Entity information:
NOTE F — INCOME TAXES
The income tax provision is comprised of the following:
     
Year Ended January 31,
  
     
2017
    
2016
    
2015
  
     
(In thousands)
  
Current        
Federal
       $ 22,925         $ 47,585         $ 46,989    
State and city
         4,034           5,910           5,978    
Foreign
         6,150           7,768           5,688    
          33,109           61,263           58,655    
Deferred        
Federal
         (4,776)           3,458           1,422    
State and city
         (2,807)           535           (67)    
Foreign
         298           (456)           (560)    
          (7,285)           3,537           795    
Income tax expense
       $ 25,824         $ 64,800         $ 59,450    
Income before income taxes        
United States
       $ 55,363         $ 149,578         $ 133,709    
Non-United States
         22,399           29,555           34,732    
        $ 77,762         $ 179,133         $ 168,441    
 
The significant components of the Company’s net deferred tax asset at January 31, 2017 and 2016 are summarized as follows:
     
2017
    
2016
  
     
(In thousands)
  
Deferred tax assets      
Compensation
       $    10,323         $ 13,045    
Straight-line lease
         4,279           3,713    
Provision for bad debts and sales allowances
         11,919           11,180    
Supplemental employee retirement plan
         519           378    
Inventory write-downs
         10,163           3,581    
Net operating loss
         2,274           1,637    
Other
         2,343           1,812    
Total deferred tax assets
         41,820           35,346    
Deferred tax liabilities
      
Depreciation and amortization
         (14,724)           (15,981)    
Intangibles
         (21,347)           (21,772)    
Prepaid expenses and other
         (3,383)           (3,362)    
Other
         (817)           (507)    
Total deferred tax liabilities
         (40,271)           (41,622)    
Net deferred tax assets (liability)
       $ 1,549         $ (6,276)    
 
As of January 31, 2017 and 2016, intangible deferred tax liabilities of   $13.8 million and $14.3 million, respectively, relate to intangible assets in Switzerland. The remaining intangible assets relate primarily to the U.S.
The following is a reconciliation of the statutory federal income tax rate to the effective rate reported in the financial statements for the years ended January 31:
     
2017
    
2016
    
2015
  
Provision for Federal income taxes at the statutory rate
         35.0%           35.0%           35.0%    
State and local income taxes, net of Federal tax benefit
         1.0           2.4           2.3    
Permanent differences resulting in Federal taxable income
         9.6           3.6           2.9    
Foreign tax rate differential
         (1.7)           (1.4)           0.1    
ASC 718 Adoption
         (3.8)           —           —    
Foreign tax credit
         (6.5)           (3.1)           (6.5)    
Other, net
         (0.4)           (0.3)           1.5    
Actual provision for income taxes
         33.2%           36.2%           35.3%    
 
Undistributed earnings of the Company’s foreign subsidiaries amounted to approximately $32 million at January 31, 2017. Those earnings are considered indefinitely reinvested and, accordingly, no provision for U.S. income taxes has been provided thereon. Upon distribution of those earnings in the form of dividends or otherwise, the Company would be subject to both U.S. income taxes (subject to an adjustment for foreign tax credits) and withholding taxes payable to the various foreign countries, as applicable. At this point in time it is not practical to estimate the amount of taxes payable if the earnings were remitted.
Unrecognized Tax Benefits
A reconciliation of the beginning and ending amounts of gross unrecognized tax benefits (excluding interest and penalties) is as follows:
     
2017
    
2016
    
2015
  
Balance at February 1,
         1,094           1,094           1,094    
Additions based on tax positions related to the current year
         0           0           0    
Additions for tax positions of prior years
         0           0           0    
Reductions for tax positions of prior years
         0           0           0    
Settlements         0           0           0    
Lapses of statutes of limitations
         0           0           0    
Balance at January 31,
         1,094           1,094           1,094    
 
The Company accounts for uncertain income tax positions in accordance with ASC Topic 740 Income Taxes. The Company files income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. As of January 31, 2017, there was an increase in the unrecognized tax position reserve of approximately $125,000 for the current year accrual of interest and penalties on existing uncertain income tax positions reserves.
The Company’s policy on classification is to include interest in “interest and financing charges” and penalties in “selling, general and administrative expense” in the accompanying Consolidated Statements of Income. The Company and certain of its subsidiaries are subject to U.S. Federal income tax as well as income tax of multiple state, local, and foreign jurisdictions. One of its foreign subsidiaries, T.R.B. International S.A., has a ruling with the Swiss government that taxes commercial foreign sourced income at an 11.6% rate. The ruling was extended to the year ending January 31, 2018.
Of the major jurisdictions, the Company and its subsidiaries are subject to examination in the United States and various foreign jurisdictions for fiscal year 2013 and forward. It is currently under audit examination by New Jersey and Belgium for fiscal year 2010 and forward. We believe that it is reasonably possible that the total amount of unrecognized tax benefits of  $1.6 million (inclusive of tax, interest and penalties) will not change during the next twelve months due to the applicable statutes of limitations.