INCOME TAXES

The components of earnings before income taxes from continuing operations consisted of domestic earnings before income taxes from continuing operations of $68.2 million, $70.8 million and $40.9 million in 2015, 2014 and 2013, respectively, and foreign earnings before income taxes from continuing operations of $40.6 million, $39.3 million and $36.8 million in 2015, 2014 and 2013, respectively. In addition to the income tax expense associated with continuing operations, we also recorded income tax benefits associated with the loss from discontinued operations of $5.9 million in 2013.

The components of income tax provision (benefit) on earnings from continuing operations were as follows:



($ thousands)	2015		2014			2013
Federal
Current	$	9,530	$	27,311		$	14,621
Deferred	11,202		(9,502		)	260
	20,732		17,809			14,881
State
Current	497		5,501			5,770
Deferred	1,176		(642		)	(1,210		)
	1,673		4,859			4,560
Foreign	4,537		4,516			4,317
Total income tax provision	$	26,942	$	27,184		$	23,758

The Company made federal, state and foreign tax payments, net of refunds, of $22.1 million, $20.1 million and $5.0 million in 2015, 2014 and 2013, respectively.

The differences between the income tax provision reflected in the consolidated financial statements and the amounts calculated at the federal statutory income tax rate of 35% were as follows:



($ thousands)	2015			2014			2013
Income taxes at statutory rate	$	38,068		$	38,544		$	27,208
State income taxes, net of federal tax benefit	2,481			3,159			2,964
Foreign earnings taxed at lower rates	(9,491		)	(8,882		)	(8,090		)
Non-deductibility of impairment of assets held for sale	—			—			1,631
Tax on international subsidiary dividend	—			1,040			—
Disposal and settlement of Shoes.com	(1,701		)	(7,428		)	—
Valuation allowance release on state loss carryforwards	(1,635		)	—			—
Valuation allowance release on other tax carryforwards	(1,367		)	—			—
Other	587			751			45
Total income tax provision	$	26,942		$	27,184		$	23,758

In 2015, the Company's effective tax rate was impacted by several discrete tax benefits which totaled $5.1 million for the year. These discrete tax benefits primarily reflected the utilization of operating loss, capital loss and other carryforwards that were previously not anticipated to be utilized and were therefore fully reserved on the consolidated balance sheet. A portion of these carryforwards became utilizable upon conversion of the Company's primary retail entity to an LLC early in 2015. In addition, certain additional tax carryforwards were able to be utilized upon settlement of negotiations related to the tax attributes associated with the sale of our Shoes.com subsidiary. If these discrete tax benefits had not been recognized, the Company's full fiscal year 2015 effective tax rate would have been 29.5%, which is 1.1% lower than 2014, driven by a lower state tax rate and a higher mix of earnings in international jurisdictions.

The other category of income tax provision principally represents the impact of expenses that are not deductible or partially deductible for federal income tax purposes and adjustments in the amounts of deferred tax assets that are anticipated to be realized.

Significant components of the Company’s deferred income tax assets and liabilities were as follows:



($ thousands)	January 30, 2016			January 31, 2015
Deferred Tax Assets
Employee benefits, compensation and insurance	$	24,740		$	26,430
Accrued expenses	16,118			16,539
Postretirement and postemployment benefit plans	721			862
Deferred rent	7,269			6,285
Accounts receivable reserves	7,946			7,563
Net operating loss (“NOL”) carryforward/carryback	7,943			9,483
Capital loss carryforward	2,368			5,188
Foreign tax credit carryforward	—			1,098
Inventory capitalization and inventory reserves	1,620			1,683
Intangible assets	—			4,865
Depreciation	630			3,957
Other	1,346			1,907
Total deferred tax assets, before valuation allowance	70,701			85,860
Valuation allowance	(6,544		)	(11,514		)
Total deferred tax assets, net of valuation allowance	64,157			74,346

Deferred Tax Liabilities
Retirement plans	(21,051		)	(23,822		)
LIFO inventory valuation	(61,585		)	(56,525		)
Capitalized software	(10,525		)	(12,721		)
Other	(786		)	(1,118		)
Intangible assets	(631		)	—
Total deferred tax liabilities	(94,578		)	(94,186		)
Net deferred tax liability	(30,421		)	(19,840		)

As of January 30, 2016, the Company had various state net operating loss carryforwards with tax values totaling $7.8 million. A valuation allowance of $3.0 million has been established related to these operating loss carryforwards. The remaining net operating loss will be carried forward to future tax years. The Company also has valuation allowances of $2.4 million related to capital loss carryforwards and $1.1 million related to share-based compensation.

As of January 30, 2016, no deferred taxes have been provided on the accumulated unremitted earnings of the Company’s foreign subsidiaries that are not subject to United States income tax. The Company periodically evaluates its foreign investment opportunities and plans, as well as its foreign working capital needs, to determine the level of investment required and, accordingly, determine the level of foreign earnings that is considered indefinitely reinvested. Based upon that evaluation, earnings of the Company’s foreign subsidiaries that are not otherwise subject to United States taxation, except for the Company’s Canadian subsidiary, are considered to be indefinitely reinvested, and accordingly, deferred taxes have not been provided. If changes occur in future investment opportunities and plans, those changes will be reflected when known and may result in providing residual United States deferred taxes on unremitted foreign earnings. If the Company’s unremitted foreign earnings were not considered indefinitely reinvested as of January 30, 2016 additional deferred taxes of approximately $43.8 million would have been provided.

Uncertain Tax Positions

ASC 740, Income Taxes, establishes a single model to address accounting for uncertain tax positions. The standard clarifies the accounting for income taxes by prescribing a minimum recognition threshold a tax position is required to meet before being recognized in the financial statements. The standard also provides guidance on derecognition, measurement classification, interest and penalties, accounting in interim periods, disclosure and transition.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:



($ thousands)
Balance at February 2, 2013	$	1,149
Reductions for tax positions of prior years due to a lapse in the statute of limitations	(134		)
Balance at February 1, 2014	$	1,015
Reductions for tax positions of prior years due to a lapse in the statute of limitations	—
Balance at January 31, 2015	$	1,015
Amounts settled and utilized for current tax obligations	(636		)
Reductions for tax positions of prior years	(379		)
Balance at January 30, 2016	$	—

If the unrecognized tax benefits were to be recognized in full, the net amount that would be reflected in the income tax provision in prior years, thereby impacting the effective tax rate, would have been $1.1 million at January 31, 2015 and February 1, 2014.

Estimated interest related to the underpayment of income taxes was classified as a component of the income tax provision in the consolidated statements of earnings and was insignificant in 2015, 2014 and 2013.

For federal purposes, the Company’s tax years 2011 to 2013 (fiscal years ending January 28, 2012, February 2, 2013 and February 1, 2014) remain open to examination. The Company also files tax returns in various foreign jurisdictions and numerous states for which various tax years are subject to examination. The Company does not expect any significant changes to its liability for unrecognized tax benefits during the next 12 months.