Income Taxes (Tables)

12 Months Ended

Mar. 03, 2018

The components of income before taxes for each of the last three fiscal years, by tax jurisdiction, were as follows (in thousands):

	2018		2017		2016
Domestic	$	13,882	$	39,818	$	54,887
Foreign		4,015		5,441		8,278
Income before income taxes	$	17,897	$	45,259	$	63,165

Provision for Income Taxes

The provision for income taxes for each of the last three fiscal years consisted of (in thousands):

	2018			2017			2016
Federal:
Current	$	549		$	30,062		$	14,600
Deferred		5,742			(17,842	)		2,352
State:
Current		(701	)		3,491			2,248
Deferred		270			(1,803	)		2,265
Foreign:
Current		411			1,222			2,066
Deferred		—			—			—
Total income tax provision	$	6,271		$	15,130		$	23,531

Income Tax Reported in Consolidated Statements of Operations

The differences between income taxes at the statutory federal income tax rate of 32.7% in fiscal 2018, and 35% in fiscal 2017 and 2016, and income tax reported in the consolidated statements of operations were as follows (in thousands):

	2018			2017			2016
Tax provision at statutory federal income tax rate	$	5,852		$	15,841		$	22,108
State income taxes, net of federal provision (benefit)		664			352			2,488
Change in valuation allowance		263			168			232
Foreign income taxes		411			1,222			2,066
Foreign and other tax credits		(772	)		(2,161	)		(4,924	)
Non-deductible penalty		1,021			40			39
Provisional remeasurement of U.S. federal deferred tax assets and liabilities		(323	)		—			—
Share-based compensation shortfall		436			—			—
Uncertain tax positions		(1,482	)		825			578
Other, net		201			(1,157	)		944
Provision for income taxes	$	6,271		$	15,130		$	23,531
Effective tax rate		35.0	%		33.4	%		37.3	%

Deferred Tax Assets and Liabilities

Deferred tax assets and liabilities at March 3, 2018 and February 25, 2017, were comprised of the following (in thousands):

	2018			2017
Deferred tax assets:
Deferred compensation	$	9,707		$	23,692
Accrued average rent		9,764			14,130
Self insurance reserves		7,857			11,719
Cumulative foreign currency translation		1,588			3,316
Deferred revenue and revenue reserves		3,584			5,224
Foreign and other tax credits		1,822			2,655
Other		3,650			4,033
Total deferred tax assets	$	37,972		$	64,769
Deferred tax liabilities:
Properties and equipment, net	$	(14,070	)	$	(24,084	)
Inventory		(13,578	)		(18,613	)
Store supplies		(2,393	)		(3,629	)
Deferred gain on debt repurchase		(2,199	)		(7,342	)
Other		(957	)		(1,082	)
Total deferred tax liabilities	$	(33,197	)	$	(54,750	)
Valuation allowance	$	(1,308	)	$	(822	)
Net deferred tax assets ⁽¹⁾	$	3,467		$	9,197

⁽¹⁾	For fiscal 2018 and 2017, state deferred tax assets were $4,354 and $4,590, respectively, and federal deferred tax assets were $0 and $4,607, respectively.

Reconciliation of Unrecognized Tax Benefits for Uncertain Tax Positions

A reconciliation of the beginning and ending amount of unrecognized tax benefits for uncertain tax positions is as follows (in thousands):

	2018			2017			2016
Unrecognized tax benefits — beginning balance	$	6,990		$	2,551		$	765
Gross increases — tax positions in current period		219			4,643			231
Gross increases — tax positions in prior period		47			225			1,862
Gross decreases — tax positions in prior period		(2,065	)		(320	)		(60	)
Settlements		—			(83	)		(81	)
Expiration of statute of limitations		(285	)		(26	)		(166	)
Unrecognized tax benefits — ending balance	$	4,906		$	6,990		$	2,551