14.	Income Taxes

(Loss) income before income taxes was generated in the United States and globally as follows:

(Table only in thousands)	2016			2015			2014
Domestic	$	(39,623	)	$	997		$	14,638
Foreign		6,659			(4,093	)		1,576
	$	(32,964	)	$	(3,096	)	$	16,214

The Company has not recorded deferred income taxes on the undistributed earnings of its foreign subsidiaries because of management’s intent to indefinitely reinvest such earnings. At December 31, 2016, the aggregate undistributed earnings of the foreign subsidiaries amounted to $44.7 million. If the Company were to distribute these earnings in the form of dividends or otherwise, the Company would be subject to U.S. income taxes and foreign withholding taxes. The unrecognized deferred income tax liability on this temporary difference is estimated to be approximately $7.1 million at December 31, 2016.

Income tax provision consisted of the following for the years ended December 31:

(Table only in thousands)	2016			2015			2014
Current:
Federal	$	4,957		$	3,429		$	4,672
State		892			753			947
Foreign		3,191			1,944			1,624
		9,040			6,126			7,243
Deferred:
Federal		(2,794	)		(3,012	)		(3,033	)
State		(409	)		(563	)		(367	)
Foreign		(547	)		87			(706	)
		(3,750	)		(3,488	)		(4,106	)
	$	5,290		$	2,638		$	3,137

The income tax provision differs from the statutory rate due to the following:

(Table only in thousands)	2016			2015			2014
Tax (benefit) expense at statutory rate	$	(11,525	)	$	(1,083	)	$	5,675
Increase (decrease) in tax resulting from:
State income tax, net of federal benefit		174			34			416
Domestic production activities deduction		(561	)		(211	)		(670	)
Intangible asset and goodwill impairment		17,859			—			—
Change in uncertain tax position reserves		(624	)		(1,281	)		388
Permanent differences		(31	)		1,162			58
Impact of rate differences and adjustments		(1,655	)		(1,489	)		296
United States and foreign tax incentives		(1,035	)		(883	)		(3,026	)
Non-deductible transaction costs		7			1,356			—
Earnout expenses		2,573			3,928			—
Change in valuation allowance		222			483			—
Audit settlements		—			65			—
Provision-to-return adjustments		108			808			—
Other		(222	)		(251	)		—
	$	5,290		$	2,638		$	3,137

Deferred income taxes reflect the future tax consequences of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes and tax credit carry forwards. The net deferred tax liabilities consisted of the following at December 31:

(Table only in thousands)	2016			2015
Gross deferred tax assets:
Accrued expenses and other	$	3		$	1,175
Reserves on assets		3,078			2,949
Share-based compensation awards		1,340			1,057
Minimum pension / post retirement		4,197			4,118
Net operating loss carry-forwards		5,932			8,473
Tax credit carry-forwards		1,634			1,626
Valuation allowances		(3,135	)		(1,500	)
		13,049			17,898
Gross deferred tax liabilities:
Depreciation		(614	)		(3,658	)
Goodwill and intangibles		(23,060	)		(30,133	)
Prepaid expenses and inventory		(785	)		(192	)
Revenue recognition		(1,554	)		(1,634	)
		(26,013	)		(35,617	)
Net deferred liabilities	$	(12,964	)	$	(17,719	)

As of December 31, 2016, the Company has federal net operating loss carry forwards of $11.5 million, and state and local net operating loss carry forwards of $12.4 million, which expire from 2018 to 2033. The Company has recorded a valuation allowance on certain of these net operating loss carry forwards to reflect expected realization. The Company also has net operating loss carry forwards in international jurisdictions totaling $7.0 million. A full valuation allowance has been established against substantially all of these losses in international jurisdictions. As of December 31, 2016 and 2015, the Company has recorded a valuation reserve in the amount of $3.1 million and $1.5 million, respectively. The changes in the valuation allowance resulted in additional income tax expense of $0.2 million, $0.6 million, and $0.1 million in 2016, 2015, and 2014, respectively.

In assessing the realizability of deferred tax assets, management considers 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 generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities (including the impact of available carryback and carry forward periods), projected future taxable income, and tax-planning strategies in making this assessment. Based on this assessment, management believes it is more likely than not that the Company will realize the benefits of these deductible differences, net of the existing valuation allowances at December 31, 2016. The amount of the deferred tax assets considered realizable, however, could be reduced in the near term if estimates of future taxable income during the carryforward period are reduced.

The Company accounts for uncertain tax positions pursuant to FASB ASC Topic 740. The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The reserve for uncertain tax positions is not expected to change significantly in the next twelve months. A reconciliation of the beginning and ending amount of uncertain tax position reserves included in other liabilities on the Consolidated Balance Sheets is as follows:

(Table only in thousands)	2016			2015
Balance as of January 1,	$	1,024		$	1,166
Additions for tax positions taken in prior years		—			50
Additions for tax positions of acquired company		—			1,139
Statute expirations		(576	)		—
Reductions for settlements on tax positions of acquired company		—			(165	)
Reductions of tax positions taken in prior years		(47	)		—
Reductions for settlements on tax positions of prior years		—			(1,166	)
Balance as of December 31,	$	401		$	1,024

The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. During 2016, 2015, and 2014, there was no such expense for interest and penalties. The favorable settlement of all uncertain tax positions would impact the Company’s effective income tax rate. Tax years going back to 2014 remain open for examination by Federal authorities, and back to 2011 remain open for all significant state and foreign authorities.