Income Taxes

The reconciliation of the provision for income taxes to the amount computed by applying the U.S. federal statutory tax rate to earnings before income taxes is as follows:



	2016			2015			2014
Earnings before income taxes:
Domestic	$	82,848		$	78,074		$	106,671
Foreign	90,012			105,760			112,252
Total	$	172,860		$	183,834		$	218,923
Federal statutory income tax rate	35.0		%	35.0		%	35.0		%
Increase (decrease) in income taxes resulting from:
Repatriated earnings	26.8		%	—			—
R&D and foreign tax credits	(30.6		)%	(2.7		)%	(1.2		)%
Foreign tax rates	(2.7		)%	(4.8		)%	(5.2		)%
Export and manufacturing incentives	(1.0		)%	(0.7		)%	(0.8		)%
Change in enacted tax rates	(0.9		)%	(0.3		)%	(0.5		)%
State taxes, net of federal benefit	0.5		%	0.8		%	1.0		%
Change in valuation allowance for deferred taxes	0.9		%	1.1		%	0.6		%
Other	0.5		%	(0.1		)%	(1.2		)%
Effective income tax rate	28.5		%	28.3		%	27.7		%

At October 1, 2016, foreign tax benefit carryforwards total $38,132. Domestic benefit carryforwards total $27,404, including $20,956 of state tax losses. We also have $3,779 of state tax credit carryforwards. Some of these tax benefit carryforwards do not expire and can be used to reduce current taxes otherwise due on future earnings of those subsidiaries. The change in the valuation allowance relates to tax benefit carryforwards reflecting recent and projected financial performance, tax planning strategies and statutory tax carryforward periods.

During 2016, we repatriated $90,937 of earnings from various foreign subsidiaries and the tax expense was completely offset by foreign tax credits.

No provision has been made for U.S. federal or foreign taxes on that portion of certain foreign subsidiaries’ undistributed earnings ($857,447 at October 1, 2016) considered to be permanently reinvested. It is not practicable to determine the amount of tax that would be payable if these amounts were repatriated to the U.S.

The components of income taxes are as follows:



	2016			2015		2014
Current:
Federal	$	12,812		$	12,065	$	25,325
Foreign	29,794			25,844		28,074
State	2,373			1,051		2,305
Total current	44,979			38,960		55,704
Deferred:
Federal	10,078			10,800		5,034
Foreign	(4,734		)	882		(1,148		)
State	(1,096		)	1,309		1,135
Total deferred	4,248			12,991		5,021
Income taxes	$	49,227		$	51,951	$	60,725

Realization of deferred tax assets is dependent, in part, upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers projected future taxable income and tax planning strategies in making its assessment of the recoverability of deferred tax assets.

The tax effects of temporary differences that generated deferred tax assets and liabilities are as follows:



	October 1, 2016			October 3, 2015
Deferred tax assets:
Benefit accruals	$	237,261		$	210,241
Inventory reserves	33,950			32,948
Tax benefit carryforwards	17,349			14,245
Contract loss reserves not currently deductible	10,931			9,049
Other accrued expenses	17,669			17,676
Total gross deferred tax assets	317,160			284,159
Less valuation allowance	(10,938		)	(9,583		)
Total net deferred tax assets	306,222			274,576
Deferred tax liabilities:
Differences in bases and depreciation of property, plant and equipment	163,977			162,661
Pension	77,471			70,273
Total gross deferred tax liabilities	241,448			232,934
Net deferred tax assets	$	64,774		$	41,642

Net deferred tax assets and liabilities are included in the balance sheet as follows:



	October 1, 2016			October 3, 2015
Current assets	$	92,903		$	91,210
Other assets	14,325			11,158
Other accrued liabilities	(283		)	(517		)
Long-term liabilities	(42,171		)	(60,209		)
Net deferred tax assets	$	64,774		$	41,642

We have unrecognized tax benefits which, if ultimately recognized, will reduce our annual effective tax rate. A reconciliation of the total amounts of unrecognized tax benefits, excluding interest and penalties, is as follows:



	October 1, 2016			October 3, 2015
Balance at beginning of year	$	1,184		$	1,793
Reductions as a result of lapse of statute of limitations	(686		)	(609		)
Balance at end of year	$	498		$	1,184

We are subject to income taxes in the U.S. and in various states and foreign jurisdictions. Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations and require the application of significant judgment. With few exceptions, we are no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities in significant jurisdictions for years before 2014. The statute of limitations in several jurisdictions will expire in the next twelve months and we will have $498 of unrecognized tax benefits recognized if the statute of limitations expires without the relevant taxing authority examining the applicable returns.

We record interest and penalties related to unrecognized tax benefits in income tax expense. We had accrued interest and penalties of $469 and $1,019 at October 1, 2016 and October 3, 2015, respectively. We expensed interest of $276 and $208 for 2016 and 2015, respectively.