Note 6 Income Taxes

The components of income before provision for income taxes are as follows:


	Year Ended September 30,
	2013		2014		2015
Income before income taxes:
U.S.	$	23,555	$	(360)	$	36,327
Foreign		8,443		5,480		10,849
Total	$	31,998	$	5,120	$	47,176
Provision for income taxes:
Current:
U.S. Federal	$	2,125	$	427	$	11,207
Foreign		1,419		1,012		1,690
State		85		541		686
Total		3,629		1,980		13,583
Deferred:
U.S. Federal		5,907		(983)		(79)
Foreign		623		302		690
State		262		70		2,368
Valuation allowance		—		—		128
Total		6,792		(611)		3,107
Total provision for income taxes	$	10,421	$	1,369	$	16,690

The provision for income taxes applicable to results of operations differed from the U.S. federal statutory rate as follows:


	Year Ended September 30,
	2013			2014			2015
Statutory federal tax rate		35	%		35	%		35	%
Tax provision for income taxes at the statutory rate	$	11,199		$	1,792		$	16,512
Foreign tax rate differentials		(913)			(605)			(1,417)
Provision for state taxes, net of federal taxes		473			230			818
U.S. tax on distributed and undistributed earnings of foreign subsidiaries		354			173			419
Manufacturer’s deduction		(217)			—			(1,213)
Tax credits		(78)			(91)			(240)
State tax rate change impact on deferred tax asset		(182)			157			1,565
Change in Valuation Allowance		—			—			128
Other, net		(215)			(287)			118
Provision for income taxes at effective tax rate	$	10,421		$	1,369		$	16,690
Effective tax rate		32.6	%		26.7	%		35.4	%

During fiscal 2013, the Company’s effective tax rate was lower than the statutory rate, primarily due to increased proportion of profitability in foreign jurisdictions and the reversal of certain tax reserves no longer required.

During fiscal 2014, the Company’s effective tax rate was lower than the statutory rate, primarily due to a higher proportion of income in lower tax jurisdictions. The Company generated a taxable loss in the United States, which will be carried back to earlier years.

During fiscal 2015, the Company’s effective tax rate was higher than the statutory rate, primarily due to a change in the Indiana tax law that was enacted in May, 2015, which decreased the deferred tax asset and increased tax expense.

Deferred tax assets (liabilities) are comprised of the following:


	September 30,
	2014		2015
Deferred tax assets:
Pension and postretirement benefits	$	63,124	$	77,076
TIMET Agreement		11,200		10,024
Inventories		2,662		3,771
Accrued compensation and benefits		1,606		2,027
Accrued expenses and other		2,093		2,085
Tax attributes		1,385		778
Valuation allowance		—		(128)
Total deferred tax assets	$	82,070	$	95,633
Deferred tax liabilities:
Property, plant and equipment, net	$	(29,789)	$	(34,109)
Intangible and other		(1,345)		(1,271)
Total deferred tax liabilities	$	(31,134)	$	(35,380)

Net deferred tax assets (liabilities)	$	50,936	$	60,253
Current deferred tax assets	$	6,297	$	6,295
Long-term deferred tax asset	$	44,639	$	53,958

As of September 30, 2015, the Company has state tax net operating loss carryforwards of approximately $24, tax credits of $778 and foreign net operating loss carryforwards of $483. As of September 30, 2014, the Company has state tax net operating loss of approximately $5,013, tax credits of $606 and foreign net operating loss carryforwards of $1,259. The Company has not recorded a valuation allowance against the loss carryforwards because management believes that it is more likely than not that net operating loss carryforwards will be realized prior to their expiration.

Undistributed earnings of certain of our foreign subsidiaries amounted to approximately $55,037 at September 30, 2015. The Company considers those earnings reinvested indefinitely and, accordingly, no provision for U.S. income taxes has been provided. Determination of the amount of unrecognized deferred U.S. income tax liability is not practicable because of the complexities associated with its hypothetical calculation.

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


	October 1, 2012 To		October 1, 2013 To		October 1, 2014 To
	September 30,		September 30,		September 30,
	2013		2014		2015
Balance at beginning of period	$	264	$	—	$	—
Gross Increases—current period tax positions		—		—		—
Gross Decreases—current period tax positions		—		—		—
Gross Increases—tax positions in prior periods		—		—		—
Gross Decreases—tax positions in prior periods		—		—		—
Gross Decreases—settlements with taxing authorities		—		—		—
Gross Decreases—lapse of statute of limitations		(264)		—		—
Balance at end of period	$	—	$	—	$	—

During fiscal year 2013, the Company recognized the tax benefits previously unrecognized due to the statute of limitations. This tax benefit was recorded in income tax expense and affected the income statement by $236. During fiscal 2013, the Company recognized a reversal of accrued interest expense related to the unrecognized tax benefits totaling $75.

As of September 30, 2015, the Company is open to examination in the U.S. federal income tax jurisdiction for the 2011 through 2015 tax years and in various foreign jurisdictions from 2009 through 2015. The Company is also open to examination in various states in the U.S., none of which were individually material.