
		2021		2020		2019
Income before income taxes:
Domestic		$	46,766	$	44,406	$	48,261
Foreign		4,231		20,484		14,744
Income before income taxes		$	50,997	$	64,890	$	63,005
Current provision:
	Federal	$	9,532	$	12,563	$	4,251
	Foreign	2,660		5,259		2,829
	State and local	1,754		1,451		986
Total current provision for income taxes		$	13,946	$	19,273	$	8,066
Deferred provision (benefit):
	Federal	$	(2,165)	$	(1,452)	$	2,970
	Foreign	(2,294)		(21)		539
	State and local	1,896		(1,144)		222
Total deferred provision for (benefit from) income taxes		$	(2,563)	$	(2,617)	$	3,731
Total provision for income taxes		$	11,383	$	16,656	$	11,797


	2021		2020		2019
Statutory federal income tax rate	21.0	%	21.0	%	21.0	%
Permanent differences	(0.1)		0.1		0.5
State income taxes, net of federal income tax benefit	5.4		—		0.4
Valuation allowance	(0.4)		—		(0.7)
Stock compensation	1.1		—		0.5
Tax credits	(3.4)		2.0		(4.1)
Foreign tax rate differential	0.1		1.4		1.1
Uncertain tax positions	(1.0)		1.4		—
Audit settlement	1.9		—		—
Other	(2.3)		(0.2)		—
Effective income tax rate	22.3	%	25.7	%	18.7	%

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 as of February 28, 2021 and February 29, 2020 (in thousands):


	2021		2020
Deferred income tax assets:
Employee related items	$	3,282	$	3,194
Inventories	5,729		823
Accrued warranty	429		548
Accounts receivable	2,347		2,094
Lease liabilities	8,962		10,601
Other deferred income tax assets	239		80
Net operating loss and other credit carry-forwards	6,649		7,983

	27,637		25,323
Less: valuation allowance	(689)		(725)
Total deferred income tax assets	26,948		24,598
Deferred income tax liabilities:
Depreciation methods and property basis differences	(18,982)		(21,447)
Right-of-use lease assets	(8,623)		(10,299)
Other assets and tax-deductible goodwill	(34,740)		(30,778)
Total deferred income tax liabilities	(62,345)		(62,524)
Net deferred income tax liabilities	$	(35,397)	$	(37,926)

As of February 28, 2021, the Company had pretax state NOL carry-forwards of $73.1 million which, if unused, will begin to expire in 2022 and pretax foreign NOL carry-forwards of $4.1 million, which, if unused, will begin to expire in 2027.

As of fiscal year end 2021 and 2020, a portion of the Company's deferred tax assets were the result of state and foreign jurisdiction NOL carry-forwards and state credit carry-forwards. The Company believes that it is more likely than not that the benefit from certain foreign NOL carry-forwards and state credit carry-forwards will not be realized. In recognition of this risk, the Company has provided a valuation allowance of $0.7 million and $0.7 million as of fiscal year end 2021 and 2020, respectively.

The calculation of the Company's tax liabilities involves dealing with uncertainties in the application of complex tax laws and regulations in a multitude of jurisdictions across the Company's global operations. Generally accepted accounting principles in the United States of America ("GAAP") states that a tax benefit from an uncertain tax position may be recognized when it is

more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, on the basis of the technical merits. The Company may (1) record unrecognized tax benefits as liabilities in accordance with GAAP and (2) adjust these liabilities when the Company's judgment changes as a result of the evaluation of new information not previously available. Because of the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from the Company's current estimate of the unrecognized tax benefit liabilities. These differences will be reflected as increases or decreases to income tax expense in the period in which new information becomes available.


	2021
Balance at beginning of period	$	2,531
Increase for tax positions related to prior periods:
Gross increases	5,617

Decrease for tax positions related to prior periods:
Gross decreases	(1,263)
Decreases relating to settlements with taxing authorities	(642)
Decreases resulting from lapses in statutes of limitations	(2,893)
Balance at end of period	$	3,350

Current year increases to our Uncertain Tax Positions (“UTPs”) primarily relate to matters related to research and development credits, certain foreign tax credits, various state and local tax matters and various temporary differences. Similarly, current year decreases primarily relate to offsetting decreased movement of certain temporary differences categorized as UTPs, the lapse of the statute of limitations in certain jurisdictions and settlements with taxing authorities.

The Company recognizes accrued interest and penalties related to unrecognized tax benefits in income tax expense. Penalties and interest expensed for fiscal 2021 and 2020 were ($0.4) million and $0.9 million, respectively.

The Company does not have any prior year tax returns currently being examined by taxing authorities. The Company believes that it has provided adequate reserves for its income tax uncertainties in all open tax years. As the outcome of any tax audits cannot be predicted with certainty, if any issues addressed in the Company's tax audits are resolved in a manner inconsistent with management's expectations, the Company could adjust its provision for income taxes in the future.

The Company has operations and taxable presence in multiple jurisdictions in the U.S. and outside of the U.S. in Canada, the Netherlands, China, Poland and Brazil. The tax positions of the Company and its subsidiaries are subject to income tax audits by multiple tax jurisdictions around the world. The Company currently considers U.S. federal and state and Canada, to be significant tax jurisdictions. The Company’s U.S. federal and state tax returns since February 28, 2018 remain open to examination. With some exceptions, tax years prior to fiscal 2018 in jurisdictions outside of U.S. are closed. The statute of limitations for fiscal year end 2018 will expire in December 2021. The Company anticipates it is reasonably possible that a decrease of unrecognized tax benefits related to various federal, foreign and state positions of $2.3 million may be resolved in the next 12 months.

Prior to enactment of H.R. 1, formerly known as the Tax Cuts and Jobs Act of 2017 (the "Tax Act"), the Company asserted that all unremitted earnings of its foreign subsidiaries were considered indefinitely reinvested. As a result of the Tax Act, the Company reported and paid U.S. tax on the majority of its previously unremitted foreign earnings. As of February 28, 2021, the Company continues to be indefinitely reinvested with respect to investments in its foreign subsidiaries. Additionally, the Company has not recorded deferred tax liabilities associated with the remaining unremitted earnings that are considered indefinitely reinvested. It is impracticable for the Company to determine the amount of unrecognized deferred tax liabilities on these indefinitely reinvested earnings, due to the complexities associated with the hypothetical calculation