Income Taxes

The reconciliation of the provision for income taxes to the amount computed by applying the U.S. federal statutory tax rate to earnings before income taxes is as follows:



	2015			2014			2013
Earnings before income taxes:
Domestic	$	79,839		$	107,395		$	83,962
Foreign	104,132			111,716			80,559
Eliminations	(137		)	(188		)	485
Total	$	183,834		$	218,923		$	165,006
Federal statutory income tax rate	35.0		%	35.0		%	35.0		%
Computed expected tax expense	$	64,342		$	76,623		$	57,752
Increase (decrease) in income taxes resulting from:
R&D tax credits	(3,046		)	(1,105		)	(3,271		)
Foreign tax rates	(10,759		)	(13,034		)	(10,726		)
Export and manufacturing incentives	(1,323		)	(1,803		)	(3,400		)
State taxes, net of federal benefit	1,534			2,236			1,921
Change in valuation allowance for deferred taxes	2,003			1,477			2,231
Change in enacted tax rates	(590		)	(1,160		)	—
Other	(210		)	(2,509		)	2
Income taxes	$	51,951		$	60,725		$	44,509
Effective income tax rate	28.3		%	27.7		%	27.0		%

At October 3, 2015, various subsidiaries had tax benefit carryforwards totaling $36,936. Some of these tax benefit carryforwards do not expire and can be used to reduce current taxes otherwise due on future earnings of those subsidiaries. The change in the valuation allowance relates to tax benefit carryforwards reflecting recent and projected financial performance, tax planning strategies and statutory tax carryforward periods.

No provision has been made for U.S. federal or foreign taxes on that portion of certain foreign subsidiaries’ undistributed earnings ($860,229 at October 3, 2015) considered to be permanently reinvested. It is not practicable to determine the amount of tax that would be payable if these amounts were repatriated to the U.S.

The components of income taxes are as follows:



	2015		2014			2013
Current:
Federal	$	12,065	$	25,325		$	29,345
Foreign	25,844		28,074			18,835
State	1,051		2,305			4,545
Total current	38,960		55,704			52,725
Deferred:
Federal	10,800		5,034			(7,542		)
Foreign	882		(1,148		)	914
State	1,309		1,135			(1,588		)
Total deferred	12,991		5,021			(8,216		)
Income taxes	$	51,951	$	60,725		$	44,509

Realization of deferred tax assets is dependent, in part, upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers projected future taxable income and tax planning strategies in making its assessment of the recoverability of deferred tax assets.

The tax effects of temporary differences that generated deferred tax assets and liabilities are as follows:



	October 3, 2015			September 27, 2014
Deferred tax assets:
Benefit accruals	$	210,241		$	189,420
Inventory reserves	32,948			31,270
Tax benefit carryforwards	11,304			13,256
Contract loss reserves not currently deductible	9,049			9,943
Other accrued expenses	17,676			18,849
Total gross deferred tax assets	281,218			262,738
Less valuation allowance	(6,642		)	(5,316		)
Total net deferred tax assets	274,576			257,422
Deferred tax liabilities:
Differences in bases and depreciation of property, plant and equipment	162,661			164,817
Pension	70,273			70,124
Other	—			486
Total gross deferred tax liabilities	232,934			235,427
Net deferred tax assets	$	41,642		$	21,995

Net deferred tax assets and liabilities are included in the balance sheet as follows:



	October 3, 2015			September 27, 2014
Current assets	$	91,210		$	92,390
Other assets	11,158			14,083
Other accrued liabilities	(517		)	(547		)
Long-term liabilities	(60,209		)	(83,931		)
Net deferred tax assets	$	41,642		$	21,995

We have unrecognized tax benefits which, if ultimately recognized, will reduce our annual effective tax rate. A reconciliation of the total amounts of unrecognized tax benefits, excluding interest and penalties, is as follows:



	October 3, 2015			September 27, 2014
Balance at beginning of year	$	1,793		$	1,533
Increases as a result of tax positions for prior years	—			338
Reductions as a result of lapse of statute of limitations	(609		)	—
Settlement of tax positions	—			(78		)
Balance at end of year	$	1,184		$	1,793

We are subject to income taxes in the U.S. and in various states and foreign jurisdictions. Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations and require the application of significant judgment. With few exceptions, we are no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years before 2011. The statute of limitations in several jurisdictions will expire in the next twelve months and we will have $700 of unrecognized tax benefits recognized if the statute of limitations expires without the relevant taxing authority examining the applicable returns.

We record interest and penalties related to unrecognized tax benefits in income tax expense. We had accrued interest and penalties of $1,019 and $1,699 at October 3, 2015 and September 27, 2014, respectively. We expensed interest of $208 and $348 for 2015 and 2014, respectively.