INCOME TAXES

Earnings from operations before income taxes consisted of the following:



	Years Ended January 31,
(in millions)	2017		2016		2015
United States	$	478.2	$	502.5	$	484.5
Foreign	198.4		207.4		253.0
	$	676.6	$	709.9	$	737.5

Components of the provision for income taxes were as follows:



	Years Ended January 31,
(in millions)	2017		2016			2015
Current:
Federal	$	125.5	$	175.8		$	130.9
State	15.4		22.3			18.2
Foreign	43.5		49.8			66.5
	184.4		247.9			215.6
Deferred:
Federal	36.7		(15.4		)	25.2
State	7.1		3.9			13.2
Foreign	2.3		9.6			(0.7		)
	46.1		(1.9		)	37.7
	$	230.5	$	246.0		$	253.3

Reconciliations of the provision for income taxes at the statutory Federal income tax rate to the Company's effective income tax rate were as follows:



	Years Ended January 31,
	2017		2016		2015
Statutory Federal income tax rate	35.0	%	35.0	%	35.0	%
State income taxes, net of Federal benefit	2.2		2.4		2.8
Foreign losses with no tax benefit	0.2		—		0.7
Undistributed foreign earnings	(2.3	)	(2.5	)	(4.2	)
Net change in uncertain tax positions	(0.7	)	0.5		0.3
Domestic manufacturing deduction	(0.9	)	(1.3	)	(1.3	)
Other	0.6		0.6		1.1
	34.1	%	34.7	%	34.4	%

The Company has the intent to indefinitely reinvest any undistributed earnings of all foreign subsidiaries. As of January 31, 2017 and 2016, the Company has not provided deferred taxes on approximately $769.0 million and $685.0 million of undistributed earnings. Generally, such amounts become subject to U.S. taxation upon the remittance of dividends and under certain other circumstances. U.S. Federal income taxes of approximately $129.0 million and $118.0 million would be incurred if these earnings were distributed.

Deferred tax assets (liabilities) consisted of the following:



	January 31,
(in millions)	2017			2016
Deferred tax assets:
Pension/postretirement benefits	$	124.7		$	166.7
Accrued expenses	36.1			34.3
Share-based compensation	17.3			18.3
Depreciation	6.5			6.6
Amortization	10.8			11.4
Foreign and state net operating losses	25.5			23.5
Sale-leaseback	25.8			30.4
Inventory	57.6			50.9
Financial hedging instruments	11.9			19.7
Unearned income	10.6			11.3
Other	23.0			53.6
	349.8			426.7
Valuation allowance	(24.1		)	(19.5		)
	325.7			407.2
Deferred tax liabilities:
Foreign tax credit	(25.8		)	(25.1		)
Net deferred tax asset	$	299.9		$	382.1

The Company has recorded a valuation allowance against certain deferred tax assets related to foreign net operating loss carryforwards where management has determined it is more likely than not that deferred tax assets will not be realized in the future. The overall valuation allowance relates to tax loss carryforwards and temporary differences for which no benefit is expected to be realized. Tax loss carryforwards of approximately $88.5 million exist in certain foreign jurisdictions. Whereas some of these tax loss carryforwards do not have an expiration date, others expire at various times from 2019 through 2024.

The following table reconciles the unrecognized tax benefits:



							January 31,
(in millions)	2017			2016			2015
Unrecognized tax benefits at beginning of year	$	10.2		$	8.3		$	27.6
Gross increases – tax positions in prior period	0.9			1.0			1.0
Gross decreases – tax positions in prior period	(5.0		)	(0.4		)	(5.4		)
Gross increases – tax positions in current period	0.3			1.4			0.1
Settlements	(3.0		)	—			(14.8		)
Lapse of statute of limitations	—			(0.1		)	(0.2		)
Unrecognized tax benefits at end of year	$	3.4		$	10.2		$	8.3

Included in the balance of unrecognized tax benefits at January 31, 2017, 2016 and 2015 are $1.0 million, $9.1 million and $5.3 million of tax benefits that, if recognized, would affect the effective income tax rate.

The Company recognizes interest expense and penalties related to unrecognized tax benefits within the provision for income taxes. During the year ended January 31, 2017, the Company recognized no expense associated with interest and penalties while during the years ended January 31, 2016 and 2015, the Company recognized approximately $1.7 million and $1.8 million of expense. Accrued interest and penalties are included within accounts payable and accrued liabilities and other long-term liabilities, and were $8.3 million and $7.8 million at January 31, 2017 and 2016.

At January 31, 2017, the Company's gross uncertain tax positions decreased $6.8 million and gross accrued interest and penalties were unchanged from January 31, 2016, primarily as a result of the conclusion of a tax examination during the three months ended April 30, 2016. This settlement resulted in an income tax benefit of $6.6 million for the year ended January 31, 2017, and reduced the effective income tax rate by 1.0 percentage point versus the prior year.

The Company conducts business globally, and, as a result, is subject to taxation in the U.S. and various state and foreign jurisdictions. As a matter of course, tax authorities regularly audit the Company. The Company's tax filings are currently being examined by a number of tax authorities in several jurisdictions, both in the U.S. and in foreign jurisdictions. Ongoing audits where subsidiaries have a material presence include New York City (tax years 2011–2013) and New York State (tax years 2012–2014). Tax years from 2010–present are open to examination in the U.S. Federal jurisdiction and 2006–present are open in various state, local and foreign jurisdictions. As part of these audits, the Company engages in discussions with taxing authorities regarding tax positions. At January 31, 2017, total unrecognized tax benefits were $3.4 million of which approximately $1.0 million, if recognized, would affect the effective income tax rate. As of January 31, 2017, unrecognized tax benefits are not expected to change materially in the next 12 months. Future developments may result in a change in this assessment.