17. Income taxes

        The components of income before income taxes and the corresponding provision for income taxes are as follows (in thousands):

        The provision for income taxes differs from that which would have resulted from the use of the federal statutory income tax rate as follows (in thousands):

        The significant items comprising our deferred tax assets and liabilities as of September 30, 2014 and 2013 are as follows (in thousands):

        At September 30, 2014, our foreign subsidiaries held approximately $173 million of cumulative earnings. We consider undistributed earnings of our foreign subsidiaries to be indefinitely reinvested outside of the United States and, accordingly, no U.S. deferred taxes have been recorded with respect to such earnings in accordance with the relevant accounting guidance for income taxes. Should the earnings be remitted as dividends, we may be subject to additional U.S. taxes, net of allowable foreign tax credits. It is not practicable to estimate the amount of any additional taxes which may be payable on the undistributed earnings given the various tax planning alternatives we could employ should we decide to repatriate these earnings in a tax-efficient manner. As of September 30, 2014, our foreign subsidiaries held approximately $95 million of cash and cash equivalents. In November 2014, we remitted $32 million from an international subsidiary to the U.S. as a return of capital on a tax-free basis.

        We had $4.5 million and $6.9 million of net operating loss carryforwards in the U.S. at September 30, 2014 and 2013, respectively. These balances resulted in deferred tax assets of $2.4 million and $3.1 million, respectively, and relate exclusively to the losses held by PSI prior to the acquisition in 2012. Although our ability to use these loss carryforwards will be restricted to an annual allowance, we have sufficient profits and time within the jurisdictions where losses have arisen to ensure that these losses will be utilized in full through fiscal year 2017. Accordingly, no reserve has been recorded against these balances. These net operating loss carryforwards expire between 2027 and 2031.

        We had $0.8 million and $3.9 million of net operating loss carryforwards in Canada at September 30, 2014 and 2013, respectively, resulting in deferred tax assets of $0.2 million and $1.0 million. The balance at September 30, 2013 was fully reserved. During fiscal year 2014, $3.1 million of these net operating losses were utilized and the balance of the existing reserve was reversed. These net operating loss carryforwards expire through 2027 to 2031.

        Cash paid for income taxes during the years ended September 30, 2014, 2013, and 2012 was $79.4 million, $58.2 million and $44.3 million, respectively.

        We account for uncertain tax positions by recognizing the financial statement effects of a tax position only when, based upon the technical merits, it is "more-likely-than-not" that the position will be sustained upon examination. Our net unrecognized tax benefits totaled $1.1 million and $1.0 million at September 30, 2014 and 2013, respectively. The total amount of unrecognized tax benefits that, if recognized, would affect our annual effective income tax rate was $1.1 million at September 30, 2014.

        We report interest and penalties as a component of income tax expense. In the fiscal years ending September 30, 2014, 2013 and 2012, we recognized interest expense relating to unrecognized tax benefits of less than $0.1 million in each year. The net liability balance at September 30, 2014 and 2013 includes approximately $0.5 million of interest and penalties.

        We recognize and present uncertain tax positions on a gross basis (i.e., without regard to likely offsets for deferred tax assets, deductions and/or credits that would result from payment of uncertain tax amounts). The reconciliation of the beginning and ending amount of gross unrecognized tax benefits was as follows (in thousands):

        We file income tax returns in the U.S. federal jurisdiction and in various state and foreign jurisdictions. We are no longer subject to federal income tax examinations for years before 2011 and to state and local income tax examinations by tax authorities for years before 2009. In international jurisdictions, similar rules apply to filed income tax returns, although the tax examination limitations and requirements may vary. We are no longer subject to audit by tax authorities for foreign jurisdictions for years prior to 2009.