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Income Taxes
9 Months Ended
Nov. 28, 2014
Income Tax Disclosure [Abstract]  
Income Taxes

Note 16 – Income Taxes

The Corporation’s provision for income taxes in interim periods is computed by applying its estimated annual effective tax rate against income before income tax expense for the period. In addition, non-recurring or discrete items are recorded during the period in which they occur. The magnitude of the impact that discrete items have on the Corporation’s quarterly effective tax rate is dependent on the level of income in the period. The effective tax rate was 35.7% and 27.6% for the three and nine months ended November 28, 2014, respectively, and 8.6% and 49.1% for the three and nine months ended November 29, 2013, respectively. The lower than statutory rate for the nine months ended November 28, 2014 was due to both the recording of a net $4.1 million federal tax refund and related interest attributable to fiscal 2000 and the error corrections identified in the current year first quarter and recorded in accordance with ASC Topic 250, Accounting Changes and Error Corrections. The net impact of the error corrections was a reduction to income tax expense of $4.1 million. During the first quarter of fiscal 2015, the Corporation identified and corrected errors in the accounting for income taxes that related to the year ended February 28, 2014. These errors primarily related to the Corporation’s failure to consider all sources of available taxable income when assessing the need for a valuation allowance against certain deferred tax assets and the recognition of a liability for an uncertain tax position. These errors were the result of the significant complexity created as a result of the Merger and related transactions in fiscal 2014. See Note 1 for further information. The lower than statutory rate for the three months ended November 29, 2013 was due primarily to the release of reserves upon lapse of the applicable statutes and related to positions that had been effectively settled under audit. The higher than statutory rate for the nine months ended November 29, 2013 was due primarily to the recording of an $8.0 million valuation allowance against certain net operating loss and foreign tax credit carryforwards which the Corporation believed at the time would expire unused as a result of the Merger.

At November 28, 2014, the Corporation had unrecognized tax benefits of $21.6 million that, if recognized, would have a favorable effect on the Corporation’s income tax expense of $19.1 million. During the nine months ended November 28, 2014, the Corporation’s unrecognized tax benefits increased $2.6 million as a result of uncertain tax positions taken in the Corporation’s most recently filed tax returns and error corrections related to the uncertain tax position as discussed above. It is reasonably possible that the Corporation’s unrecognized tax positions as of November 28, 2014 could decrease $3.0 million during the next twelve months due to anticipated settlements and resulting cash payments related to tax years which are open to examination.

The Corporation recognizes interest and penalties accrued on unrecognized tax benefits and refundable income taxes as a component of income tax expense. During the nine months ended November 28, 2014, the Corporation recognized a net benefit of $3.8 million for interest and penalties on unrecognized tax benefits and refundable income taxes. As of November 28, 2014, the total amount of gross accrued interest and penalties related to unrecognized tax benefits less refundable income taxes was a net payable of $0.6 million.

The Corporation is subject to examination by the IRS for tax years 2010 to the present and various U.S. state and local jurisdictions for tax years 2001 to the present. The Corporation is also subject to tax examination in various international tax jurisdictions, including Canada, the United Kingdom, Australia, Italy, Mexico and New Zealand for tax years 2006 to the present.