INCOME TAXES

United States and foreign income (loss) before income taxes for the years ended February 2012, 2013 and 2014 was as follows:



	2012			2013			2014
United States	$	4,305		$	(7,518	)	$	16,659
Foreign	(867		)	(1,350		)	(2,067		)
Income (loss) before income taxes	$	3,438		$	(8,868	)	$	14,592

The benefit for income taxes for the years ended February 2012, 2013, and 2014 consisted of the following:



	2012			2013			2014
Current:
Federal	$	529		$	(529	)	$	—
State	1,510			(152		)	(900		)
Foreign	—			161			13
	2,039			(520		)	(887		)
Deferred:
Federal	(29,303		)	(4,589		)	(25,219		)
State	(5,023		)	(1,930		)	(7,957		)
Foreign	—			—			—
	(34,326		)	(6,519		)	(33,176		)
Benefit for income taxes	$	(32,287	)	$	(7,039	)	$	(34,063	)
Other Tax Related Information:
Tax provision (benefit) of discontinued operations	5,544			(6,975		)	—

The provision (benefit) for income taxes for the years ended February 2012, 2013 and 2014 differs from that computed at the Federal statutory corporate tax rate as follows:



	2012			2013			2014
Computed income tax provision (benefit) at 35%	$	1,203		$	(3,109	)	$	5,110
State income tax benefit	(3,513		)	(2,082		)	(8,857		)
Foreign taxes	303			639			737
Tax benefit resulting from swap expiration and related OCI reversal	(786		)	—			—
Allocation of tax benefit from discontinued operations	—			(3,007		)	—
Nondeductible stock compensation and Section 162 disallowance	271			127			55
Entertainment disallowance	504			430			455
Change in valuation allowance	(30,092		)	6,966			(31,059		)
Tax attributed to noncontrolling interest	(1,496		)	(1,561		)	(1,793		)
Section 165(g) worthless stock deduction	—			(5,746		)	—
Alternative minimum tax	529			(529		)	—
Taxable dividend from foreign subsidiary	752			—			—
Other	38			833			1,289
Benefit for income taxes	$	(32,287	)	$	(7,039	)	$	(34,063	)

The components of deferred tax assets and deferred tax liabilities at February 28, 2013 and February 28, 2014 are as follows:



	2013			2014
Deferred tax assets:
Net operating loss carryforwards	$	29,070		$	27,963
Intangible assets	17,051			12,127
Compensation relating to stock options	2,884			2,199
Interest rate exchange agreement	43			38
Deferred revenue	2,049			1,639
Accrued rent	1,567			1,897
Tax credits	1,405			1,927
Investments in subsidiaries	320			352
Other	1,116			2,181
Valuation allowance	(40,863		)	(970		)
Total deferred tax assets	14,642			49,353
Deferred tax liabilities
Indefinite-lived intangible assets	(37,952		)	(40,549		)
Property and equipment	(1,507		)	(569		)
Cancellation of debt income	(13,136		)	(13,136		)
Other	(119		)	—
Total deferred tax liabilities	(52,714		)	(54,254		)
Net deferred tax liabilities	$	(38,072	)	$	(4,901	)

A valuation allowance is provided when it is more likely than not that some portion of the deferred tax asset will not be realized. The Company historically recorded a full valuation allowance on all U.S. (federal and state) deferred tax assets. During the year ended February 28, 2014, due to improved operating results, the Company determined that a valuation allowance on most of its deferred tax assets was no longer appropriate and reversed the valuation allowance on all U.S. deferred tax assets (with the exception of certain state NOL DTA's). The Company decreased its valuation allowance for all jurisdictions by a net of $39.9 million, from $40.9 million as of February 28, 2013 to $1.0 million as of February 28, 2014.

The Company has federal NOLs of $62 million and state NOLs of $164 million available to offset future taxable income. These net operating losses include an unrealized benefit of approximately $1.4 million related to share-based compensation that will be recorded in equity when realized. The federal net operating loss carryforwards begin expiring in 2028, and the state net operating loss carryforwards expire between the years ending February 2014 and February 2034. A valuation allowance has been provided for the net operating loss carryforwards related to states in which the Company no longer has operating results as it is more likely than not that substantially all of these net operating losses will expire unutilized.

The $1.9 million of tax credits at February 28, 2014 relate primarily to alternative minimum tax carryforwards that can be carried forward indefinitely. This amount also includes tax credits in Indiana and Texas that are expected to be fully utilized prior to expiration.

The Company has adopted FASB Accounting Standards Codification Topic 740-10, Accounting for Uncertainty in Income Taxes (“ASC 740-10”). ASC 740-10 clarifies the accounting for uncertainty in income taxes by prescribing a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken within a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. The amount recognized is measured as the largest benefit that is greater than 50 percent likely of being realized upon ultimate settlement. As of February 28, 2014, the estimated value of the Company’s net uncertain tax positions is approximately $0.2 million, most of which is included in other noncurrent liabilities, as the Company does not expect to settle the items within the next 12 months.

The following is a tabular reconciliation of the total amounts of gross unrecognized tax benefits for the years ending February 28, 2013 and February 28, 2014:



	For the year ending February 28,
	2013			2014
Gross unrecognized tax benefit – opening balance	$	(525	)	$	(683	)
Gross increases – tax positions in prior periods	(158		)	—
Gross decreases—settlements with taxing authorities	—			525
Gross unrecognized tax benefit – ending balance	$	(683	)	$	(158	)

Included in the balance of unrecognized tax benefits at February 28, 2014 and February 28, 2013 are $0.2 million and $0.7 million of tax benefits that, if recognized, would reduce the Company’s provision for income taxes. Due to the uncertain and complex application of tax regulations, it is possible that the ultimate resolution of audits may result in liabilities that could be different from this estimate. In such case, the Company will record additional tax expense or tax benefit in the tax provision, or reclassify amounts on the accompanying consolidated balance sheets in the period in which such matter is effectively settled with the taxing authority.

The Company recognizes interest accrued related to unrecognized tax benefits and penalties as income tax expense. Related to the uncertain tax benefits noted above, the Company accrued an immaterial amount of interest during the year ending February 28, 2014 and in total, as of February 28, 2014, has recognized a liability for interest of $2 thousand.

The Company files income tax returns in the U.S. federal jurisdiction, various state jurisdictions and various international jurisdictions. The Company has a number of federal, state and foreign income tax years still open for examination as a result of the net operating loss carryforwards. Accordingly the Company is subject to examination for both U.S. federal and certain state tax return purposes for the years ending February 29, 2004 to present.