INCOME TAXES

The components of income (loss) before income taxes and equity in earnings of equity-method investees were as follows:



	Fiscal Year Ended June 30,
	2016			2015 (Revised)		2014 (Revised)
Domestic	$	158,025		$	170,884	$	154,773
Foreign	(39,617		)	41,985		42,387
Total	$	118,408		$	212,869	$	197,160

The provision (benefit) for income taxes consisted of the following:



	Fiscal Year Ended June 30,
	2016			2015 (Revised)			2014 (Revised)
Current:
Federal	$	21,304		$	32,910		$	47,660
State and local	1,798			8,311			7,640
Foreign	14,737			9,981			16,920
	37,839			51,202			72,220
Deferred:
Federal	30,711			(912		)	2,241
State and local	5,017			(1,069		)	(186		)
Foreign	(2,635		)	(686		)	(4,667		)
	33,093			(2,667		)	(2,612		)
Total	$	70,932		$	48,535		$	69,608

Cash paid for income taxes, net of refunds, during the fiscal years ended June 30, 2016, 2015 and 2014 amounted to $44,225, $47,317 and $47,339, respectively.

The reconciliation of the U.S. Federal statutory rate to our effective rate on income before provision for income taxes was as follows:



	Fiscal Year Ended June 30,
	2016			%			2015 (Revised)				%		2014 (Revised)			%
Expected United States federal income tax at statutory rate	$	41,443		35.0	%		$	74,504			35.0	%	$	69,006		35.0	%
State income taxes, net of federal benefit	5,447			4.6	%		4,795				2.2	%	4,862			2.5	%
Domestic manufacturing deduction	(1,233		)	(1.0	)%		(1,210		)		(0.6	)%	(2,642		)	(1.3	)%
Foreign income at different rates	(2,861		)	(2.4	)%		(9,515		)		(4.5	)%	(295		)	(0.1	)%
Goodwill impairment	23,172			19.6	%	—	—			—	—	%	—			—	%
Change in Valuation Allowance	5,067			4.3	%		963				0.5	%	—			—	%
Corporate tax reorganization	(4,173		)	(3.5	)%		(20,670		)		(9.7	)%	—			—	%
Unrealized foreign exchange losses	7,056			6.0	%		—				—	%	—			—	%
Non-taxable gains on acquisition of pre-existing ownership interests in HPPC and Empire	—			—	%		(2,793		)		(1.3	)%	—			—	%
Reduction of deferred tax liabilities resulting from change in United Kingdom tax rate	(4,942		)	(4.2	)%		—				—	%	(3,739		)	(1.9	)%
Other	1,956			1.5	%		2,461				1.2	%	2,416			1.1	%
Provision for income taxes	$	70,932		59.9	%		$	48,535			22.8	%	$	69,608		35.3	%

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts for income tax purposes. Deferred tax assets and liabilities consisted of the following:



	June 30, 2016			June 30, 2015 (Revised)
Current deferred tax assets⁽¹⁾:
Basis difference on inventory	$	—		$	13,730
Reserves not currently deductible	—			22,804
Other	—			1,972
Current deferred tax assets⁽¹⁾	$	—		$	38,506

Noncurrent deferred tax assets/(liabilities):
Basis difference on inventory	$	11,232		$	—
Reserves not currently deductible	17,652			—
Basis difference on intangible assets	(145,673		)	(154,009		)
Basis difference on property and equipment	(25,933		)	(23,415		)
Other comprehensive income	(4,623		)	(1,217		)
Net operating loss and tax credit carryforwards	25,340			28,875
Stock based compensation	4,632			6,828
Other	1,176			2,723
Valuation allowances	(15,310		)	(10,926		)
Noncurrent deferred tax liabilities, net	$	(131,507	)	$	(151,141	)

Total net deferred tax liabilities	$	(131,507	)	$	(112,635	)


(1)	Due to the Company’s adoption of ASU 2015-17, all deferred tax assets and liabilities are classified as noncurrent as of June 30, 2016. See Note 3, Summary of Significant Accounting Policies and Practices, for details.

