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INCOME TAXES: | 12 Months Ended
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Dec. 31, 2016
INCOME TAXES |
INCOME TAXES | NOTE 4—INCOME TAXES: The domestic and foreign components of pretax income are as follows:
|  | 2016 |  | 2015 |  | 2014 |
Domestic |  | $ | 87,016 |  | $ | 82,276 |  | $ | 81,255 |
Foreign |  |  | 10,896 |  |  | 10,302 |  |  | 10,039 |
|  | $ | 97,912 |  | $ | 92,578 |  | $ | 91,294 |
The provision for income taxes is comprised of the following:
|  | 2016 |  | 2015 |  | 2014 |
Current: |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 28,484 |  | $ | 26,259 |  | $ | 25,173 |
Foreign |  |  | 86 |  |  | (596) |  |  | 549 |
State |  |  | 1,954 |  |  | 785 |  |  | 1,538 |
|  |  | 30,524 |  |  | 26,448 |  |  | 27,260 |
Deferred: |  |  |  |  |  |  |  |  |  |
Federal |  |  | (2,547) |  |  | (1,189) |  |  | (172) |
Foreign |  |  | 3,323 |  |  | 2,106 |  |  | 2,032 |
State |  |  | (707) |  |  | (914) |  |  | (686) |
|  |  | 69 |  |  | 3 |  |  | 1,174 |
|  | $ | 30,593 |  | $ | 26,451 |  | $ | 28,434 |
Significant components of the Company’s net deferred tax liability at year end were as follows:
|  | December 31, |
|  | 2016 |  | 2015 |
Deferred tax assets: |  |  |  |  |  |  |
Accrued customer promotions |  | $ | 3,194 |  | $ | 3,907 |
Deferred compensation |  |  | 26,509 |  |  | 23,842 |
Postretirement benefits |  |  | 4,732 |  |  | 4,543 |
Other accrued expenses |  |  | 6,543 |  |  | 8,324 |
Foreign subsidiary tax loss carry forward |  |  | 8,452 |  |  | 9,956 |
Tax credit carry forward |  |  | 2,514 |  |  | 2,319 |
|  |  | 51,944 |  |  | 52,891 |
Valuation allowance |  |  | (2,317) |  |  | (2,077) |
Total deferred tax assets |  | $ | 49,627 |  | $ | 50,814 |
Deferred tax liabilities: |  |  |  |  |  |  |
Depreciation |  | $ | 28,049 |  | $ | 29,062 |
Deductible goodwill and trademarks |  |  | 45,733 |  |  | 44,255 |
Accrued export company commissions |  |  | 6,044 |  |  | 5,897 |
Employee benefit plans |  |  | 928 |  |  | 2,403 |
Inventory reserves |  |  | 3,529 |  |  | 3,793 |
Prepaid insurance |  |  | 1,015 |  |  | 1,065 |
Deferred foreign exchange gain |  |  | 436 |  |  | — |
Unrealized capital gain |  |  | 733 |  |  | 362 |
Deferred gain on sale of real estate |  |  | 8,093 |  |  | 8,154 |
Total deferred tax liabilities |  | $ | 94,560 |  | $ | 94,991 |
Net deferred tax liability |  | $ | 44,933 |  | $ | 44,177 |
At December 31, 2016, the Company has benefits related to state tax credit carry-forwards expiring by year as follows: $313 in 2018, $1,080 in 2019 and $853 in 2020. The Company expects that these state credit carry-forwards will be utilized before their expiration. At December 31,2016 the Company also had $268 in foreign tax credit carry-forwards which are not material to its financial statements. At December 31, 2016, the tax benefits of the Company’s Canadian subsidiary tax loss carry-forwards expiring by year are as follows: $2,181 in 2028, $3,546 in 2029 and $619 in 2031. The Company expects that these carry-forwards will be realized before their expiration. At December 31, 2016, the amounts of the Company’s Spanish subsidiary loss carry-forwards expiring by year are as follows: $264 in 2026, $56 in 2027, $168 in 2028, $96 in 2029, $290 in 2030, $387 in 2031, $291 in 2032, $117 in 2033 and $437 in 2034. A full valuation allowance has been provided for these Spanish loss carry-forwards as the Company expects that the losses will not be utilized before their expiration. The effective income tax rate differs from the statutory rate as follows:
