in income taxes in 2016, 2015 and 2014, respectively.