16. Income Taxes

The provision for income taxes for the fiscal years 2016, 2015 and 2014 consists of the following (in thousands):

	Fiscal Year Ended September 30,
	2016			2015			2014
Current:
Federal	$	87,088		$	113,023		$	121,418
Foreign		8,795			9,531			9,414
State		13,816			13,686			14,637

Total current portion		109,699			136,240			145,469

Deferred:
Federal		20,915			7,963			(335	)
Foreign		(932	)		(1,461	)		(895	)
State		1,436			655			447

Total deferred portion		21,419			7,157			(783	)

Total provision for income taxes	$	131,118		$	143,397		$	144,686

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

	Fiscal Year Ended September 30,
	2016			2015			2014
Statutory tax rate		35.0	%		35.0	%		35.0	%
State income taxes, net of federal tax benefit		2.9			2.7			2.7
Effect of foreign operations		(0.4	)		(0.1	)		(0.5	)
Other, net		(0.5	)		0.3			(0.2	)

Effective tax rate		37.0	%		37.9	%		37.0	%

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

	At September 30,
	2016			2015
Deferred tax assets attributable to:
Share-based compensation expense	$	18,425		$	17,082
Accrued liabilities		32,145			27,949
Inventory adjustments		4,492			3,055
Foreign loss carryforwards		36,419			35,315
Unrecognized tax benefits		532			471
Other		3,225			4,065

Total deferred tax assets		95,238			87,937
Valuation allowance		(36,571	)		(34,965	)

Total deferred tax assets, net		58,667			52,972

Deferred tax liabilities attributable to:
Depreciation and amortization		131,201			103,697

Total deferred tax liabilities		131,201			103,697

Net deferred tax liability	$	72,534		$	50,725

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 $327.1 million, $362.1 million and $361.8 million in the fiscal years 2016, 2015 and 2014, respectively. Foreign operations had earnings before provision for income taxes of $27.0 million, $16.4 million and $28.9 million in the fiscal years 2016, 2015 and 2014, 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, 2016, 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 $263.0 million and $233.2 million as of September 30, 2016 and 2015, 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, 2016 and 2015, the Company had total operating loss carry-forwards of $117.9 million and $114.2 million, respectively, of which $104.0 million and $98.4 million, respectively, are subject to a valuation allowance. At September 30, 2016, operating loss carry-forwards of $13.9 million expire between 2017 and 2025 and operating loss carry-forwards of $104.0 million have no expiration date. At September 30, 2016 and 2015, the Company had tax credit carry-forwards of $3.1 million and $3.4 million, respectively, including, at September 30, 2016, tax credit carry-forwards of $1.9 million which expire between 2024 and 2026, and tax credit carry-forwards of $1.2 million have no expiration date.

The changes in the amount of unrecognized tax benefits are as follows (in thousands):

	Fiscal Year Ended September 30,
	2016			2015
Balance at beginning of the fiscal year	$	2,982		$	2,867
Increases related to prior year tax positions		447			43
Decreases related to prior year tax positions		(18	)		(134	)
Increases related to current year tax positions		275			308
Settlements		(2,261	)		—
Lapse of statute		(130	)		(102	)

Balance at end of fiscal year	$	1,295		$	2,982

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

The Company recognizes interest and penalties, accrued in connection with unrecognized tax benefits, in income tax expense. The total amount of accrued interest and penalties as of September 30, 2016 and 2015 was $0.2 million and $1.2 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 of such change, or a range thereof, 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, 2013, and issued their examination reports. The Company is currently seeking relief from double taxation through competent authority on certain cross-border adjustments related to the fiscal years ended September 30, 2007 through September 30, 2012, and it does not anticipate the ultimate resolution of these items to have a material impact on the Company's financial statements.

The Company's consolidated federal income tax returns for the fiscal years ended September 30, 2015 and 2016 are currently under IRS examination. 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 2011 forward. Generally, states' statutes in the United States are open for tax reviews from 2007 forward.