Income Taxes

The provision for income taxes from operations consisted of the following:



	Years Ended December 31,
(in thousands)	2015			2014			2013
Current
Federal	$	29,684		$	25,178		$	19,804
State	5,001			4,391			3,243
Foreign	3,568			4,041			3,926
Deferred
Federal	2,390			2,264			3,646
State	753			142			404
Foreign	(605		)	(225		)	(430		)
	$	40,791		$	35,791		$	30,593

Income and loss from operations before income taxes for the years ended December 31, 2015, 2014, and 2013, consisted of the following:



	Years Ended December 31,
(in thousands)	2015		2014		2013
Domestic	$	106,381	$	90,142	$	74,912
Foreign	2,298		9,180		6,652
	$	108,679	$	99,322	$	81,564

Reconciliations between the statutory federal income tax rates and the Company’s effective income tax rates as a percentage of income before income taxes for its operations were as follows:



	Years Ended December 31,
(in thousands)	2015		2014		2013
Federal tax rate	35.0	%	35.0	%	35.0	%
State taxes, net of federal benefit	3.3	%	3.0	%	3.0	%
Tax benefit of domestic manufacturing deduction	(2.3	)%	(2.4	)%	(2.2	)%
Change in valuation allowance	1.3	%	1.5	%	1.3	%
Difference between United States statutory and foreign local tax rates	0.2	%	(0.4	)%	0.1	%
Change in uncertain tax position	0.3	%	(0.8	)%	(0.4	)%
Other	(0.3	)%	0.1	%	0.7	%
Effective income tax rate	37.5	%	36.0	%	37.5	%

The tax effects of the significant temporary differences that constitute the deferred tax assets and liabilities at December 31, 2015 and 2014, respectively, were as follows:



	December 31,
(in thousands)	2015			2014
Current deferred tax assets (liabilities)
State tax	$	1,762		$	1,685
Workers’ compensation	1,777			1,586
Health claims	746			651
Vacation liability	1,410			1,211
Allowance for doubtful accounts	205			156
Inventories	6,112			5,685
Sales incentive and advertising allowances	963			757
Stock-based compensation	3,422			3,197
Unrealized foreign exchange gain or loss	247			102
Other, net	(441		)	(368		)
	$	16,203		$	14,662
Long-term deferred tax assets (liabilities)
Depreciation	$	(5,265	)	$	(3,913	)
Goodwill and other intangibles amortization	(11,835		)	(10,512		)
Stock-based compensation	2,207			3,315
Accrued pension liabilities	—			1,276
Foreign tax credit carryforwards	1,345			—
Uncertain tax positions’ unrecognized tax benefits	134			623
Non-United States tax loss carry forward	7,082			6,506
Tax effect on cumulative translation adjustment	(711		)	(789		)
Other	588			796
	(6,455		)	(2,698		)
Less valuation allowances	(7,576		)	(6,754		)
	$	(14,031	)	$	(9,452	)

The total deferred tax assets as of December 31, 2015 and 2014, were $22.6 million and $22.0 million, respectively. The total deferred tax liabilities as of December 31, 2015 and 2014, were $20.5 million and $16.8 million, respectively.

At December 31, 2015, the Company had $31.1 million of pre-tax loss carryforwards in various non-United States taxing jurisdictions, which includes approximately $5.9 million that were generated by the Company’s Beijing and Thailand subsidiaries that are in the process of liquidating. Tax loss carryforwards of $0.7 million, $1.6 million, $1.4 million, $2.3 million and $1.7 million will expire in 2016, 2017, 2018, 2019 and 2020, respectively, if not used. The remaining tax losses can be carried forward indefinitely.

At December 31, 2015, and 2014, the Company had deferred tax valuation allowances of $7.6 million and $6.8 million, respectively. The valuation allowance increased $0.8 million and $1.3 million for the years ended December 31, 2015 and 2014, respectively.

The Company does not provide for federal income taxes on the undistributed earnings of its international subsidiaries because such earnings are reinvested and, in the Company’s opinion, will continue to be reinvested indefinitely. At December 31, 2015, 2014 and 2013, the Company had not provided for federal income taxes on undistributed earnings of $51.6 million, $45.6 million and $34.8 million, respectively, from its international subsidiaries. Should these earnings be distributed in the form of dividends or otherwise, the Company would be subject to both United States income taxes and withholding taxes in various international jurisdictions. These taxes may be partially offset by United States foreign tax credits. Determination of the related amount of unrecognized deferred United States income taxes is not practicable because of the complexities associated with this hypothetical calculation. United States federal income taxes are provided on the earnings of the Company’s foreign branches, which are included in the United States federal income tax return.

A reconciliation of the beginning and ending amounts of unrecognized tax benefits in 2015, 2014 and 2013, respectively, was as follows, including foreign translation amounts:



Reconciliation of Unrecognized Tax Benefits	2015			2014			2013
Balance at January 1	$	1,307		$	3,456		$	3,843
Additions based on tax positions related to prior years	310			7			297
Reductions based on tax positions related to prior years	(514		)	(1,146		)	(494		)
Additions for tax positions of the current year	191			165			837
Settlements	—			(680		)	(435		)
Lapse of statute of limitations	(187		)	(495		)	(592		)
Balance at December 31	$	1,107		$	1,307		$	3,456

Included in the balance of unrecognized tax benefits at December 31, 2015, 2014 and 2013, are tax positions of $0.2 million, $0.0 million and $0.7 million, respectively, which, if recognized, would reduce the effective tax rate.

The Company recognizes accrued interest and penalties related to unrecognized tax benefits in income tax expense, which is a continuation of the Company’s historical accounting policy. During the years ended December 31, 2015, 2014 and 2013, accrued interest decreased by $30 thousand, $0.2 million and $0.3 million, respectively, as a result of the reversal of accrued interest associated with the lapses of statutes of limitations. The Company had accrued $0.2 million both at December 31, 2015 and 2014, and $0.4 million at December 31, 2013, for the potential payment of interest, before income tax benefits.

At December 31, 2015, the Company remained subject to United States federal income tax examinations for the tax years 2012 through 2015. In addition, the Company remained subject to state, local and foreign income tax examinations primarily for the tax years 2010 through 2015.