INCOME TAXES

For the fiscal year ended August 1, 2015, income before income taxes consists of $227.4 million from U.S. operations and $2.4 million from foreign operations. For the fiscal year ended August 2, 2014, income before income taxes consists of $201.1 million from U.S. operations and $6.3 million from foreign operations. For the fiscal year ended August 3, 2013, income before income taxes consists of $166.7 million from U.S. operations and $7.4 million from foreign operations.

Total federal and state income tax (benefit) expense consists of the following:



	Current		Deferred			Total
	(In thousands)
Fiscal year ended August 1, 2015
U.S. Federal	$	60,848	$	13,209		$	74,057
State & Local	14,119		2,098			$	16,217
Foreign	729		32			$	761
	$	75,696	$	15,339		$	91,035
Fiscal year ended August 2, 2014
U.S. Federal	$	66,953	$	(894	)	$	66,059
State & Local	12,660		1,452			14,112
Foreign	1,432		323			1,755
	$	81,045	$	881		$	81,926
Fiscal year ended August 3, 2013
U.S. Federal	$	44,095	$	7,029		$	51,124
State & Local	13,366		(364		)	13,002
Foreign	2,021		115			2,136
	$	59,482	$	6,780		$	66,262

Total income tax expense (benefit) was different than the amounts computed using the United States statutory income tax rate of 35% applied to income before income taxes as a result of the following:



	Fiscal year ended
	August 1, 2015			August 2, 2014			August 3, 2013
	(In thousands)
Computed "expected" tax expense	$	80,419		$	72,593		$	60,940
State and local income tax, net of Federal income tax benefit	10,547			9,135			7,501
Non-deductible expenses	1,551			1,333			1,516
Tax effect of share-based compensation	165			160			134
General business credits	(365		)	(114		)	(1,374		)
Other, net	(1,282		)	(1,181		)	(2,455		)
Total income tax expense	$	91,035		$	81,926		$	66,262

Total income tax expense (benefit) for the years ended August 1, 2015, August 2, 2014 and August 3, 2013 was allocated as follows:



	August 1, 2015			August 2, 2014			August 3, 2013
	(In thousands)
Income tax expense	$	91,035		$	81,926		$	66,262
Stockholders' equity, difference between compensation expense for tax purposes and amounts recognized for financial statement purposes	(2,746		)	(2,601		)	(1,952		)
Other comprehensive income	(293		)	—			—
	$	87,996		$	79,325		$	64,310

The tax effects of temporary differences that give rise to significant portions of the net deferred tax assets and deferred tax liabilities at August 1, 2015 and August 2, 2014 are presented below:



	2015			2014
	(In thousands)
Deferred tax assets:
Inventories, principally due to additional costs inventoried for tax purposes	$	9,034		$	7,532
Compensation and benefits related	23,651			24,129
Accounts receivable, principally due to allowances for uncollectible accounts	3,279			3,000
Accrued expenses	9,077			10,438
Net operating loss carryforwards	1,177			1,295
Other deferred tax assets	313			21
Total gross deferred tax assets	46,531			46,415
Less valuation allowance	—			—
Net deferred tax assets	$	46,531		$	46,415
Deferred tax liabilities:
Plant and equipment, principally due to differences in depreciation	$	47,872		$	36,494
Intangible assets	31,955			28,124
Other	15			274
Total deferred tax liabilities	79,842			64,892
Net deferred tax liabilities	$	(33,311	)	$	(18,477	)
Current deferred income tax assets	$	32,333		$	32,518
Non-current deferred income tax liabilities	(65,644		)	(50,995		)
	$	(33,311	)	$	(18,477	)

In assessing the need to establish a valuation reserve for the recoverability of deferred tax assets, the Company considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The Company considers relevant evidence, both positive and negative, to determine the need for a valuation allowance. Information evaluated includes the Company's financial position and results of operations for the current and preceding years, the availability of deferred tax liabilities and tax carrybacks, as well as an evaluation of currently available information about future years. As of August 1, 2015, the Company has sufficient taxable income in the federal carryback period and anticipates sufficient future taxable income over the periods in which the deferred tax assets are deductible. The Company also has the availability of future reversals of taxable temporary differences that are expected to generate taxable income in the future. Therefore, the ultimate realization of deferred tax assets for federal and state tax purposes appears more likely than not at August 1, 2015 and correspondingly no valuation allowance has been established.

At August 1, 2015, the Company had net operating loss carryforwards of approximately $3.3 million for federal income tax purposes. The federal carryforwards are subject to an annual limitation of approximately $0.3 million under Internal Revenue Code Section 382. The carryforwards expire at various times between fiscal years 2017 and 2027.

The Company and its subsidiaries file income tax returns in the United States federal jurisdiction and in various state jurisdictions. UNFI Canada files income tax returns in Canada and certain of its provinces. U.S. federal income tax examination years prior to 2012 have either statutorily or administratively been closed with the Internal Revenue Service, and with limited exception, the fiscal tax years that remain subject to examination by state jurisdictions range from the Company's fiscal 2011 to fiscal 2014.

The Company records interest and penalties related to unrecognized tax benefits as a component of income tax expense. For the fiscal year ended August 1, 2015, the Company recognized net tax benefits of approximately $0.5 million in its consolidated statement of income. For the fiscal year ended August 2, 2014, the Company recognized net tax benefits of $0.3 million in its consolidated statement of income related to tax examinations closed during the fiscal year. For the fiscal year ended August 3, 2013, the Company recognized net tax benefits of $4.4 million in its consolidated statement of income related to tax examinations closed during the fiscal year.

The undistributed earnings of the Company's non-U.S. subsidiaries approximated $16.1 million at August 1, 2015. We consider the undistributed earnings to be indefinitely reinvested; therefore, we have not provided a deferred tax liability for any residual U.S. tax that may be due upon repatriation of these earnings. Because of the effect of U.S. foreign tax credits, it is not practicable to estimate the amount of tax that might be payable on these earnings in the event they no longer are indefinitely reinvested.