|  | 2016 |  | 2015 |  | 2014 |
U.S. statutory rate |  | 35.0 | % | 35.0 | % | 35.0 | %
State income taxes, net |  | 1.0 |  | 1.1 |  | 1.0 |
Exempt municipal bond interest |  | (0.1) |  | (0.1) |  | (0.5) |
Foreign tax rates |  | (0.4) |  | (1.3) |  | (1.5) |
Qualified domestic production activities deduction |  | (2.7) |  | (2.6) |  | (2.8) |
Tax credits receivable |  | (0.5) |  | (1.2) |  | (0.6) |
Adjustment of deferred tax balances |  | (0.5) |  | 0.2 |  | 1.9 |
Reserve for uncertain tax benefits |  | — |  | (2.1) |  | — |
Other, net |  | (0.6) |  | (0.4) |  | (1.4) |
Effective income tax rate |  | 31.2 | % | 28.6 | % | 31.1 | %
The Company has not provided for U.S. federal or foreign withholding taxes on $22,081 and $20,174 of foreign subsidiary undistributed earnings as of December 31, 2016 and December 31, 2015, respectively, because such earnings are considered to be permanently reinvested. The Company estimates that the federal income tax liability on such remittances would approximate 30%. This foreign subsidiary holds $12,354 and $15,265 of cash and short term investments as of December 31, 2016 and 2015, respectively. At December 31, 2016 and 2015, the Company had unrecognized tax benefits of $4,746 and $4,680, respectively. Included in this balance is $2,761 and $2,737, respectively, of unrecognized tax benefits that, if recognized, would favorably affect the annual effective income tax rate. As of December 31, 2016 and 2015, $439 and $421, respectively, of interest and penalties were included in the liability for uncertain tax positions. A reconciliation of the beginning and ending balances of the total amounts of unrecognized tax benefits is as follows:
|  | 2016 |  | 2015 |  | 2014 |
Unrecognized tax benefits at January 1 |  | $ | 4,680 |  | $ | 6,993 |  | $ | 6,010 |
Increases in tax positions for the current year |  |  | 803 |  |  | 812 |  |  | 1,827 |
Increases in tax positions for new uncertain tax position |  |  | — |  |  | — |  |  | 609 |
Reductions in tax positions for lapse of statute of limitations |  |  | (718) |  |  | (865) |  |  | (1,050) |
Reductions in tax positions relating to settlements with taxing authorities |  |  | (27) |  |  | (772) |  |  | (403) |
Increases (decreases) in prior period unrecognized tax benefits |  |  | 8 |  |  | (1,488) |  |  | — |
Unrecognized tax benefits at December 31 |  | $ | 4,746 |  | $ | 4,680 |  | $ | 6,993 |
The Company recognizes interest and penalties related to unrecognized tax benefits in the provision for income taxes on the Consolidated Statements of Earnings and Retained Earnings. The Company is subject to taxation in the U.S. and various state and foreign jurisdictions. The Company remains subject to examination by U.S. federal and state and foreign tax authorities for the years 2013 through 2015. With few exceptions, the Company is no longer subject to examinations by tax authorities for the years 2012 and prior. The Company’s Canadian subsidiary is currently subject to examination by the Canada Revenue Agency for tax years 2005 and 2007. In addition, the Company is currently subject to various state tax examinations. Although the Company is unable to determine the ultimate outcome of the ongoing examinations, the Company believes that its liability for uncertain tax positions relating to these jurisdictions for such years is adequate.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32559-109319 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32718-109319 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32537-109319 + Details
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