TAXES ON INCOME (TAX BENEFITS)

Income (loss) from continuing operations before taxes on income (tax benefits) was as follows (in thousands):



	Years Ended December 31,
	2015			2014			2013
Domestic	$	(15,944	)	$	(75,112	)	$	23,695
Foreign	17,159			39,137			35,307
Total	$	1,215		$	(35,975	)	$	59,002

Provisions (benefits) for taxes on income (loss) from continuing operations consisted of the following components (in thousands):



	Years Ended December 31,
	2015			2014			2013
Current:
Federal	$	2,150		$	(2,112	)	$	8,603
Foreign	5,600			10,586			6,078
State	528			2,635			527
Subtotal	8,278			11,109			15,208
Deferred:
Federal	218			(18,629		)	(2,075		)
Foreign	1,382			3,034			(727		)
State	(673		)	646			(252		)
Subtotal	927			(14,949		)	(3,054		)
Total tax provision (benefit)	$	9,205		$	(3,840	)	$	12,154

Income tax (benefit) expense differed from the amounts computed by applying the U.S. federal income tax rate of 35% to income (loss) before income taxes, equity in income (loss) of joint ventures and minority interests as a result of the following (in thousands):



	Years Ended December 31,
	2015			2014			2013
Income taxes (benefit) at U.S. federal statutory tax rate	$	425		$	(12,591	)	$	20,651
Increase (decrease) in taxes resulting from:
Change in the balance of the valuation allowance for deferred tax assets allocated to foreign income tax expense	(756		)	7,785			1,447
Change in the balance of the valuation allowance for deferred tax assets allocated to state income tax expense	4,834			5,206			115
State income taxes, net of federal income tax benefit	(94		)	(3,073		)	64
Divestitures	2,269			—			—
Meals and entertainment	761			863			1,034
Changes in taxes previously accrued	(489		)	(1,932		)	(3,098		)
Foreign tax rate differences	(1,468		)	(9,215		)	(4,892		)
Goodwill impairment	3,485			9,690			—
Recognition of uncertain tax positions	24			(96		)	(89		)
Settlement of escrow arrangement	(1,115		)	—			—
Contingent consideration reversal	—			—			(1,461		)
Domestic Production Activities deduction	(528		)	(81		)	(1,548		)
Incremental U.S. taxes on undistributed foreign earnings	2,102			—			—
Other matters	(245		)	(396		)	(69		)
Total tax provision (benefit)	$	9,205		$	(3,840	)	$	12,154
Effective tax rate	757.6		%	10.7		%	20.6		%

Net deferred taxes consisted of the following (in thousands):



	December 31,
	2015			2014
Deferred income tax assets:
Foreign tax credit carryforwards	$	358		$	1,477
Net operating loss carryforwards	14,688			19,355
Accrued expenses	24,449			21,378
Other	8,285			7,207
Total gross deferred income tax assets	47,780			49,417
Less valuation allowance	(18,897		)	(19,353		)
Net deferred income tax assets	28,883			30,064
Deferred income tax liabilities:
Property, plant and equipment	(11,438		)	(7,499		)
Intangible assets	(14,525		)	(22,653		)
Undistributed foreign earnings	(9,153		)	(7,051		)
Other	(8,248		)	(6,859		)
Total deferred income tax liabilities	(43,364		)	(44,062		)
Net deferred income tax liabilities	$	(14,481	)	$	(13,998	)

The Company’s tax assets and liabilities, netted by taxing location, are in the following captions in the balance sheets (in thousands):



	December 31,
	2015			2014
Current deferred income tax assets, net	$	7,804		$	9,516
Current deferred income tax liabilities, net ⁽¹⁾	(5,029		)	(3,935		)
Noncurrent deferred income tax assets, net	2,130			3,334
Noncurrent deferred income tax liabilities, net	(19,386		)	(22,913		)
Net deferred income tax liabilities	$	(14,481	)	$	(13,998	)

__________________________


⁽¹⁾	The December 31, 2015 balance includes $1.5 million of deferred income tax liabilities related to BPPC, which are classified as held for sale. See Note 5.

The Company’s deferred tax assets at December 31, 2015 included $14.7 million in federal, state and foreign net operating loss (“NOL”) carryforwards. These NOLs include $8.1 million, which if not used will expire between the years 2016 and 2035, and $6.6 million that have no expiration dates. The Company also has deferred tax amounts related to foreign tax credit carryforwards of $0.4 million, all of which have no expiration date.

For financial reporting purposes, a valuation allowance of $18.9 million has been recognized to reduce the deferred tax assets related to certain federal, state and foreign net operating loss carryforwards and other assets, for which it is more likely than not that the related tax benefits will not be realized, due to uncertainties as to the timing and amounts of future taxable income. The valuation allowance at December 31, 2014 was $19.4 million. Activity in the valuation allowance is summarized as follows (in thousands):



	Years Ended December 31,
	2015			2014			2013
Balance, at beginning of year	$	19,353		$	7,797		$	6,574
Additions	7,783			14,442			1,754
Reversals	(5,294		)	(2,090		)	(131		)
Other adjustments	(2,945		)	(796		)	(400		)
Balance, at end of year	$	18,897		$	19,353		$	7,797

The Company has recorded income tax expense at U.S. tax rates on all profits, except for undistributed profits of non-U.S. subsidiaries of approximately $229.4 million, which are considered indefinitely reinvested. Determination of the amount of unrecognized deferred tax liability related to the indefinitely reinvested profits is not feasible. A deferred tax asset is recognized only if the Company has definite plans to generate a U.S. tax benefit by repatriating earnings in the foreseeable future. As part of the February 2016 acquisition of Underground Solutions, the Company repatriated approximately $30.4 million from foreign subsidiaries to assist in funding the transaction, incurring approximately $3.5 million in additional taxes, which were accrued as of December 31, 2015. These were viewed as one-time, special-use transactions. With few exceptions, U.S. income taxes, net of applicable foreign tax credits, have not been provided on undistributed earnings of international subsidiaries. It is the Company’s intention to permanently reinvest these earnings.

FASB ASC 740, Income Taxes (“FASB ASC 740”), prescribes a more-likely-than-not threshold for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FASC ASC 740 also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods and disclosure of uncertain tax positions in financial statements.

A reconciliation of the beginning and ending balance of unrecognized tax benefits is as follows (in thousands):



	Years Ended December 31,
	2015			2014			2013
Balance at January 1,	$	2,672		$	2,936		$	3,170
Additions for tax positions of prior years	10			36			30
Lapse in statute of limitations	(218		)	(252		)	(236		)
Foreign currency translation	(54		)	(48		)	(28		)
Balance at December 31, total tax provision	$	2,410		$	2,672		$	2,936

The total amount of unrecognized tax benefits, if recognized, that would affect the effective tax rate was $0.5 million at December 31, 2015.

The Company recognizes interest and penalties, if any, related to unrecognized tax benefits in income tax expense. During the years ended December 31, 2015, 2014 and 2013, approximately $0.3 million was accrued for interest in all periods.

The Company believes that it is reasonably possible that the total amount of unrecognized tax benefits will change in 2016. The Company has certain tax return years subject to statutes of limitation that will expire within twelve months. Unless challenged by tax authorities, the expiration of those statutes of limitation is expected to result in the recognition of uncertain tax positions in the amount of approximately $0.2 million.

The Company is subject to taxation in the United States, various states and foreign jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal, state, local or foreign examinations by tax authorities for years before 2010.