NOTE 4. INCOME TAXES

Income before provision for income taxes consisted of the following:

(in thousands)	Year Ended December 31,
	2015			2014			2013
U.S.	$	66,889		$	76,848		$	71,678
Foreign		(512	)		(287	)		(304	)
	$	66,377		$	76,561		$	71,374

The provision for income taxes consisted of the following:

(in thousands)	Year Ended December 31,
	2015			2014			2013
Current:
U.S. Federal	$	7,976		$	7,494		$	1,188
State		1,851			2,139			1,803
Foreign		1,645			1,572			2,217
		11,472			11,205			5,208
Deferred:
U.S. Federal		13,201			17,986			21,067
State		1,538			1,927			1,818
Foreign		(304	)		(266	)		(116	)
		14,435			19,647			22,769
Total	$	25,907		$	30,852		$	27,977

The reconciliation of the U.S. federal statutory tax rate to the Company’s effective tax rate is as follows:

	Year Ended December 31,
	2015			2014			2013
U.S. federal statutory rate		35.0	%		35.0	%		35.0	%
State taxes, net of federal benefit		4.2			4.1			4.1
Other		(0.2	)		1.2			0.1
		39.0	%		40.3	%		39.2	%

The following table shows the deferred income taxes related to the temporary differences between the tax bases of assets and liabilities and the respective amounts included in “Deferred income taxes, net” on the Company’s Consolidated Balance Sheets:

(in thousands)	December 31,
	2015		2014
Deferred tax liabilities:
Accelerated depreciation	$	286,618	$	272,496
Prepaid costs currently deductible		6,997		6,358
Other		5,034		4,404
Total deferred tax liabilities		298,649		283,258
Deferred tax assets:
Accrued costs not yet deductible		8,638		7,463
Allowance for doubtful accounts		804		788
Net operating loss carry forwards and credits		577		302
Deferred revenues		1,945		1,132
Share-based compensation		3,334		4,671
Total deferred tax assets		15,298		14,356
Deferred income taxes, net	$	283,351	$	268,902

In 2015 exercises of non-qualified stock options by employees resulted in a tax shortfall of $0.3 million. In 2014 and 2013 exercises of non-qualified stock options by employees resulted in an excess tax benefit of $1.8 million and $1.3 million, respectively. The net tax benefit was recorded as common stock in conjunction with the proceeds received from the exercise of the stock options.

A deferred U.S. tax liability has not been provided on the undistributed earnings of certain foreign subsidiaries because it is the Company’s intent to permanently reinvest such earnings. Undistributed earnings of foreign subsidiaries, which have been or are intended to be permanently reinvested, aggregated approximately $1.9 million and $1.6 million as of December 31, 2015 and 2014, respectively. As of December 31, 2015, the Company’s foreign net operating losses for tax purposes were $1.8 million. If not utilized, these carry forwards will begin to expire in 2023.

The Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority. The Company evaluated all of its tax positions for which the statute of limitations remained open and determined there were no material unrecognized tax benefits as of December 31, 2015 and 2014. In addition, there have been no material changes in unrecognized benefits during 2015, 2014 and 2013.

The Company is subject to income taxes in the U.S. federal jurisdiction, and various states and foreign jurisdictions. Tax regulations within each jurisdiction are subject to interpretation of the related tax laws and regulations and require the application of significant judgment. With few exceptions, the Company is no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for the years before 2011.

Our income tax returns are subject to examination by federal, state and foreign tax authorities. There may be differing interpretations of tax laws and regulations, and as a result, disputes may arise with these tax authorities involving the timing and amount of deductions and allocation of income.

The Company recognizes interest and penalties related to unrecognized tax benefits in the provision for income taxes for all periods presented. Such interest and penalties were not significant for the years ended December 31, 2015, 2014 and 2013.