Income Taxes

Income before income taxes consists of the following:



	Year Ended March 31,
	2016		2015		2014
(In thousands)
United States	$	142,253	$	122,588	$	98,786
Foreign	14,932		4,870		2,962
	$	157,185	$	127,458	$	101,748

The provision for income taxes consists of the following:



	Year Ended March 31,
(In thousands)	2016			2015			2014
Current
Federal	$	6,080		$	13,066		$	7,801
State	1,171			760			625
Foreign	3,905			3,228			1,675
Deferred
Federal	44,787			31,012			27,045
State	1,678			1,162			(7,879		)
Foreign	(343		)	(30		)	(134		)
Total provision for income taxes	$	57,278		$	49,198		$	29,133

The principal components of our deferred tax balances are as follows:



	March 31,
(In thousands)	2016			2015
Deferred Tax Assets
Allowance for doubtful accounts and sales returns	$	5,083		$	4,106
Inventory capitalization	1,838			1,550
Inventory reserves	1,367			1,495
Net operating loss carryforwards	12,350			23,800
State income taxes	10,293			7,557
Accrued liabilities	2,162			619
Stock compensation	4,411			3,517
Other	300			834
Total deferred tax assets	37,804			43,478

Deferred Tax Liabilities
Property and equipment	(833		)	(1,143		)
Intangible assets	(496,485		)	(385,807		)
Total deferred tax liabilities	(497,318		)	(386,950		)

Net deferred tax liability	$	(459,514	)	$	(343,472	)

At March 31, 2016, a 100% owned subsidiary of the Company had a net operating loss carryforward of approximately $32.0 million ($11.2 million, tax effected), which may be used to offset future taxable income of the consolidated group and begins to expire in 2025. The Company expects to fully utilize the loss carryover before it expires. The net operating loss carryforward is subject to an annual limitation as to usage under Internal Revenue Code Section 382 of approximately $33.0 million.

A reconciliation of the effective tax rate compared to the statutory U.S. Federal tax rate is as follows:



	Year Ended March 31,
	2016					2015					2014
(In thousands)				%					%					%
Income tax provision at statutory rate	$	55,015		35.0		$	44,610		35.0		$	35,612		35.0
Foreign tax benefit	(2,894		)	(1.8	)	(2,019		)	(1.6	)	(918		)	(0.9	)
State income taxes, net of federal income tax benefit	3,284			2.0		2,865			2.3		2,004			2.0
Decrease in net deferred tax liability resulting from a change in the effective state tax rate	—			—		—			—		(8,892		)	(8.7	)
Goodwill adjustment for sale of asset	—			—		206			0.2		—			—
Nondeductible transaction costs	1,071			0.7		2,936			2.3		—			—
Nondeductible compensation	758			0.5		566			0.4		1,011			1.0
Other	44			—		34			—		316			0.3
Total provision for income taxes	$	57,278		36.4		$	49,198		38.6		$	29,133		28.7

Uncertain tax liability activity is as follows:



	2016		2015			2014
(In thousands)
Balance – beginning of year	$	3,420	$	1,236		$	1,016
Additions based on tax positions related to the current year	664		2,229			360
Reductions based on lapse of statute of limitations	—		(45		)	(140		)
Balance – end of year	$	4,084	$	3,420		$	1,236

We recognize interest and penalties related to uncertain tax positions as a component of income tax expense. We did not incur any material interest or penalties related to income taxes in 2014, 2015 or 2016. The amount of unrecognized tax benefits at March 31, 2016, 2015, and 2014 was $4.1 million, $3.4 million, and $1.2 million, respectively, which would reduce the effective tax rate by 2.6%, 2.7%, and 1.2%, respectively, if recognized. We do not anticipate any events or circumstances that would cause a significant change to these uncertainties during 2017. We are subject to taxation in the United States and various state and foreign jurisdictions, and we are generally open to examination from the year ended March 31, 2013 forward.

The Company does not provide for United States income taxes on the undistributed earnings of foreign subsidiaries, which are intended to be indefinitely reinvested in operations outside of the United States. As of March 31, 2016, the cumulative amount of earnings upon which United States income taxes have not been provided is approximately $27.8 million. As of March 31, 2016, the amount of unrecognized deferred tax liability related to these earnings is estimated to be $2.2 million.