(7)	Income Taxes

Earnings before income taxes for the years ended December 31, 2015, 2014 and 2013 consisted of the following components (in thousands):

	2015		2014		2013
United States	$	710,614	$	665,219	$	517,432
Other		291,731		256,237		236,698
	$	1,002,345	$	921,456	$	754,130

Components of income tax expense for the years ended December 31, 2015, 2014 and 2013 were as follows (in thousands):

	2015			2014			2013
Current:
Federal	$	229,224		$	218,302		$	166,430
State		22,041			37,155			12,577
Foreign		71,507			56,107			40,451
Deferred:
Domestic		(10,134	)		(30,664	)		(1,965	)
Foreign		(6,360	)		(5,477	)		(1,656	)
	$	306,278		$	275,423		$	215,837

Reconciliations between the statutory federal income tax rate and the effective income tax rate for the years ended December 31, 2015, 2014 and 2013 were as follows:

	2015			2014			2013
Federal statutory rate		35.0	%		35.0	%		35.0	%
Foreign rate differential		(3.3	)		(3.9	)		(4.1	)
R&D tax credits		(0.5	)		(0.4	)		(0.5	)
State taxes, net of federal benefit		2.0			2.0			1.9
Section 199 deduction		(1.3	)		(1.6	)		(1.8	)
Other, net		(1.3	)		(1.2	)		(1.9	)
		30.6	%		29.9	%		28.6	%

The deferred income tax balance sheet accounts arise from temporary differences between the amount of assets and liabilities recognized for financial reporting and tax purposes.

Components of the deferred tax assets and liabilities at December 31 were as follows (in thousands):

	2015			2014
Deferred tax assets:
Reserves and accrued expenses	$	146,014		$	130,508
Inventories		9,309			10,186
Net operating loss carryforwards		45,616			41,480
R&D credits		8,504			7,145
Foreign tax credits		7,940			-
Valuation allowance		(19,338	)		(16,169	)
Total deferred tax assets	$	198,045		$	173,150
Deferred tax liabilities:
Reserves and accrued expenses	$	11,222		$	27,981
Amortizable intangible assets		962,143			798,502
Plant and equipment		4,004			4,741
Total deferred tax liabilities	$	977,369		$	831,224

At December 31, 2015, the Company had approximately $17.5 million of tax-effected U.S. federal net operating loss carryforwards that if not utilized will expire in years 2023 through 2035. The U.S. federal net operating loss carryforwards increased from 2014 to 2015 primarily due to to additional net operating losses obtained through a recent acquisition. In a recent acquisition, the consolidated group obtained U.S. federal net operating losses subject to an IRC Section 382 limitation; however, the Company expects to utilize the losses in their entirety prior to expiration. The Company has approximately $22.9 million of tax-effected state net operating loss carryforwards (without regard to federal benefit of state) that if not utilized will expire in years 2016 through 2035. The state net operating loss carryforwards are primarily related to Florida, Georgia and New Jersey, but the Company has smaller net operating losses in various other states. The Company has approximately $13.1 million of tax-effected foreign net operating loss carryforwards that if not utilized will begin to expire in 2016, while some do not have a definite expiration. Additionally, the Company has $12.4 million of U.S. federal and state research and development tax credit carryforwards (without regard to federal benefit of state) that will expire in years 2019 through 2035 and $7.9 million of U.S. federal foreign tax credits that, if not utilized, will expire in 2025.

As of December 31, 2015, the Company determined that a total valuation allowance of $19.3 million was necessary to reduce U.S. deferred tax assets by $11.0 million and foreign deferred tax assets by $8.3 million, where it was more likely than not that some portion or all of such deferred tax assets will not be realized. As of December 31, 2015, based on the Company's estimates of future taxable income and any applicable tax-planning strategies within various tax jurisdictions, the Company believes that it is more likely than not that the remaining net deferred tax assets will be realized.

The Company recognizes in the consolidated financial statements only those tax positions determined to be "more likely than not" of being sustained upon examination based on the technical merits of the positions. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):

	2015			2014			2013
Beginning balance	$	28,567		$	26,924		$	24,865
Additions for tax positions of prior periods		3,525			6,532			3,055
Additions for tax positions of the current period		3,299			5,571			1,639
Additions due to acquisitions		6,177			-			5,026
Reductions for tax positions of prior periods		(12,206	)		(1,008	)		(3,675	)
Reductions for tax positions of the current period
Settlements with taxing authorities		(142	)		(518	)		-
Lapse of applicable statute of limitations		(3,080	)		(8,934	)		(3,986	)
Ending balance	$	26,140		$	28,567		$	26,924

The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate is $24.2 million. Interest and penalties related to unrecognized tax benefits are classified as a component of income tax expense and totaled a benefit of $1.8 million in 2015. Accrued interest and penalties were $3.4 million at December 31, 2015 and $5.2 million at December 31, 2014. During the next twelve months, the unrecognized tax benefits are expected to decrease by a net $3.2 million, due mainly to anticipated statute of limitations lapses in various jurisdictions.

The Company and its subsidiaries are subject to U.S. federal income tax as well as income taxes of multiple state, city and foreign jurisdictions. The Company's federal income tax returns for 2013 through the current period remain subject to examination and the relevant state, city and foreign statutes vary. At December 31, 2015, the Internal Revenue Service has been and is continuing to examine the Company's income tax returns for the years 2013 and 2014. The Company does not expect the assessment of any significant additional tax in excess of amounts reserved.