Income Taxes (Tables)

12 Months Ended

Dec. 31, 2017

Income (loss) before income taxes for the years ended December 31, 2017, 2016 and 2015 was derived from the following sources:



(In thousands)	2017		2016			2015
Domestic	$	13,363	$	(7,328	)	$	(16,751	)
Foreign	171,368		127,327			108,936
Income before income tax expense and equity in net loss of affiliate	$	184,731	$	119,999		$	92,185

Components of Income Tax (Benefit) Expense

Income tax expense for the years ended December 31, 2017, 2016 and 2015 is summarized as follows:



(In thousands)	2017			2016			2015
Current:
Federal	$	60,529		$	7,759		$	4,170
State	808			(10		)	528
Foreign	36,700			31,387			18,817
	98,037			39,136			23,515
Deferred (net of valuation allowance):
Federal	249			(8,183		)	(11,374		)
State	(891		)	250			(738		)
Foreign	2,270			(8,351		)	(1,201		)
	1,628			(16,284		)	(13,313		)
Income tax expense	$	99,665		$	22,852		$	10,202

Reconciliation of Income Tax Expense With Expected Amounts Based Upon Statutory Federal Tax Rates

Income tax (benefit) expense differs from the expected amounts based upon the statutory federal tax rates for the years ended December 31, 2017, 2016 and 2015 as follows:



(In thousands)	2017			2016			2015
Expected federal income tax at statutory rate	$	64,656		$	42,000		$	32,265
State income taxes before valuation allowance, net of federal tax effect	(1,376		)	(769		)	(576		)
Effect of foreign source income	(27,581		)	(22,242		)	(23,374		)
Tax contingencies	2,816			1,103			1,483
Valuation allowance	3,195			1,713			1,109
U.S. federal research credit	(4,881		)	(1,676		)	(3,905		)
Equity compensation	(2,321		)	815			739
Transition tax	72,993			—			—
Remeasurement of deferred taxes	(10,248		)	—			—
Incremental taxes on unremitted foreign earnings release	3,968			—			—
Other items, net	(1,556		)	1,908			2,461
Income tax expense	$	99,665		$	22,852		$	10,202

Deferred Tax Assets And Deferred Tax Liabilities

The Company has remeasured its deferred tax assets and liabilities as a result of passage of the Tax Cuts and Jobs Act. The primary impact of this remeasurement was a reduction in deferred tax assets and liabilities in connection with the reduction of the U.S. corporate income tax rate as described above. The significant components of the Company’s deferred tax assets and deferred tax liabilities at December 31, 2017 and 2016 are as follows:



(In thousands)	2017			2016
Deferred tax assets attributable to:
Accounts receivable	$	32		$	470
Inventory	4,132			5,061
Accruals not currently deductible for tax purposes	8,641			3,729
Net operating loss and credit carryforwards	15,184			27,198
Capital loss carryforward	2,391			3,134
Depreciation	—			8,395
Equity compensation	3,658			5,134
Asset impairments	452			1,467
Other, net	2,549			4,356
Gross deferred tax assets	37,039			58,944
Valuation allowance	(17,494		)	(14,661		)
Total deferred tax assets	19,545			44,283
Deferred tax liabilities attributable to:
Purchased intangible assets	(28,956		)	(55,809		)
Depreciation	(2,512		)	—
Total deferred tax liabilities	(31,468		)	(55,809		)
Net deferred tax liabilities	$	(11,923	)	$	(11,526	)

Reconciliations of Total Amount of Gross Unrecognized Tax Benefits

Reconciliations of the beginning and ending balances of the total amounts of gross unrecognized tax benefits for the years ended December 31, 2017 and 2016 are as follows:



(In thousands)	2017			2016
Gross unrecognized tax benefits at beginning of year	$	8,293		$	7,621
Increase in tax positions from prior years	298			14
Increases in tax positions for current year	4,724			1,944
Lapse in statute of limitations	(754		)	(1,286		)
Gross unrecognized tax benefits at end of year	$	12,561		$	8,293