16. Income Taxes

The provision for income taxes for the fiscal years 2014, 2013 and 2012 consists of the following (in thousands):

	Year Ended September 30,
	2014			2013			2012
Current:
Federal	$	121,418		$	113,057		$	97,866
Foreign		9,414			9,997			10,925
State		14,637			17,727			16,692

Total current portion		145,469			140,781			125,483

Deferred:
Federal		(335	)		13,932			4,920
Foreign		(895	)		(2,822	)		(2,888	)
State		447			(375	)		364

Total deferred portion		(783	)		10,735			2,396

Total provision for income taxes	$	144,686		$	151,516		$	127,879

The difference between the U.S. statutory federal income tax rate and the effective income tax rate is summarized below:

	Year Ended September 30,
	2014			2013			2012
Statutory tax rate		35.0	%		35.0	%		35.0	%
State income taxes, net of federal tax benefit		2.7			2.8			3.4
Effect of foreign operations		(0.5	)		(0.6	)		(0.4	)
Effect of limited restructuring		—			—			(2.8	)
Other, net		(0.2	)		(0.5	)		0.2

Effective tax rate		37.0	%		36.7	%		35.4	%

The tax effects of temporary differences that give rise to the Company's deferred tax assets and liabilities are as follows (in thousands):

	September 30,
	2014			2013
Deferred tax assets attributable to:
Share-based compensation expense	$	22,984		$	20,668
Accrued liabilities		27,074			26,817
Inventory adjustments		2,450			3,771
Foreign loss carryforwards		31,882			28,776
Unrecognized tax benefits		370			437
Other		3,874			3,408

Total deferred tax assets		88,634			83,877
Valuation allowance		(29,926	)		(26,073	)

Total deferred tax assets, net		58,708			57,804

Deferred tax liabilities attributable to:
Depreciation and amortization		102,032			99,259

Total deferred tax liabilities		102,032			99,259

Net deferred tax liability	$	43,324		$	41,455

Management believes that it is more likely than not that the results of future operations will generate sufficient taxable income to realize the deferred tax assets, net of the valuation allowance. The Company has recorded a valuation allowance to account for uncertainties regarding recoverability of certain deferred tax assets, primarily foreign loss carryforwards.

Domestic earnings before provision for income taxes were $361.8 million, $386.6 million and $334.5 million in the fiscal years 2014, 2013 and 2012, respectively. Foreign operations had earnings before provision for income taxes of $28.9 million, $26.1 million and $26.4 million in the fiscal years 2014, 2013 and 2012, respectively.

Tax reserves are evaluated and adjusted as appropriate, while taking into account the progress of audits by various taxing jurisdictions and other changes in relevant facts and circumstances evident at each balance sheet date. Management does not expect the outcome of current or future tax audits to have a material adverse effect on the Company's financial condition, results of operations or cash flow.

At September 30, 2014, undistributed earnings of the Company's foreign operations are intended to remain permanently invested to finance anticipated future growth and expansion. Accordingly, federal and state income taxes have not been provided on accumulated but undistributed earnings of $202.9 million and $170.9 million as of September 30, 2014 and 2013, respectively, as such earnings have been permanently reinvested in the business. The determination of the amount of the unrecognized deferred tax liability related to the undistributed earnings is not practicable.

At September 30, 2014 and 2013, the Company had total operating loss carry-forwards of $103.0 million and $96.4 million, respectively, of which $87.1 million and $79.4 million, respectively, are subject to a valuation allowance. At September 30, 2014, operating loss carry-forwards of $25.4 million expire between 2016 and 2032 and operating loss carry-forwards of $77.6 million have no expiration date. At September 30, 2014 and 2013, the Company had tax credit carry-forwards of $2.1 million and $2.0 million, respectively, which expire in 2024.

The changes in the amount of unrecognized tax benefits for the fiscal years ended September 30, 2014 and 2013 are as follows (in thousands):

	2014			2013
Balance at beginning of the fiscal year	$	4,823		$	7,941
Increases related to prior year tax positions		4			26
Decreases related to prior year tax positions		(2,094	)		(1	)
Increases related to current year tax positions		300			218
Lapse of statute		(166	)		(3,361	)

Balance at end of fiscal year	$	2,867		$	4,823

If recognized, these positions would affect the Company's effective tax rate.

The Company classifies and recognizes interest and penalties accrued related to unrecognized tax benefits in income tax expense. The total amount of accrued interest and penalties as of September 30, 2014 and 2013 was $1.1 million and $1.4 million, respectively.

Because existing tax positions will continue to generate increased liabilities for unrecognized tax benefits over the next 12 months, and the fact that from time to time we are routinely under audit by various taxing authorities, it is reasonably possible that the amount of unrecognized tax benefits will change during the next 12 months. An estimate of the amount or range of such change cannot be made at this time. However, we do not expect the change, if any, to have a material effect on our consolidated financial condition or results of operations within the next 12 months.

The IRS has concluded the field work associated with their examination of the Company's consolidated federal income tax returns for the fiscal years ended September 30, 2007 through September 30, 2011 and issued their examination reports. The Company is currently seeking relief from double taxation through competent authority on certain cross-border adjustments, and it does not anticipate the ultimate resolution of these items to have a material impact on the Company's financial statements.

The IRS is currently conducting an examination of the Company's consolidated federal income tax returns for the fiscal years ended September 30, 2012 and 2013. The IRS had previously audited the Company's consolidated federal income tax returns through the tax year ended September 30, 2006. Thus, pending the resolution of the adjustments discussed in the preceding paragraph, our statute remains open from the year ended September 30, 2007 forward. Our foreign subsidiaries are impacted by various statutes of limitations, which are generally open from 2009 forward. Generally, states' statutes in the United States are open for tax reviews from 2007 forward.