Income Taxes (Tables)

12 Months Ended

Dec. 31, 2015

Components of Deferred Income Tax Assets and Liabilities

Significant components of the Company’s deferred income tax assets and liabilities are as follows at December 31 (in thousands):



	2015			2014
Deferred income tax assets:
Net operating loss carryforward	$	649		$	343
Deferred revenue	6,762			4,141
Deferred compensation	1,252			423
Inventory reserve	956			508
Non-qualified and non-employee stock option expense	3,393			3,094
Capitalized research and development	3,348			4,847
Alternative minimum tax carryforward	—			1,081
Research and development tax credit carryforward	2,386			2,139
Reserves, accruals, and other	1,067			1,897
Total deferred income tax assets	19,813			18,473
Deferred income tax liabilities:
Depreciation	(2,228		)	(1,674		)
Amortization	(1,979		)	(236		)
Other	(187		)	—
Total deferred income tax liabilities	(4,394		)	(1,910		)
Net deferred income tax assets before valuation allowance	15,419			16,563
Valuation allowance	(1,700		)	(500		)
Net deferred income tax assets	$	13,719		$	16,063

Significant Components of the Provision for Income Taxes

Significant components of the provision for income taxes are as follows for the years ended December 31 (in thousands):



	2015			2014		2013
Current:
Federal	$	13,594		$	7,793	$	7,963
State	996			800		987
Total current	14,590			8,593		8,950
Deferred:
Federal	288			2,656		764
State	984			942		(143		)
Foreign	(278		)	—		—
Total deferred	994			3,598		621
Tax provision recorded as an increase in liability for unrecorded tax benefits	(156		)	202		219
Provision for income taxes	$	15,428		$	12,393	$	9,790

Reconciliation of the Company's Effective Income Tax Rate to the Federal Statutory Rate

A reconciliation of the Company’s effective income tax rate to the federal statutory rate follows for the years ended December 31 (in thousands):



	2015			2014			2013
Federal income tax at the statutory rate	$	12,347		$	11,236		$	9,812
State income taxes, net of federal benefit	1,061			1,433			1,283
Difference between statutory and foreign tax rates ⁽ⁱ⁾	2,442			—			—
Permanent differences ⁽ⁱⁱ⁾	(205		)	98			(96		)
Research and development	(1,050		)	(452		)	(386		)
Return to provision adjustment	(67		)	28			(361		)
Change in liability for unrecognized tax benefits	(156		)	202			219
Incentive stock option benefit	(144		)	(616		)	(538		)
Change in valuation allowance	1,200			500			—
Other	—			(36		)	(143		)
Provision for income taxes	$	15,428		$	12,393		$	9,790
Effective tax rate	43.6		%	38.4		%	34.9		%


⁽ⁱ⁾	The difference between statutory and foreign tax rates of $2.4 million was largely driven by losses incurred in a newly formed foreign entity for which no tax benefit will be realized, partially reduced by a tax benefit for newly formed foreign entities for which the statutory tax rate is lower than the U.S. statutory tax rate.


⁽ⁱⁱ⁾	Permanent differences include certain expenses that are not deductible for tax purposes including lobbying fees as well as favorable items including the domestic production activities deduction

Roll Forward of Liability for Unrecognized Tax Benefits Exclusive of Accrued Interest

The following table presents a roll forward of the Company's liability for unrecognized tax benefits, exclusive of accrued interest, as of December 31 (in thousands):



	2015			2014		2013
Balance, beginning of period	$	3,325		$	3,110	$	2,903
(Decrease) increase in previous year tax positions	(389		)	—		57
Increase in current year tax positions	270			121		144
Decrease due to lapse of statute of limitations	(14		)	—		—
Increase related to adjustment of previous estimates of activity	204			94		6
Balance, end of period	$	3,396		$	3,325	$	3,110