(11) Income Taxes

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


	2015			2014			2013
Current:
Federal	$	14,006		$	17,755		$	10,316
State and local		2,451			2,946			2,205
Foreign		322			183			168

Total current		16,779			20,884			12,689

Deferred:
Federal		(9,920	)		(1,550	)		803
State and local		(1,459	)		(731	)		411

Total deferred		(11,379	)		(2,281	)		1,214

Total provision for income taxes	$	5,400		$	18,603		$	13,903

The Company’s effective tax rate on earnings from operations for the year ended February 28, 2015, was (13.8)%, as compared with a 58.5% and 36.0% in 2014 and 2013, 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:


	2015			2014			2013
Statutory rate		35.0	%		35.0	%		35.0	%
Provision for state income taxes, net of Federal income tax benefit		(1.9	)		3.9			3.7
Domestic production activities deduction		3.5			(4.8	)		(2.9	)
Impairment of goodwill		(50.0	)		20.5			—
Other		(0.4	)		3.9			0.2

		(13.8	)%		58.5	%		36.0	%

Included in other assets on the consolidated balance sheets is approximately $2.3 million of refund receivable related to amended Canadian tax returns for fiscal years 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:


	2015			2014
Current deferred tax assets related to:
Allowance for doubtful receivables	$	1,356		$	1,395
Inventories		2,745			2,661
Employee compensation and benefits		2,305			2,275
Other		(134	)		(69	)

	$	6,272		$	6,262


Non-current deferred tax (liabilities) assets related to:
Property, plant and equipment	$	(9,087	)	$	(4,682	)
Goodwill and other intangible assets		(10,556	)		(21,913	)
Pension and noncurrent employee compensation benefits		6,064			2,384
Net operating loss and foreign tax credits		113			381
Property tax		(367	)		(634	)
Currency exchange		2,842			560
Stock options exercised		747			1,003
Other		(4	)		(3	)

	$	(10,248	)	$	(22,904	)

Included in other non-current deferred tax (liabilities) assets are currency exchange, stock options exercised, and the valuation allowance. As of the fiscal year ended 2015, the Company has federal net operating loss carry forwards of approximately $323,000 expiring in fiscal years 2023 through 2025. Based on historical earnings and expected sufficient future taxable income, 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.

At fiscal year-end 2015 and 2014, unrecognized tax benefits related to uncertain tax positions, including accrued interest and penalties of $329,481 and $246,000, respectively, are included in other liabilities on the consolidated balance sheets and would impact the effective rate if recognized. For fiscal year 2015, the unrecognized tax benefit includes an aggregate of $17,000 of interest expense. Approximately $17,000 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 2015 and 2014 is as follows (in thousands):


	2015			2014
Balance at beginning of year	$	246		$	96
Additions (reductions) based on tax positions related to the current year		166			182
Reductions due to lapses of statutes of limitations		(82	)		(32	)

Balance at end of year	$	330		$	246

The Company is subject to U.S. federal income tax as well as income tax of multiple state jurisdictions and foreign tax jurisdictions. The Company has concluded all U.S. Federal income tax matters for years through 2009. All material state and local income tax matters have been concluded for years through 2009 and foreign tax jurisdictions through 2009.

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 2015, 2014 and 2013.