Income Taxes

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



	2015			2014			2013
Current:
Federal	$	82,532		$	101,857		$	85,173
State	18,022			20,123			15,845
International	85,310			88,707			81,052
	185,864			210,687			182,070
Deferred:
Federal	12,127			(1,097		)	22,973
State	(1,828		)	(2,071		)	2,438
International	(4,466		)	(22,576		)	(25,138		)
	5,833			(25,744		)	273
	$	191,697		$	184,943		$	182,343

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:



	2015			2014			2013
United States	$	281,579		$	317,400		$	326,990
International	410,604			365,933			255,229
Income before income taxes	$	692,183		$	683,333		$	582,219

Provision at statutory tax rate	$	242,264		$	239,166		$	203,777
State taxes, net of federal benefit	10,526			11,734			11,885
International effective tax rate differential	(56,132		)	(56,865		)	(22,059		)
Change in valuation allowance	(205		)	(7,803		)	(8,253		)
Other non-deductible expenses	3,530			4,040			2,840
Changes in tax accruals	(7,423		)	1,335			(1,336		)
Other	(863		)	(6,664		)	(4,511		)
Provision for income taxes	$	191,697		$	184,943		$	182,343

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, 2015, the company had a liability for unrecognized tax benefits of $36,935 (substantially all of which, if recognized, would favorably affect the company's effective tax rate), of which approximately $525 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:



	2015			2014			2013
Balance at beginning of year	$	44,701		$	45,987		$	46,980
Additions based on tax positions taken during a prior period	2,568			3,792			22,170
Reductions based on tax positions taken during a prior period	(9,482		)	(7,737		)	(3,684		)
Additions based on tax positions taken during the current period	8,440			5,518			7,593
Reductions related to settlement of tax matters	(4,143		)	(317		)	(24,450		)
Reductions related to a lapse of applicable statute of limitations	(5,149		)	(2,542		)	(2,622		)
Balance at end of year	$	36,935		$	44,701		$	45,987

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 2015, 2014, and 2013 the company recognized $(3,247), $1,570, and $267, respectively, of interest expense related to unrecognized tax benefits. At December 31, 2015 and 2014, the company had a liability for the payment of interest of $8,878 and $12,173, 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, 2015:



United States - Federal		2012 - present
United States - States		2008 - present
Germany (a)		2010 - present
Hong Kong		2009 - present
Italy (a)		2008 - present
Sweden		2010 - present
United Kingdom		2013 - 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:



	2015			2014
Deferred tax assets:
Net operating loss carryforwards	$	102,005		$	113,414
Inventory adjustments	48,467			42,635
Allowance for doubtful accounts	13,371			16,055
Accrued expenses	43,044			44,369
Interest carryforward	26,051			34,558
Stock-based compensation awards	26,911			22,819
Other comprehensive income items	16,232			19,885
Integration and restructuring	4,117			2,737
Other	7,892			—
	288,090			296,472
Valuation allowance	(8,149		)	(8,353		)
Total deferred tax assets	$	279,941		$	288,119

Deferred tax liabilities:
Goodwill	$	(113,788	)	$	(81,716	)
Depreciation	(83,291		)	(78,151		)
Intangible assets	(31,481		)	(30,372		)
Other	—			(1,654		)
Total deferred tax liabilities	$	(228,560	)	$	(191,893	)
Total net deferred tax assets	$	51,381		$	96,226

At December 31, 2015, the company had international tax loss carryforwards of approximately $282,026, of which $8,089 have expiration dates ranging from 2016 to 2034, and the remaining $273,937 have no expiration date. Deferred tax assets related to these international tax loss carryforwards were $85,637 with a corresponding valuation allowance of $3,697.

The company also has Federal net operating loss carryforwards of approximately $38,643 at December 31, 2015 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 $3,286,018 at December 31, 2015. 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 $182,668, $223,909, and $235,102 in 2015, 2014, and 2013, respectively.