Income Taxes

12 Months Ended

Feb. 29, 2012

Income Taxes [Abstract]

Income Taxes

(13) Income Taxes

The following table represents components of the provision for income taxes for fiscal years ended (in thousands):

	2012		2011		2010
Current:
Federal	$	12,650	$	18,167	$	16,357
State and local		2,575		3,535		3,104
Foreign		1,985		866		857
Total current		17,210		22,568		20,318
Deferred:
Federal		794		2,085		223
State and local		18		133		71
Foreign		—		—		(149	)
Total deferred		812		2,218		145
Total provision for income taxes	$	18,022	$	24,786	$	20,463

The Company’s effective tax rate on earnings from operations for the year ended February 29, 2012, was 36.5%, as compared with a 35.7% and 36.8% in 2011 and 2010, respectively. The following summary reconciles the statutory U.S. Federal income tax rate to the Company’s effective tax rate for the fiscal years ended:

	2012			2011			2010
Statutory rate		35.0	%		35.0	%		35.0	%
Provision for state income taxes, net of Federal income tax benefit		3.5			3.1			3.7
Domestic production activities deduction		(2.6	)		(3.0	)		(2.0	)
Other		0.6			0.6			0.1
		36.5	%		35.7	%		36.8	%

Included in other assets on the balance sheet is approximately $2,800,000 of refund receivable related to amended Canadian tax returns for 2006-2008.

Deferred taxes are recorded to give recognition to temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements. The tax effects of these temporary differences are recorded as deferred tax assets and deferred tax liabilities. Deferred tax assets generally represent items that can be used as a tax deduction or credit in future years. Deferred tax liabilities generally represent items that have been deducted for tax purposes, but have not yet been recorded in the consolidated statements of earnings. To the extent there are deferred tax assets that are more likely than not to be realized, a valuation allowance would not be recorded. The components of deferred income tax assets and liabilities are summarized as follows (in thousands) for fiscal years ended:

	2012			2011
Current deferred tax assets related to:
Allowance for doubtful receivables	$	1,683		$	1,833
Inventories		1,952			1,910
Employee compensation and benefits		1,667			1,942
Other		191			351
	$	5,493		$	6,036
Noncurrent deferred tax liability (asset) related to:
Property, plant and equipment	$	4,362		$	4,940
Goodwill and other intangible assets		22,280			21,527
Pension and noncurrent employee compensation benefits		(4,101	)		(1,955	)
Net operating loss and foreign tax credits		(285	)		(315	)
Property tax		506			881
Interest rate swap		—			(225	)
Currency exchange		633			567
Stock options exercised		(382	)		(303	)
Valuation allowance		—			247
Other		16			15
	$	23,029		$	25,379

The Company maintained a valuation allowance of approximately $250,000 to adjust the basis of net deferred taxes as of February 28, 2011. In fiscal year 2012, the Company determined it would be able to utilize certain credits and carry forwards and released the valuation reserve. Included in other non-current deferred tax liability (asset) are currency exchange, stock options exercised, and the valuation allowance. The Company has federal net operating loss carry forwards of approximately $681,000 and state net operating loss carry forwards of approximately $937,000 expiring in fiscal years 2019 through 2031. Based on historical earnings, management believes it will be able to fully utilize the net operating loss carry forwards.

Accounting standards require a two-step approach to determine how to recognize tax benefits in the financial statements where recognition and measurement of a tax benefit must be evaluated separately. A tax benefit will be recognized only if it meets a “more-likely-than-not” recognition threshold. For tax positions that meet this threshold, the tax benefit recognized is based on the largest amount of tax benefit that is greater than 50 percent likely of being realized upon ultimate settlement with the taxing authority.

Unrecognized tax benefits, including accrued interest and penalties, at fiscal year end 2012 and 2011 of $95,000 and $163,000, respectively, related to uncertain tax positions are included in other liabilities on the consolidated balance sheets and would impact the effective rate if recognized. For fiscal year 2012, the unrecognized tax benefit includes an aggregate of $6,000 of interest expense. Approximately $32,000 of unrecognized tax benefits relate to items that are affected by expiring statutes of limitations within the next 12 months. A reconciliation of the change in the unrecognized tax benefits for fiscal years ended 2012 and 2011 is as follows (in thousands):

	2012			2011
Balance at beginning of year	$	141		$	147
Additions (reductions) based on tax positions related to the current year		243			43
Reductions due to lapses of statutes of limitations		(47	)		(49	)
Balance at end of year	$	337		$	141

The Company is subject to U.S. federal income tax as well as to income tax of multiple state jurisdictions and foreign tax jurisdictions. The Company has concluded all U.S. federal income tax matters for years through 2007. All material state and local income tax matters have been concluded for years through 2006 and foreign tax jurisdictions through 2008.

The Company recognizes interest expense on underpayments of income taxes and accrued penalties related to unrecognized non-current tax benefits as part of the income tax provision. Other than amounts included in the unrecognized tax benefits, the Company did not recognize any interest or penalties for the fiscal years ended 2012, 2011 and 2010.