At June 30, 2016 and 2015, the Company had U.S. federal net operating loss (“NOL”) carryforwards of approximately $38,433 and $42,880, respectively, the majority of which will not expire until 2033. Certain of these federal loss carryforwards are subject to Internal Revenue Code Section 382 which imposes limitations on utilization following certain changes in ownership of the entity generating the loss carryforward. We had foreign NOL carryforwards of approximately $42,573 and $45,027 in the same respective years.

At June 30, 2016 and 2015, the Company had U.S. federal foreign tax credit carryforwards of approximately $877. These credit carryforwards have various expiration dates through 2020.

As of June 30, 2016, the Company has not provided for deferred taxes on the excess of financial reporting over the tax basis of investments in certain foreign subsidiaries in the amount of $411,000 as the Company plans to reinvest such earnings indefinitely outside the United States. If these earnings were repatriated in the future, additional income and withholding tax expense would be incurred. Due to complexities in the laws of the U.S. and foreign jurisdictions and the assumptions that would have to be made, it is not practicable to estimate the total amount of income taxes that would have to be provided on such earnings.

As required by the authoritative guidance on accounting for income taxes, the Company evaluates the realizability of deferred tax assets on a jurisdictional basis at each reporting date. Accounting for income taxes requires that a valuation allowance be established when it is more likely than not that all or a portion of the deferred tax assets will not be realized. In circumstances where there is sufficient negative evidence indicating that the deferred tax assets are not more likely than not realizable, we establish a valuation allowance. We have recorded valuation allowances in the amounts of $15,310 and $10,926 at June 30, 2016 and 2015, respectively.

The changes in valuation allowances against deferred income tax assets were as follows:



	Fiscal Year Ended June 30,
	2016			2015 (Revised)
Balance at beginning of year	$	10,926		$	10,952
Additions charged to income tax expense	7,484			963
Reductions credited to income tax expense	(2,417		)	—
Currency translation adjustments	(683		)	(989		)
Balance at end of year	$	15,310		$	10,926

Unrecognized tax benefits activity, including interest and penalties, is summarized below:



	Fiscal Year Ended June 30,
	2016			2015 (Revised)			2014 (Revised)
Balance at beginning of year	$	10,759		$	11,058		$	2,507
Additions based on tax positions related to the current year	4,276			1,089			5,946
Additions based on tax positions related to prior years	1,404			202			3,511
Reductions due to lapse in statute of limitations and settlements	(420		)	(1,590		)	(906		)
Balance at end of year	$	16,019		$	10,759		$	11,058

As of June 30, 2016, the Company had $16,019 of unrecognized tax benefits, of which $10,826 represents the amount that, if recognized, would impact the effective tax rate in future periods. As of June 30, 2015 and 2014, the Company had $10,759 and $11,058, respectively, of unrecognized tax benefits of which $9,375 and $10,041, respectively, would impact the effective income tax rate in future periods. Accrued liabilities for interest and penalties were $650 and $353 at June 30, 2016 and 2015, respectively. Interest and penalties (expense and/or benefit) are recorded as a component of the provision (benefit) for income taxes in the consolidated financial statements. The Company believes that it is reasonably possible that its unrecognized tax benefits could decrease by $4,200 by June 30, 2017 due to settlements and expirations of statutes of limitations; all of which would reduce the income tax provision for continuing operations.

The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction, various U.S. state jurisdictions and several foreign jurisdictions. 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 years prior to 2013. However, to the extent we generated NOLs or tax credits in closed tax years, future use of the NOL or tax credit carry forward balance would be subject to examination within the relevant statute of limitations for the year in which utilized. The Company is no longer subject to tax examinations in the United Kingdom for years prior to 2013. Given the uncertainty regarding when tax authorities will complete their examinations and the possible outcomes of their examinations, a current estimate of the range of reasonably possible significant increases or decreases of income tax that may occur within the next twelve months cannot be made. Although there are various tax audits currently ongoing, the Company does not believe the ultimate outcome of such audits will have a material impact on the Company’s consolidated financial statements.