Income Taxes (Notes)

12 Months Ended

Feb. 29, 2016

The provision for income taxes consists of:



		2016			2015			2014

Income before income taxes:
Domestic		$	95,554		$	76,434		$	83,495
Foreign		8,814			13,696			10,416
Income before income taxes		$	104,368		$	90,130		$	93,911
Current provision (benefit):
	Federal	$	28,099		$	3,770		$	28,901
	Foreign	2,706			3,025			1,903
	State and Local	(337		)	2,575			4,382
Total current provision for income taxes		$	30,468		$	9,370		$	35,186
Deferred provision (benefit):
	Federal	$	(5,813	)	$	15,455		$	(2,143	)
	Foreign	(123		)	(858		)	1,230
	State and Local	3,046			1,220			41
Total deferred provision (benefit) for income taxes		$	(2,890	)	$	15,817		$	(872	)
Total provision for income taxes		$	27,578		$	25,187		$	34,314

A reconciliation from the federal statutory income tax rate to the effective income tax rate is as follows:



	2016		2015		2014
Statutory federal income tax rate	35.0	%	35.0	%	35.0	%
Permanent differences	0.4		0.6		1.3
State income taxes, net of federal income tax benefit	(1.5	)	2.7		3.0
Benefit of Section 199 of the Code, manufacturing deduction	(2.7	)	(2.4	)	(2.2	)
Valuation allowance	(1.2	)	(3.4	)	—
Tax credits	(3.2	)	(3.4	)	—
Foreign tax rate differential	(0.4	)	(0.7	)	(0.6	)
Other	—		(0.5	)	—
Effective income tax rate	26.4	%	27.9	%	36.5	%

Deferred federal and state income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial accounting purposes and the amounts used for income tax purposes. Significant components of the Company’s net deferred income tax liability are as follows:



	2016			2015
	(In thousands)
Deferred income tax assets:
Employee related items	$	5,652		$	4,690
Inventories	1,106			1,080
Accrued warranty	1,008			893
Accounts receivable	173			565
Net operating loss carry forward	2,903			1,919
	10,842			9,147
Less: valuation allowance	(648		)	(1,588		)
Total deferred income tax assets	10,194			7,559
Deferred income tax liabilities:
Depreciation methods and property basis differences	(31,008		)	(28,611		)
Other assets and tax-deductible goodwill	(28,946		)	(26,161		)
Total deferred income tax liabilities	(59,954		)	(54,772		)
Net deferred income tax liabilities	$	(49,760	)	$	(47,213	)

In general, it is our practice and intention to reinvest the earnings of our non-U.S. subsidiaries in those operations. As of fiscal year end 2016, we have not made a provision for U.S. or additional foreign withholding taxes on approximately $20.0 million of the excess of the amount for financial reporting over the tax basis of investments in foreign subsidiaries that is indefinitely reinvested. Generally, such amounts become subject to U.S. taxation upon the remittance of dividends and under certain other circumstances. It is not practicable to estimate the amount of deferred tax liability related to investments in these foreign subsidiaries.

The following table summarizes the Net Operating Loss Carry forward:



	2016		2015
	(In thousands)
Federal	$	—	$	—
State	$	2,903	$	1,919
Foreign	$	—	$	—

As of February 29, 2016, the Company had pretax state NOL carry forwards of $36.7 million which, if unused, will begin to expire in 2025.

As of fiscal year end 2016 and 2015, a portion of our deferred tax assets were the result of state NOL carry forwards. We believe that it is more likely than not that the benefit from certain state NOL carryforwards will not be realized. In recognition of this risk, we have provided a valuation allowance of $0.6 million and $1.6 million as of fiscal year end 2016 and 2015, respectively. For the year ended February 29, 2016, we recorded a net valuation allowance release of $1.0 million on the basis of local tax authority reassessment of the amount which was realized in local tax jurisdictions and on local income tax returns.

We will review this risk within the next fiscal year and may conclude that a significant portion of the valuation allowance will no longer be needed. The tax benefits related to any reversal of the valuation allowance will be recognized as a reduction of income tax expense.