8. Income Taxes

The components of income before income taxes are as follows:


	Fiscal Year Ended January 31,
	2016		2015		2014
Domestic	$	323,906	$	328,479	$	375,793
Foreign		26,125		34,971		51,725

	$	350,031	$	363,450	$	427,518

The components of the provision for income tax expense/(benefit) are as follows:


	Fiscal Year Ended January 31,
	2016			2015			2014
Current:
Federal	$	84,274		$	109,978		$	139,848
State		21,391			19,665			20,530
Foreign		6,215			3,600			13,285

	$	111,880		$	133,243		$	173,663

Deferred:
Federal	$	13,985		$	(3,295	)	$	(15,171	)
State		(1,218	)		1,372			(6,225	)
Foreign		895			(298	)		(7,109	)

		13,662			(2,221	)		(28,505	)

	$	125,542		$	131,022		$	145,158

The following table reflects the differences between the statutory U.S. federal income tax rate and the Company’s effective tax rate:


	Fiscal Year Ended January 31,
	2016			2015			2014
Expected provision at statutory U.S. federal tax rate		35.0	%		35.0	%		35.0	%
State and local income taxes, net of federal tax benefit		3.7			3.7			2.2
Foreign taxes		(2.0	)		(2.4	)		(2.7	)
Federal rehabilitation tax credit		(1.9	)		0.0			(0.6	)
Other		1.1			(0.3	)		0.1

Effective tax rate		35.9	%		36.0	%		34.0	%

The significant components of deferred tax assets and liabilities as of January 31, 2016 and 2015 are as follows:


	January 31,
	2016			2015
Deferred tax liabilities:
Prepaid expense	$	(4,645	)	$	(3,732	)
Depreciation		(66,936	)		(51,774	)
Other temporary differences		(2,604	)		(1,728	)

Gross deferred tax liabilities		(74,185	)		(57,234	)

Deferred tax assets:
Deferred rent		72,253			70,023
Inventory		11,031			8,137
Accounts receivable		3,953			2,844
Net operating loss carryforwards		4,941			4,003
Tax uncertainties		2,972			3,363
Accrued salaries and benefits		27,660			31,747
Income tax credits		4,287			114
Other temporary differences		7,896			5,725

Gross deferred tax assets, before valuation allowances		134,993			125,956

Valuation allowances		(6,560	)		(45	)

Net deferred tax assets	$	54,248		$	68,677

Net deferred tax assets are attributed to the jurisdictions in which the Company operates. As of January 31, 2016 and 2015, respectively, $28,249 and $43,330 were attributable to U.S. federal, $17,391 and $16,097 were attributed to state jurisdictions and $8,608 and $9,250 were attributed to foreign jurisdictions.

As of January 31, 2016, certain non-U.S. subsidiaries of the Company had net operating loss carryforwards for tax purposes of approximately $244 that expire from 2017 through 2033 and approximately $19,735 that do not expire. Certain U.S. subsidiaries of the Company had state net operating loss and credit carryforwards for tax purposes of approximately $868 that expire from 2017 through 2027 and $6,524 that expire from 2017 to 2031. As of January 31, 2016, the Company had a full valuation allowance for certain foreign net operating loss carryforwards and a partial valuation allowance against state credit carryforwards where it was uncertain the carryforwards would be utilized. The Company had no valuation allowance for certain other foreign and state net operating loss carryforwards where management believes it is more-likely-than-not the tax benefit of these carryforwards will be realized. In November 2015, the FASB issued an accounting standards update that requires companies to classify all deferred tax assets and liabilities as noncurrent on the balance sheet rather than separating deferred taxes into current and noncurrent amounts. The Company elected to early adopt this update and prospectively applied the update to deferred tax assets and liabilities as of January 31, 2016. As of January 31, 2016 and 2015, the non-current portion of net deferred tax assets aggregated $54,248 and $49,922, respectively.

The cumulative amount of the Company’s share of undistributed earnings of non-U.S. subsidiaries for which no deferred taxes have been provided was $255,467 as of January 31, 2016. These earnings are deemed to be permanently re-invested to finance growth programs. It is not practical to estimate the income tax liability that might be incurred if such earnings were remitted to the United States.

A reconciliation of the beginning and ending balances of the total amounts of gross unrecognized tax benefits is as follows:


	January 31,
Tax Benefit Reconciliation	2016			2015			2014
Balance at the beginning of the period	$	6,889		$	4,835		$	7,895
Increases in tax positions for prior years		4,053			2,518			1,026
Decreases in tax positions for prior years		(891	)		(12	)		(305	)
Increases in tax positions for current year		274			352			521
Settlements		(1,590	)		(620	)		(3,190	)
Lapse in statute of limitations		(897	)		(184	)		(1,112	)

Balance at the end of the period	$	7,838		$	6,889		$	4,835

The total amount of net unrecognized tax benefits that, if recognized, would impact the Company’s effective tax rate were $5,698 and $4,952 as of January 31, 2016 and 2015, respectively. The Company accrues interest and penalties related to unrecognized tax benefits in income tax expense in the Consolidated Statements of Income, which is consistent with the recognition of these items in prior reporting periods. During the years ended January 31, 2016, 2015 and 2014, the Company recognized expense/(benefit) of ($686), $408 and ($1,922), respectively, related to interest and penalties. The Company accrued $800 and $1,486 for the payment of interest and penalties as of January 31, 2016 and 2015, respectively.

The Company files income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. Certain federal, foreign and state jurisdictions are subject to audit from fiscal 2006 to 2015. It is possible that a state or foreign examination may be resolved within twelve months. Due to the potential for resolution of federal and foreign audit and state examinations, and the expiration of various statutes of limitation, it is possible that the Company’s gross unrecognized tax benefits balance may change within the next twelve months by a range of zero to $1,103.