Entity information:
INCOME TAXES

The components of earnings before income taxes consisted of domestic earnings before income taxes of $60.9 million, $68.2 million and $70.8 million in 2016, 2015 and 2014, respectively, and foreign earnings before income taxes of $36.4 million, $40.6 million and $39.3 million in 2016, 2015 and 2014, respectively.

The components of income tax provision (benefit) on earnings were as follows:

($ thousands)
 
2016

 
2015

 
2014

Federal
 
 
 
 
 
 
Current
 
$
10,577

 
$
9,530

 
$
27,311

Deferred
 
14,164

 
11,202

 
(9,502
)
 
 
24,741

 
20,732

 
17,809

State
 


 


 


Current
 
3,844

 
497

 
5,501

Deferred
 
(1,157
)
 
1,176

 
(642
)
 
 
2,687

 
1,673

 
4,859

Foreign
 
3,740

 
4,537

 
4,516

Total income tax provision
 
$
31,168

 
$
26,942

 
$
27,184



The Company made federal, state and foreign tax payments, net of refunds, of $16.9 million, $22.1 million and $20.1 million in 2016, 2015 and 2014, respectively.

The differences between the income tax provision reflected in the consolidated financial statements and the amounts calculated at the federal statutory income tax rate of 35% were as follows:

($ thousands)
 
2016

 
2015

 
2014

Income taxes at statutory rate
 
$
34,039

 
$
38,068

 
$
38,544

State income taxes, net of federal tax benefit
 
3,149

 
2,481

 
3,159

Foreign earnings taxed at lower rates
 
(8,404
)
 
(9,491
)
 
(8,882
)
Tax on international subsidiary dividend
 
—

 
—

 
1,040

Disposal and settlement of Shoes.com
 
—

 
(1,701
)
 
(7,428
)
Valuation allowance release on state loss carryforwards
 
—

 
(1,635
)
 
—

Valuation allowance release on other tax carryforwards
 
(179
)
 
(1,367
)
 
—

Valuation allowance for impairment of investment in nonconsolidated affiliate
 
2,450

 
—

 
—

Non-deductibility of acquisition costs
 
1,280

 
—

 
—

Settlement of federal and state audit matters
 
(945
)
 
—

 
—

Other
 
(222
)
 
587

 
751

Total income tax provision
 
$
31,168

 
$
26,942

 
$
27,184



In 2016, the Company's effective tax rate was impacted by several discrete tax benefits, including the settlement of certain federal and state tax matters, reductions of the valuation allowance related to capital loss carryforwards, and other adjustments, which totaled $2.5 million for the year. If these discrete tax benefits had not been recognized, the Company's full fiscal year 2016 effective tax rate would have been 34.6%.

The other category of income tax provision principally represents the impact of expenses that are not deductible or partially deductible for federal income tax purposes and adjustments in the amounts of deferred tax assets that are anticipated to be realized.

Significant components of the Company’s deferred income tax assets and liabilities were as follows:

($ thousands)
 
January 28, 2017

 
January 30, 2016

Deferred Tax Assets
 
 
 
 
Employee benefits, compensation and insurance
 
$
18,783

 
$
24,740

Accrued expenses
 
18,843

 
16,118

Postretirement and postemployment benefit plans
 
706

 
721

Deferred rent
 
8,319

 
7,269

Accounts receivable reserves
 
7,479

 
7,946

Net operating loss (“NOL”) carryforward/carryback
 
23,302

 
7,943

Capital loss carryforward
 
2,185

 
2,368

Alternative minimum tax credit carryforward
 
270

 
—

Inventory capitalization and inventory reserves
 
3,871

 
1,620

Impairment of investment in nonconsolidated affiliate
 
2,590

 
—

Depreciation
 
—

 
630

Other
 
1,580

 
1,346

Total deferred tax assets, before valuation allowance
 
87,928

 
70,701

Valuation allowance
 
(7,890
)
 
(6,544
)
Total deferred tax assets, net of valuation allowance
 
80,038

 
64,157

 
 
 
 
 
Deferred Tax Liabilities
 
 
 
 
Retirement plans
 
(8,421
)
 
(21,051
)
LIFO inventory valuation
 
(61,301
)
 
(61,585
)
Capitalized software
 
(8,715
)
 
(10,525
)
Depreciation
 
(9,076
)
 
—

Other
 
(1,096
)
 
(786
)
Intangible assets
 
(41,645
)
 
(631
)
Total deferred tax liabilities
 
(130,254
)
 
(94,578
)
Net deferred tax liability
 
$
(50,216
)
 
$
(30,421
)


As of January 28, 2017, the Company had various federal and state net operating loss carryforwards totaling $23.3 million, with expiration dates between 2017 and 2036. The Company's state net operating loss carryforwards have tax values totaling $8.1 million, for which the Company has recorded a valuation allowance of $3.1 million. The remaining net operating loss will be carried forward to future tax years. The Company also has valuation allowances of $2.6 million related to the impairment of an investment in a nonconsolidated affiliate, as further described in Note 4 to the consolidated financial statements, and $2.2 million related to capital loss carryforwards. In connection with the Allen Edmonds acquisition, the Company acquired net operating loss carryforwards totaling $15.6 million, the majority of which represents federal carryforwards. The Company anticipates full utilization of these federal operating loss carryforwards.

As of January 28, 2017, no deferred taxes have been provided on the accumulated unremitted earnings of the Company’s foreign subsidiaries that are not subject to United States income tax. The Company periodically evaluates its foreign investment opportunities and plans, as well as its foreign working capital needs, to determine the level of investment required and, accordingly, determines the level of foreign earnings that is considered indefinitely reinvested. Based upon that evaluation, earnings of the Company’s foreign subsidiaries that are not otherwise subject to United States taxation, are considered to be indefinitely reinvested, and accordingly, deferred taxes have not been provided. If changes occur in future investment opportunities and plans, those changes will be reflected when known and may result in providing residual United States deferred taxes on unremitted foreign earnings. If the Company’s unremitted foreign earnings were not considered indefinitely reinvested as of January 28, 2017, additional deferred taxes of approximately $53.4 million would have been provided.

Uncertain Tax Positions
ASC 740, Income Taxes, establishes a single model to address accounting for uncertain tax positions. The standard clarifies the accounting for income taxes by prescribing a minimum recognition threshold a tax position is required to meet before being recognized in the financial statements. The standard also provides guidance on derecognition, measurement classification, interest and penalties, accounting in interim periods, disclosure and transition.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
($ thousands)
 
 
Balance at February 1, 2014
 
$
1,015

Reductions for tax positions of prior years due to a lapse in the statute of limitations
 
—

Balance at January 31, 2015
 
$
1,015

Amounts settled and utilized for current tax obligations
 
(636
)
Reductions for tax positions of prior years
 
(379
)
Balance at January 30, 2016
 
$
—

Amounts settled and utilized for current tax obligations
 
—

Balance at January 28, 2017
 
$
—



If the unrecognized tax benefits were to be recognized in full, the net amount that would be reflected in the income tax provision in prior years, thereby impacting the effective tax rate, would have been $1.1 million at January 31, 2015.
Estimated interest related to the underpayment of income taxes was classified as a component of the income tax provision in the consolidated statements of earnings and was insignificant in 2016, 2015 and 2014.

For federal purposes, the Company’s tax years 2013 to 2015 (fiscal years ending February 1, 2014, January 31, 2015 and January 30, 2016) remain open to examination. The Company also files tax returns in various foreign jurisdictions and numerous states for which various tax years are subject to examination. The Company does not expect any significant changes to its liability for unrecognized tax benefits during the next 12 months.