Income Taxes

The following table summarizes our distribution between domestic and foreign earnings (loss) before income taxes and the provision (benefit) for income taxes (in thousands):



	Fiscal 2016			Fiscal 2015			Fiscal 2014
Earnings from continuing operations before income taxes:
Domestic	$	84,843		$	96,512		$	94,607
Foreign	1,620			(1,456		)	(5,024		)
Earnings from continuing operations before income taxes	$	86,463		$	95,056		$	89,583

Income taxes:
Current:
Federal	$	19,704		$	33,205		$	33,552
State	4,475			4,789			4,865
Foreign	599			138			516
	24,778			38,132			38,933
Deferred—primarily Federal	8,108			(1,508		)	(3,071		)
Deferred—Foreign	(922		)	(105		)	(76		)
Income taxes	$	31,964		$	36,519		$	35,786

Reconciliations of the United States federal statutory income tax rates and our effective tax rates are summarized as follows:



	Fiscal 2016		Fiscal 2015		Fiscal 2014
Statutory tax rate	35.0	%	35.0	%	35.0	%
State income taxes—net of federal income tax benefit	3.8	%	3.3	%	3.0	%
Impact of foreign operations rate differential (1)	(0.4	)%	0.6	%	1.1	%
Valuation allowance against foreign losses and other carry-forwards (2)	(0.6	)%	0.3	%	0.8	%
Other, net	(0.8	)%	(0.8	)%	—	%
Effective tax rate for continuing operations	37.0	%	38.4	%	39.9	%

(1) Impact of foreign operations rate differential primarily reflects the rate differential between the United States and the respective foreign jurisdictions for any foreign income or losses, and the impact of any permanent differences.

(2) Valuation allowance against foreign losses and other carry-forwards primarily reflects the valuation allowance recorded due to our inability to recognize an income tax benefit related to certain operating loss carry-forwards and deferred tax assets during the period. The benefit in Fiscal 2016 was due to the utilization of certain operating loss carryforward benefits against current year earnings and changes in our assessment of the likelihood of recognition of certain foreign operating loss carryforwards.

Deferred tax assets and liabilities included in our consolidated balance sheets are comprised of the following (in thousands):



	January 28, 2017			January 30, 2016
Deferred Tax Assets:
Inventories	$	14,886		$	16,610
Accrued compensation and benefits	11,817			14,287
Receivable allowances and reserves	2,561			2,601
Deferred rent and lease obligations	6,671			5,981
Operating loss and other carry-forwards	3,691			3,455
Other, net	3,960			2,559
Deferred tax assets	43,586			45,493
Deferred Tax Liabilities:
Depreciation and amortization	(5,360		)	(2,689		)
Acquired intangible assets	(46,524		)	(41,683		)
Deferred tax liabilities	(51,884		)	(44,372		)
Valuation allowance	(4,115		)	(4,553		)
Net deferred tax liability	$	(12,413	)	$	(3,432	)

As of January 28, 2017 and January 30, 2016 our operating loss and other carry-forwards primarily relate to our operations in Canada, Hong Kong and Japan, as well as certain states. The majority of these operating loss carry-forwards allow for carry-forward of at least 15 years. Substantially all of our valuation allowance of $4.1 million and $4.6 million as of January 28, 2017 and January 30, 2016, respectively, relates to the foreign and state operating loss carry-forwards and deferred tax assets in those jurisdictions. The recent history of operating losses in certain jurisdictions is considered significant negative evidence against the realizability of these tax benefits. The amount of the valuation allowance considered necessary, however, could change in the future if our operating results or estimates of future taxable operating results changes, particularly if, in future years, objective evidence in the form of cumulative losses is no longer present in certain jurisdictions. Alternatively, if we generate operating losses in future periods in certain jurisdictions, we may determine it is necessary to increase valuation allowances for certain deferred tax assets.

No deferred tax liabilities related to our original investments in our foreign subsidiaries and foreign earnings, if any, were recorded at either balance sheet date, as substantially all our original investments and earnings related to our foreign subsidiaries are considered permanently reinvested outside of the United States. Further, because the financial basis in each foreign entity does not exceed the tax basis by an amount exceeding undistributed earnings, no additional United States tax would be due if the original investment were to be repatriated in the future. As of January 28, 2017 and January 30, 2016, we had undistributed earnings of foreign subsidiaries of $4.4 million and $4.7 million, respectively, which were considered permanently reinvested. These undistributed earnings could become subject to United States taxes if they are remitted as dividends or as a result of certain other types of intercompany transactions, but the amount of taxes payable upon remittance would not be significant after considering any foreign tax credits.

Accounting for income taxes requires that we offset all deferred tax liabilities and assets within each particular tax jurisdiction and present them as a single amount in our consolidated balance sheets, with all net deferred tax assets or deferred tax liabilities by jurisdiction recognized as non-current deferred tax assets or deferred tax liabilities in our consolidated balance sheets. The amounts of deferred income taxes included in the following line items in our consolidated balance sheets are as follows (in thousands):



	January 28, 2017			January 30, 2016
Assets:
Deferred tax assets	$	1,165		$	225
Liabilities:
Deferred tax liabilities	(13,578		)	(3,657		)
Net deferred tax liability	$	(12,413	)	$	(3,432	)