Income taxes (Tables)

12 Months Ended

Dec. 31, 2019

The components of income before income taxes are as follows:

The provision for income taxes charged to operations is as follows:



(In thousands)	Years Ended December 31,
	2019			2018			2017
Current tax expense:
U.S. federal	$	18,212		$	15,898		$	91,043
State	2,705			2,963			348
Foreign	10,156			14,273			9,352
Total current	$	31,073		$	33,134		$	100,743
Deferred tax benefit:
U.S. federal	$	(9,168	)	$	(10,724	)	$	(4,796	)
State	(1,218		)	1,134			(151		)
Foreign	(3,045		)	(2,148		)	(827		)
Total deferred	$	(13,431	)	$	(11,738	)	$	(5,774	)
Change in valuation allowance	751			—			—
Total provision	$	18,393		$	21,396		$	94,969

Deferred tax liabilities (assets) at December 31, 2019 and 2018 were as follows:



(In thousands)	December 31,
	2019			2018
Capitalized software	$	12,202		$	16,756
Depreciation and amortization	11,756			12,964
Intangible assets	13,490			13,492
Right of use asset	9,833			—
Unrealized gain on derivative instruments	1,176			1,871
Undistributed earnings of foreign subsidiaries	3,482			3,449
Gross deferred tax liabilities	51,939			48,532
Operating loss carryforwards	(87,074		)	(83,013		)
Vacation and other accruals	(4,979		)	(5,391		)
Inventory valuation and warranty provisions	(2,317		)	(2,576		)
Doubtful accounts and sales provisions	(860		)	(890		)
Unrealized exchange loss	(1,052		)	(1,735		)
Deferred revenue	(7,708		)	(8,199		)
Operating lease liabilities	(10,426		)	—
Accrued expenses	(262		)	(848		)
Global intangible low-taxed income	(3,444		)	(4,339		)
Stock-based compensation	(5,809		)	(5,216		)
Research and development tax credit carryforward	—			(258		)
Capital loss carryforward	—			(250		)
Foreign tax credit carryforward	(674		)	(42		)
Outside basis difference on asset held for sale	(10,762		)	—
Cumulative translation adjustment on undistributed earnings	(985		)	(912		)
Other	(2,072		)	(1,776		)
Gross deferred tax assets	(138,424		)	(115,445		)
Valuation allowance	85,516			79,624
Net deferred tax liability	$	(969	)	$	12,711

A reconciliation of income taxes at the U.S. federal statutory income tax rate to our effective tax rate follows:



	Years Ended December 31,
	2019		2018		2017
U.S. federal statutory rate	21	%	21	%	35	%
Foreign taxes greater (less) than federal statutory rate	—		(4	)	(12	)
Outside basis difference on asset held for sale	(6	)	—		—
Research and development tax credits	(3	)	(2	)	(3	)
Enhanced deduction for certain research and development expenses	(3	)	(4	)	(3	)
State income taxes, net of federal tax benefit	—		2		—
Nondeductible officer compensation	1		—		—
Change in intercompany prepaid tax asset	—		(1	)	(2	)
Foreign-derived intangible income deduction	(3	)	(1	)	—
Global intangible low-taxed income inclusion ("GILTI")	1		2		—
Amortization of intangible assets	—		—		1
Remeasurement of U.S. deferred tax balance	—		—		(10	)
Transition tax on deferred foreign income	1		1		54
Global intangible low-taxed income deferred	—		(2	)	—
Foreign tax on undistributed foreign earnings	—		(1	)	3
Other	1		1		1
Effective tax rate	10	%	12	%	64	%

A reconciliation of the beginning and ending amount of unrecognized tax benefit is as follows:

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(In thousands)	December 31, 2019			December 31, 2018
Balance at beginning of period	$	9,775		$	10,158
Additions based on tax positions related to the current year	776			1,486
Reductions for tax positions of prior years	—			(1,208		)
Additions for tax positions of prior years	390			1,207
Reductions as a result of settlement with taxing authorities	(725		)	—
Reductions as a result of the closing of open tax periods	(3,564		)	(1,868		)
Balance at end of period	$	6,652		$	9,775