TAXES

The sources of the Company’s earnings before taxes were as follows for the years ended December 31:



	2014		2013		2012
United States	$	33,157	$	18,119	$	32,296
Non-United States	411,847		384,590		350,305
Earnings before taxes	$	445,004	$	402,709	$	382,601

The provisions for taxes consist of:



	Current		Deferred			Total
Year ended December 31, 2014:
United States federal	$	—	$	5,676		$	5,676
State and local	1,372		527			1,899
Non-United States	92,358		6,830			99,188
Total	$	93,730	$	13,033		$	106,763
Year ended December 31, 2013:
United States federal	$	—	$	8,249		$	8,249
State and local	1,459		965			2,424
Non-United States	86,340		(398		)	85,942
Total	$	87,799	$	8,816		$	96,615
Year ended December 31, 2012:
United States federal	$	—	$	12,341		$	12,341
State and local	1,372		87			1,459
Non-United States	84,962		(7,008		)	77,954
Total	$	86,334	$	5,420		$	91,754

The provisions for tax expense for the years ended December 31, 2014, 2013, and 2012 differed from the amounts computed by applying the United States federal income tax rate of 35% to the earnings before taxes as a result of the following:



	2014			2013			2012
Expected tax	$	155,751		$	140,948		$	133,910
United States state and local income taxes, net of federal income tax benefit	1,899			1,167			1,459
Change in valuation allowance	(172		)	1,178			—
Non-United States income taxes at other than a 35% rate	(51,360		)	(50,041		)	(44,288		)
Other, net	645			3,363			673
Total provision for taxes	$	106,763		$	96,615		$	91,754

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are presented below at December 31, 2014:



	2014			2013
Deferred tax assets:
Inventory	$	27,164		$	23,957
Accrued and other liabilities	84,521			74,755
Accrued post-retirement benefit and pension costs	68,709			48,296
Net operating loss and tax credit carryforwards	45,806			43,939
Other	9,044			12,832
Total deferred tax assets	235,244			203,779
Less valuation allowance	(36,263		)	(31,697		)
Total deferred tax assets less valuation allowance	198,981			172,082
Deferred tax liabilities:
Inventory	3,918			4,155
Property, plant, and equipment	47,547			51,763
Rainin intangibles amortization	65,409			59,889
Prepaid post-retirement benefit and pension costs	51,391			44,049
International earnings	13,506			10,838
Total deferred tax liabilities	181,771			170,694
Net deferred tax (liability) asset	$	17,210		$	1,388

A reconciliation of the beginning and end amounts of unrecognized tax benefits is as follows:



	2014			2013
Unrecognized tax benefits at beginning of year	$	18,848		$	17,780
Increases related to current tax positions	990			2,024
Increases related to prior year tax positions	1,944			1,137
Decreases related to prior year tax positions	—			(362		)
Foreign currency translation (decreases) increases to prior year tax positions	(926		)	101
Decreases relating to taxing authority settlements	(1,886		)	(393		)
Decreases resulting from a lapse of the applicable statute of limitations	(2,106		)	(1,439		)
Unrecognized tax benefits at end of year	$	16,864		$	18,848

Included in the balance of unrecognized tax benefits at December 31, 2014 and 2013 were $13.6 million and $15.5 million, respectively, of tax benefits that if recognized would reduce the Company’s effective tax rate. The Company recognizes accrued amounts of interest and penalties related to its uncertain tax positions as part of its income tax expense within its consolidated statement of operations. The amount of accrued interest and penalties included within other non-current liabilities within the Company’s consolidated balance sheet as of both December 31, 2014 and 2013 was $1.6 million.

The Company believes that it is reasonably possible that the unrecognized tax benefit balance could change over the next twelve months, primarily related to potential disputes raised by the taxing authorities over income and expense recognition. The Company does not expect a change would have a material impact on its financial position, results of operations, or cash flows.

The Company has recorded valuation allowances related to certain of its deferred income tax assets due to the uncertainty of the ultimate realization of future benefits from such assets. The potential decrease or increase of the valuation allowance in the near term is dependent on the future ability of the Company to realize the deferred tax assets that are affected by the future profitability of operations in various worldwide jurisdictions. The $4.6 million and $8.5 million increases in the total valuation allowance during 2014 and 2013, respectively, are primarily attributable to changes in the foreign tax credit carryforward and foreign currency fluctuation.

The deferred tax assets and valuation allowance as of December 31, 2014 do not include certain deferred tax assets that arose directly from (or the use of which was postponed by) tax deductions related to equity compensation in excess of compensation expense recorded. Shareholders' equity will be increased by $51.8 million if and when such tax assets are ultimately realized.

At December 31, 2014, the Company has various U.S. state net operating losses and various foreign net operating losses that have various expiration periods.

The Company plans to repatriate earnings from China, Switzerland, Germany, the United Kingdom, and certain other countries in future years and believes that there will be no additional cost associated with the repatriation of such foreign earnings other than withholding taxes. All other undistributed earnings are considered to be permanently reinvested.

As of December 31, 2014, the major jurisdictions for which the Company is subject to examinations are Germany for years after 2011, the United States after 2011, France after 2010, Switzerland after 2010, the United Kingdom after 2012, and China after 2011. Additionally, the Company is currently under examination in various taxing jurisdictions in which it conducts business operations. While the Company has not yet received any material assessments from these taxing authorities, the Company believes that adequate amounts of taxes and related interest and penalties have been provided for any adverse adjustments as a result of these examinations and that the ultimate outcome of these examinations will not result in a material impact on the Company’s consolidated results of operations or financial position.