INCOME TAXES

A reconciliation of the statutory federal income tax rate to the company's consolidated effective tax rate is summarized as follows:


Fiscal years ended October 31	2014		2013		2012

Statutory federal income tax rate	35.0	%	35.0	%	35.0	%
Increase (reduction) in income taxes resulting from:
Domestic manufacturer's deduction	(1.9	)	(2.0	)	(2.0	)
State and local income taxes, net of federal income tax benefit	1.5		1.5		1.5
Effect of foreign source income	(1.2	)	(0.3	)	0.2
Domestic research tax credit	(0.2	)	(2.4	)	(0.2	)
Other, net	(1.0	)	(0.1	)	(0.5	)

Consolidated effective tax rate	32.2	%	31.7	%	34.0	%

Components of the provision for income taxes were as follows:


Fiscal years ended October 31		2014			2013			2012

Provision for income taxes:
Current –
Federal	$	75,815		$	61,388		$	59,405
State		5,997			5,108			4,609
Non-U.S.		3,672			5,734			3,854

Current provision	$	85,484		$	72,230		$	67,868

Deferred –
Federal	$	(3,047	)	$	824		$	(685	)
State		(81	)		91			(132	)
Non-U.S.		219			(1,277	)		(330	)

Deferred benefit		(2,909	)		(362	)		(1,147	)

Total provision for income taxes	$	82,575		$	71,868		$	66,721

Earnings before income taxes were as follows:


Fiscal years ended October 31		2014		2013		2012

Earnings before income taxes:
U.S.	$	239,501	$	213,509	$	189,206
Non-U.S.		16,944		13,204		7,056

Total	$	256,445	$	226,713	$	196,262

During the fiscal years ended October 31, 2014, 2013, and 2012, respectively, $8,857, $6,134, and $9,017 was added to stockholders' equity reflecting the permanent book to tax difference in accounting for tax benefits related to employee stock-based award transactions.

The tax effects of temporary differences that give rise to the net deferred income tax assets are presented below:


October 31		2014			2013

Deferred tax assets (liabilities):
Allowance for doubtful accounts	$	858		$	1,635
Inventory items		3,918			3,969
Compensation and other accruals		40,932			38,168
Employee benefits		20,374			18,315
Depreciation		3,093			(2,467	)
Other		3,734			5,550

Deferred tax assets	$	72,909		$	65,170
Valuation allowance		(4,012	)		(5,572	)

Net deferred tax assets	$	68,897		$	59,598

The valuation allowance as of October 31, 2014 and 2013 principally applies to capital loss carryforwards and foreign net operating loss carryforwards that are expected to expire prior to utilization.

As of October 31, 2014, the company had net operating loss carryforwards of approximately $23,786 in foreign jurisdictions. The carryforward periods on the company's foreign loss carryforwards are as follows: $10,740 that do not expire; none that expire in fiscal years 2015 thru 2018; and $13,046 that expire between fiscal years 2019 and 2022.

As of October 31, 2014, the company had approximately $64,513 of accumulated undistributed earnings from subsidiaries outside the U.S. that are considered to be reinvested indefinitely. No deferred tax liability has been provided for such earnings.

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


Balance as of October 31, 2013	$	4,506
Decrease as a result of tax positions taken during a prior period		(164	)
Increase as a result of tax positions taken during the current period		726
Decrease relating to settlements with taxing authorities		(26	)

Balance as of October 31, 2014	$	5,042

Included in the balance of unrecognized tax benefits as of October 31, 2014 are potential benefits of $3,655 that, if recognized, would affect the effective tax rate from continuing operations.

The company recognizes potential accrued interest and penalties related to unrecognized tax benefits as a component of the provision for income taxes. In addition to the liability of $5,042 for unrecognized tax benefits as of October 31, 2014 was an amount of approximately $134 for accrued interest and penalties. To the extent interest and penalties are not assessed with respect to uncertain tax positions, the amounts accrued will be revised and reflected as an adjustment to the provision for income taxes.

The company anticipates that total unrecognized tax benefits will not change significantly within the next 12 months.

The company is subject to U.S. federal income tax as well as income tax of numerous state and foreign jurisdictions. The company is generally no longer subject to U.S. federal tax examinations for taxable years before fiscal 2010 and with limited exceptions, state and foreign income tax examinations for fiscal years before 2009.