Income Taxes

9 Months Ended

Sep. 30, 2015

Note 7 – Income Taxes
Income tax expense consists of the following:
	Nine Months Ended
	September 30,
(in thousands)		2015		2014
Federal – Current	$	483	$	617
Foreign – Current		4,786		626
State – Current		296		454
Deferred		7,481		10,649
	$	13,046	$	12,346

Income tax expense differs from the amount computed by applying the U.S. federal statutory income tax rate to income before income tax primarily due to the mix of taxable income by taxing jurisdiction, the impact of tax incentives and tax holidays in foreign locations, and state income taxes (net of federal benefit).

The Company considers earnings from foreign subsidiaries to be indefinitely reinvested and, accordingly, no provision for U.S. federal and state income taxes has been made for these earnings. Upon distribution of foreign subsidiary earnings in the form of dividends or otherwise, such distributed earnings would be reportable for U.S. income tax purposes (subject to adjustment for foreign tax credits). Determination of the amount of any unrecognized deferred tax liability on these undistributed earnings is not practicable.

The Company has been granted certain tax incentives, including tax holidays, for its subsidiaries in China, Malaysia and Thailand that will expire at various dates, unless extended or otherwise renegotiated, through December 2015 in China, 2016 in Malaysia and 2026 in Thailand, and are subject to certain conditions with which the Company expects to comply. The net impact of these tax incentives was to lower income tax expense for the nine months ended September 30, 2015 and 2014 by approximately $7.1 million (approximately $0.13 per diluted share) and $10.0 million (approximately $0.18 per diluted share), respectively, as follows:

	Nine Months Ended
	September 30,
(in thousands)		2015		2014
China	$	1,573	$	2,321
Malaysia		1,565		1,731
Thailand		3,936		5,913
	$	7,074	$	9,965

As of September 30, 2015, the total amount of the reserve for uncertain tax benefits including interest and penalties was $17.2 million. The reserve is classified as a current or long-term liability in the condensed consolidated balance sheets based on the Company’s expectation of when the items will be settled. The amount of accrued potential interest and penalties, respectively, on unrecognized tax benefits included in the reserve as of September 30, 2015, was $1.7 million and $1.6 million. No material changes affected the reserve during the nine months ended September 30, 2015.

The Company and its subsidiaries in Brazil, China, Ireland, Luxembourg, Malaysia, Mexico, the Netherlands, Romania, Singapore, Thailand and the United States remain open to examination by the various local taxing authorities, in total or in part, for fiscal years 2004 to 2014. During the course of such examinations, disputes may occur as to matters of fact or law. Also, in most tax jurisdictions, the passage of time without examination will result in the expiration of applicable statutes of limitations thereby precluding examination of the tax period(s) for which such statute of limitation has expired. The Company believes that it has adequately provided for its tax liabilities.