Income Taxes

The components of income (loss) from continuing operations before income taxes and income tax expense (benefit) were as follows:



	Year Ended June 30,
	2015			2014			2013
Income (loss) from continuing operations before income taxes:
United States	$	18,443		$	(6,068	)	$	(24,760	)
Foreign	352			155			477
	$	18,795		$	(5,913	)	$	(24,283	)
Tax provision (benefit):
Federal:
Current	$	4,267		$	3,184		$	(699	)
Deferred	(458		)	(5,281		)	(9,613		)
	$	3,809		$	(2,097	)	$	(10,312	)
State:
Current	$	1,372		$	594		$	157
Deferred	(921		)	(375		)	(710		)
	$	451		$	219		$	(553	)
Foreign:
Current	$	58		$	(12	)	$	364
Deferred	48			49			—
	$	106		$	37		$	364
	$	4,366		$	(1,841	)	$	(10,501	)

The following is the reconciliation between the statutory federal income tax rate and the Company’s effective income tax (benefit) rate for continuing operations:



	Year Ended June 30,
	2015		2014		2013
Tax provision (benefit) at federal statutory rates	35.0	%	(35.0	)%	(35.0	)%
State income tax, net of federal tax benefit	4.9		(3.1	)	(1.8	)
Research and development credits	(4.8	)	(14.7	)	(12.6	)
Domestic manufacturing deduction	(3.2	)	(5.3	)	—
Deemed repatriation of foreign earnings	(0.4	)	0.7		—
Foreign tax credits	—		(13.3	)	—
Equity compensation	(0.1	)	2.2		1.8
Officers' compensation	2.8		11.1		—
Stock compensation shortfalls	—		24.1		—
Deferred tax asset and liability adjustments	(4.2	)	—		—
Change in state tax rates	(3.1	)	—		—
Reserves for tax contingencies	(5.0	)	—		—
Acquisition costs	—		—		0.5
Valuation allowance	—		—		2.5
Other	1.3		2.2		1.4
	23.2	%	(31.1	)%	(43.2	)%

The components of the Company’s net deferred tax assets (liabilities) for continuing operations were as follows:



	June 30,
	2015			2014
Deferred tax assets:
Inventory valuation and receivable allowances	$	9,264		$	8,830
Accrued compensation	2,563			972
Equity compensation	4,229			4,831
Federal and state research and development tax credit carryforwards	16,262			11,167
Gain on sale-leaseback	834			1,232
Other accruals	1,889			1,043
Capital loss carryforwards	3,562			—
Other temporary differences	1,800			4,012
	40,403			32,087
Valuation allowance	(18,864		)	(10,844		)
Total deferred tax assets	21,539			21,243
Deferred tax liabilities:
Prepaid expenses	(1,103		)	—
Property and equipment	(1,578		)	(1,694		)
Intangible assets	(7,110		)	(9,242		)
Tax method of accounting change	(854		)	—
Other temporary differences	(320		)	(624		)
Total deferred tax liabilities	(10,965		)	(11,560		)
Net deferred tax assets	$	10,574		$	9,683

As reported:
Current deferred tax assets	$	12,407		$	15,216
Non-current deferred tax assets (included in other non-current assets)	1,275			378
Non-current deferred tax liabilities	(3,108		)	(5,911		)
	$	10,574		$	9,683

At June 30, 2015, the Company evaluated the need for a valuation allowance on deferred tax assets. In assessing whether the deferred tax assets are realizable, management considered whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the Company's past operating results, its forecast of future earnings, future taxable income, and tax planning strategies. The Company continues to conclude that it is more likely than not that most domestic deferred tax assets would be realizable based on the financial performance in fiscal year 2015, projected future taxable income and the reversal of existing deferred tax liabilities.

The Company continues to record a full valuation allowance on certain state research and development (“R&D”) and investment tax credits, and capital loss carryforwards as of June 30, 2015 as management continues to believe that it is not more likely than not that these deferred tax assets would be realized. Any future reversals of the valuation allowance will impact income tax expense.

The Company had federal research and development credit carryforwards of $959, which will expire from 2032 through 2033. The Company had state research and development credit carryforwards of $14,899, which will expire from 2016 through 2029. The Company also had state investment tax credits carryforwards of $404.

Upon consideration of changing business conditions and cash position in its foreign subsidiaries, management has determined that it does not need to indefinitely reinvest the earnings of certain foreign subsidiaries. Therefore, the Company has accrued deferred taxes in association with $672 in undistributed earnings and profits.

The Company files income tax returns in all jurisdictions in which it operates. The Company has established reserves to provide for additional income taxes that management believes will more likely than not be due in future years as these previously filed tax returns are audited. These reserves have been established based upon management’s assessment as to the potential exposures. All tax reserves are analyzed quarterly and adjustments are made as events occur and warrant modification.

The changes in the Company’s reserves for unrecognized income tax benefits are summarized as follows:



	Year Ended June 30,
	2015			2014
Unrecognized tax benefits, beginning of period	$	3,142		$	2,923
Increases for previously recognized positions	123			102
Reductions as a result of a lapse of the applicable statue of limitations	(1,197		)	(166		)
Increases for currently recognized positions	122			283
Unrecognized tax benefits, end of period	$	2,190		$	3,142

The $2,190 of unrecognized tax benefits as of June 30, 2015, if released, would reduce income tax expense.

The Company’s major tax jurisdiction is the U.S. and the open tax years are fiscal 2011 through 2015.

The Company is currently under audit by the Internal Revenue Service for fiscal year 2013. There have been no significant changes to the status of this examination during the year ended June 30, 2015. It is reasonably possible that within the next 12 months the Company’s unrecognized tax benefits, exclusive of interest, may decrease by up to $757 at the conclusion of the audit. We expect that the decrease, if recognized, would not affect the effective tax rate.