Note 7. Income Taxes

The income tax provision represents the Company’s federal and state income tax obligations as well as foreign tax provisions. The Company’s income tax provision was $8.5 million and $6.3 million for the three months ended June 30, 2016 and 2015, respectively. The estimated annual effective income tax rate is based upon estimated income before income taxes for the year, the geographical composition of the estimated income before taxes and estimated permanent differences. The estimated annual effective income tax rate can fluctuate and may differ from the actual tax rate recognized in fiscal 2017 for various reasons, including estimates of income before taxes, tax legislation, permanent differences, discrete items, and any adjustments between tax provision calculations and filed tax returns.

The significant differences between the statutory tax rate and effective tax rate for the three months ended June 30, 2016 and 2015 were as follows:

	For the Three Months Ended June 30,
		2016			2015
Statutory income tax rate		35.0		%	35.0		%
Increase (decrease) resulting from:
Credits		(1.3	)		(1.6	)
State taxes, net		3.4			3.4
Permanent differences		2.7			3.9
Other		(0.1	)		0.8
Effective tax rate		39.7		%	41.5		%

The Company and its subsidiaries are subject to U.S. federal income tax, as well as income tax in multiple states and other countries, including Germany. All tax years remain subject to examination by the Internal Revenue Service and state and foreign tax authorities. The Company has net operating loss and tax credit carryforwards which may be utilized in future years to offset taxable income, and those years may also be subject to review by relevant taxing authorities if the carryforwards are utilized. Fiscal years 2012 through 2016 remain open to examination in Germany.