Income Taxes

The components of the provision for income taxes from continuing operations are as follows:



Fiscal Years	2015		2014		2013
Current:
Federal	$	9,912	$	10,723	$	15,646
State and local	1,905		844		3,687
Foreign	3,751		5,283		5,653
	15,568		16,850		24,986
Deferred	18,638		16,880		3,660
Provision for income taxes from continuing operations	$	34,206	$	33,730	$	28,646

The following table reconciles the United States statutory income tax rate with our effective income tax rate from continuing operations:



Fiscal Years	2015		2014		2013
United States statutory rate	35.0	%	35.0	%	35.0	%
State taxes, net of federal tax benefit	2.8		3.0		3.7
Foreign earnings taxed at different rates	(0.3	)	—		(0.3	)
Change in uncertain tax position reserve	(1.0	)	—		(1.6	)
Permanent differences and other, net	(0.1	)	(0.4	)	(0.6	)
Effective income tax rate from continuing operations	36.4	%	37.6	%	36.2	%

The change in the uncertain tax position reserve in fiscal year 2015 was the result of the expiration of certain statutes and the resolution of a Canadian transfer pricing audit related to fiscal years 2005 to 2007, offset by reserve additions during the year. The change in uncertain tax position reserve in fiscal year 2013 was the result of the expiration of certain statutes and the favorable resolution of other tax matters, offset by reserve additions during the year.

The tax effects of temporary differences that give rise to deferred tax assets and liabilities are as follows:



Fiscal Years	2015			2014
Deferred tax liabilities:
Inventory	$	(47,888	)	$	(40,781	)
Depreciation	(12,899		)	(9,815		)
Intangibles	(57,146		)	(52,889		)
Derivative financial instruments	(2,630		)	(627		)
Other	(904		)	(2,606		)
Total deferred tax liabilities	(121,467		)	(106,718		)
Deferred tax assets:
Compensation and employees benefits	44,833			50,024
Accruals and reserves	10,859			7,618
Share-based payments	4,025			3,864
Net operating loss	1,693			7,156
Other	1,986			1,968
Gross deferred tax assets	63,396			70,630
Less valuation allowance	(1,209		)	(6,762		)
Total deferred tax assets	62,187			63,868
Net deferred tax liabilities	$	(59,280	)	$	(42,850	)

The deferred tax assets include $1,693 and $7,156 related to state net operating loss carry-forwards which expire between fiscal year 2016 and fiscal year 2035 at June 27, 2015 and June 28, 2014, respectively.

We recognize a valuation allowance if it is more likely than not that some portion, or all, of a deferred tax asset will not be realized. The valuation allowance of $1,209 at June 27, 2015 and $6,762 at June 28, 2014, respectively, relates to net operating loss and capital loss carry-forwards. In July 2013, the FASB issued updated guidance to address the presentation of an unrecognized tax benefit when a net operating loss carry-forward, a similar tax loss, or a tax credit carry-forward exists. Specifically, the new guidance requires entities to present an unrecognized tax benefit netted against certain deferred tax assets when specific requirements are met. The net operating loss and related valuation allowance were reduced by $4,392 upon adopting this guidance. Besides the reduction due to this adoption, the valuation allowance decreased by $1,161 during fiscal year 2015.

We have no foreign tax credit carry-forwards as of June 27, 2015.

We have not provided U.S. income taxes and foreign withholding taxes on undistributed earnings from our foreign subsidiaries of approximately $48,729 and $56,414 as of June 27, 2015 and June 28, 2014, respectively. These earnings are considered to be indefinitely reinvested in the operations of such subsidiaries. It is not practicable to estimate the amount of tax that may be payable upon distribution.

We recognize interest and penalties related to uncertain tax positions as a component of income tax expense. Net tax-related interest and penalties in fiscal year 2015 and 2014 were ($795) and $351, respectively, and were immaterial for fiscal year 2013. As of June 27, 2015 and June 28, 2014, we had $930 and $2,061, respectively, of accrued interest and penalties related to uncertain tax positions, of which $729 and $1,704 would favorably affect our effective tax rate in any future periods, if the positions are effectively settled in our favor.

We file income tax returns in the United States, Canada and multiple state jurisdictions. We have substantially concluded all U.S. Federal income tax examinations through fiscal year 2011 and all Canadian income tax examinations through fiscal year 2008. With few exceptions, we are no longer subject to state and local income tax examinations prior to fiscal year 2010.

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



Fiscal Years	2015			2014
Beginning balance	$	10,826		$	9,338
Tax positions related to current year:
Gross increase	1,487			1,196
Tax positions related to prior years:
Gross increase	208			1,090
Gross decrease	(547		)	(152		)
Settlements	(1,670		)	(114		)
Lapses in statutes of limitations	(1,465		)	(532		)
Ending balance	$	8,839		$	10,826

As of June 27, 2015 and June 28, 2014, the total amount of unrecognized tax benefits that would favorably affect the effective tax rate, if recognized was $821 and $2,340. We are not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next 12 months.