Income Taxes

The provision for income taxes for the years ended December 31 consists of the following:



	2014			2013			2012
Current:
Federal	$	101,857		$	85,173		$	134,276
State	20,123			15,845			22,072
International	88,707			81,052			52,708
	210,687			182,070			209,056
Deferred:
Federal	(1,097		)	22,973			9,690
State	(2,071		)	2,438			2,572
International	(22,576		)	(25,138		)	(17,676		)
	(25,744		)	273			(5,414		)
	$	184,943		$	182,343		$	203,642

The principal causes of the difference between the U.S. federal statutory tax rate of 35% and effective income tax rates for the years ended December 31 are as follows:



	2014			2013			2012
United States	$	317,400		$	326,990		$	441,526
International	365,933			255,229			268,833
Income before income taxes	$	683,333		$	582,219		$	710,359

Provision at statutory tax rate	$	239,166		$	203,777		$	248,626
State taxes, net of federal benefit	11,734			11,885			16,019
International effective tax rate differential	(56,865		)	(22,059		)	(43,008		)
Change in valuation allowance	(7,803		)	(8,253		)	(6,266		)
Other non-deductible expenses	4,040			2,840			2,764
Changes in tax accruals	1,335			(1,336		)	(10,613		)
Other	(6,664		)	(4,511		)	(3,880		)
Provision for income taxes	$	184,943		$	182,343		$	203,642

During 2013, the company recorded an increase in the provision for income taxes, inclusive of penalties, of $20,809 ($.20 per share on both a basic and diluted basis) and interest expense of $1,623 ($1,236 net of related taxes or $.01 per share on both a basic and diluted basis) relating to the settlement of certain international tax matters.

At December 31, 2014, the company had a liability for unrecognized tax benefits of $44,701 (substantially all of which, if recognized, would favorably affect the company's effective tax rate), of which approximately $125 is expected to be paid over the next twelve months. The company does not believe there will be any other material changes in its unrecognized tax positions over the next twelve months.

A reconciliation of the beginning and ending amount of unrecognized tax benefits for the years ended December 31 is as follows:



	2014			2013			2012
Balance at beginning of year	$	45,987		$	46,980		$	63,498
Additions based on tax positions taken during a prior period	3,792			22,170			448
Reductions based on tax positions taken during a prior period	(7,737		)	(3,684		)	(11,824		)
Additions based on tax positions taken during the current period	5,518			7,593			8,014
Reductions related to settlement of tax matters	(317		)	(24,450		)	(8,288		)
Reductions related to a lapse of applicable statute of limitations	(2,542		)	(2,622		)	(4,868		)
Balance at end of year	$	44,701		$	45,987		$	46,980

Interest costs related to unrecognized tax benefits are classified as a component of "Interest and other financing expense, net" in the company's consolidated statements of operations. In 2014, 2013, and 2012 the company recognized $1,570, $267, and $18, respectively, of interest expense related to unrecognized tax benefits. At December 31, 2014 and 2013, the company had a liability for the payment of interest of $12,173 and $10,637, respectively, related to unrecognized tax benefits.

In many cases the company's uncertain tax positions are related to tax years that remain subject to examination by tax authorities. The following describes the open tax years, by major tax jurisdiction, as of December 31, 2014:



United States - Federal		2011 - present
United States - States		2008 - present
Germany (a)		2010 - present
Hong Kong		2008 - present
Italy (a)		2008 - present
Sweden		2008 - present
United Kingdom		2012 - present

(a) Includes federal as well as local jurisdictions.

Deferred income taxes are provided for the effects of temporary differences between the tax basis of an asset or liability and its reported amount in the consolidated balance sheets. These temporary differences result in taxable or deductible amounts in future years.

The significant components of the company's deferred tax assets and liabilities, included primarily in "Other current assets," "Other assets," "Accrued expenses," and "Other liabilities" in the company's consolidated balance sheets, consist of the following at December 31:



	2014			2013
Deferred tax assets:
Net operating loss carryforwards	$	113,414		$	112,584
Inventory adjustments	42,635			43,009
Allowance for doubtful accounts	16,055			16,513
Accrued expenses	56,178			52,664
Interest carryforward	34,558			44,917
Stock-based compensation awards	11,010			11,507
Other comprehensive income items	19,885			6,206
Other	1,083			1,470
	294,818			288,870
Valuation allowance	(8,353		)	(16,156		)
Total deferred tax assets	$	286,465		$	272,714

Deferred tax liabilities:
Goodwill	$	(81,716	)	$	(54,261	)
Depreciation	(78,151		)	(65,309		)
Intangible assets	(30,372		)	(66,919		)
Total deferred tax liabilities	$	(190,239	)	$	(186,489	)
Total net deferred tax assets	$	96,226		$	86,225

At December 31, 2014, the company had international tax loss carryforwards of approximately $346,852, of which $22,516 have expiration dates ranging from 2015 to 2033, and the remaining $324,336 have no expiration date. Deferred tax assets related to these international tax loss carryforwards were $93,318 with a corresponding valuation allowance of $3,858.

The company also has Federal net operating loss carryforwards of approximately $51,151 at December 31, 2014 which relate to acquired subsidiaries. These Federal net operating losses expire in various years beginning after 2020. The company has an agreement with the sellers of an acquired business to reimburse them for the company's utilization of certain Federal net operating loss carryforwards.

Valuation allowances reflect the deferred tax benefits that management is uncertain of the ability to utilize in the future.

Cumulative undistributed earnings of international subsidiaries were $2,947,255 at December 31, 2014. No deferred Federal income taxes were provided for the undistributed earnings as they are permanently reinvested in the company's international operations.

Income taxes paid, net of income taxes refunded, amounted to $223,909, $235,102, and $179,408 in 2014, 2013, and 2012, respectively.