Income Taxes (Notes)

12 Months Ended

Feb. 28, 2017

The provision for income taxes consists of:



		2017			2016			2015
		(Restated)			(Restated)			(Restated)
		(in thousands)
Income before income taxes:
Domestic		$	74,972		$	93,561		$	77,511
Foreign		10,325			8,814			13,696
Income before income taxes		$	85,297		$	102,375		$	91,207
Current provision (benefit):
	Federal	$	23,282		$	28,099		$	3,770
	Foreign	2,751			2,706			3,025
	State and Local	(696		)	(337		)	2,575
Total current provision for income taxes		$	25,337		$	30,468		$	9,370
Deferred provision (benefit):
	Federal	$	(2,486	)	$	(6,560	)	$	15,859
	Foreign	189			(123		)	(858		)
	State and Local	993			3,046			1,220
Total deferred provision (benefit) for income taxes		$	(1,304	)	$	(3,637	)	$	16,221
Total provision for income taxes		$	24,033		$	26,831		$	25,591

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



	2017		2016		2015
	(Restated)		(Restated)		(Restated)
Statutory federal income tax rate	35.0	%	35.0	%	35.0	%
Permanent differences	0.7		0.4		0.6
State income taxes, net of federal income tax benefit	0.4		(1.5	)	2.7
Benefit of Section 199 of the Code, manufacturing deduction	(2.3	)	(2.7	)	(2.4	)
Valuation allowance	—		(1.2	)	(3.4	)
Stock compensation	(1.8	)	—		—
Tax credits	(3.1	)	(3.2	)	(3.4	)
Foreign tax rate differential	(0.8	)	(0.4	)	(0.7	)
Other	0.1		(0.2	)	(0.3	)
Effective income tax rate	28.2	%	26.2	%	28.1	%

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:



	2017			2016
	(Restated)			(Restated)
	(In thousands)
Deferred income tax assets:
Employee related items	$	6,839		$	5,652
Inventories	1,286			1,106
Accrued warranty	715			1,008
Accounts receivable	261			173
Net operating loss carry forward	4,011			2,903
	13,112			10,842
Less: valuation allowance	(648		)	(648		)
Total deferred income tax assets	12,464			10,194
Deferred income tax liabilities:
Depreciation methods and property basis differences	(27,913		)	(31,008		)
Other assets and tax-deductible goodwill	(37,950		)	(30,839		)
Total deferred income tax liabilities	(65,863		)	(61,847		)
Net deferred income tax liabilities	$	(53,399	)	$	(51,653	)

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 2017, we have not made a provision for U.S. or additional foreign withholding taxes on approximately $24.8 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 (NOL) Carryforward:



	2017		2016
	(In thousands)
Federal	$	—	$	—
State	$	4,011	$	2,903
Foreign	$	—	$	—

As of February 28, 2017, the Company had pretax state NOL carryforwards of $55.5 million which, if unused, will begin to expire in 2025.

As of fiscal year end 2017 and 2016, a portion of our deferred tax assets were the result of state NOL carryforwards. We believe that it is more likely than not that the benefit from certain state NOL carry forwards will not be realized. In recognition of this risk, we have provided a valuation allowance of $0.6 million and $0.6 million as of fiscal year end 2017 and 2016, respectively.

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.