4. INCOME TAXES

The income tax provision includes the following:


					Fiscal Year
		2013			2012			2011

Current:
Federal	$	(2,804	)	$	(696	)	$	2,880
State and local		172			(194	)		378
Foreign		5,419			5,077			4,872
		2,787			4,187			8,130

Deferred:
Federal		1,652			(239	)		274
State and local		(314	)		658			32
Foreign		(201	)		(397	)		260
		1,137			22			566
	$	3,924		$	4,209		$	8,696

Federal income tax benefits of $2,804 and $696 recognized in the 2013 and 2012 fiscal years, respectively, were the result of loss carrybacks to the 2011 and 2010 fiscal years, net of the tax impact from the loss of the domestic production activities deductions in those years.

State income tax benefits from loss carryforwards to future years are recognized as deferred tax assets in the 2013 fiscal year and as a current income tax benefit in the 2012 fiscal year.

The valuation allowance increased by $804 in 2013 as a result of increases in foreign net operating loss carryforwards.

The components of earnings before income taxes were as follows:


					Fiscal Year
		2013			2012			2011

United States	$	(4,196	)	$	(1,447	)	$	8,668
Foreign		25,081			29,098			32,649
Earnings before income taxes	$	20,885		$	27,651		$	41,317

The Company's effective income tax rate differs from the statutory U.S. Federal income tax rate as a result of the following:


			Fiscal Year
	2013		2012		2011
Statutory U.S. Federal tax rate	34.0	%	34.0	%	34.0	%
State and local taxes, net of
Federal benefit	-0.8	%	-0.6	%	0.6	%
Foreign tax rate differentials	-22.3	%	-19.9	%	-16.4	%
Valuation allowance on deferred
tax assets	0.4	%	3.1	%	2.6	%
Adjustment on tax accruals and
reserves	4.8	%	-2.4	%	0.8	%
Foreign tax credits	-0.3	%	-0.3	%	-0.5	%
Permanent differences and other	2.9	%	1.3	%	-0.1	%
	18.7	%	15.2	%	21.0	%

The Company had total net operating loss carryforwards of approximately $35,681 and $32,166 in the 2013 and 2012 fiscal years, respectively. As of the fiscal year ended March 3, 2013, $30,235 of net operating loss carryforwards have an indefinite carryforward period and $5,446 have a five year carryforward period.

The Company had New York State investment tax credit carryforwards of $710 and $1,728 in the 2013 and 2012 fiscal years, respectively. In the 2011 fiscal year, a $19 benefit was recognized for utilization of these credits. The New York State Investment tax credits expire in fiscal years 2013 through 2018. The Company has Kansas tax credits of $210 in both fiscal years 2013 and 2012, for which no benefit was provided. The Company does not believe that realization of the principal portion of the Kansas tax credit or the investment tax credit carryforward is more likely than not. The Kansas credits expire in the 2019 and 2020 fiscal years.

The deferred tax asset valuation allowance of $12,465 as of March 3, 2013 is related to foreign net operating losses and state tax credit carryforwards for which the Company does not expect to realize any tax benefit. During the 2013 fiscal year, the valuation allowance increased by $804 due to current year foreign losses and the expiration of state credits for which no tax benefit was recognized. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts for income tax purposes.

Significant components of the Company's deferred tax liabilities and assets as of March 3, 2013 and February 26, 2012 were as follows:


		March 3,			February 26,
		2013			2012
Deferred tax assets:
Impairment of fixed assets	$	5,813		$	6,035
Net operating loss carryforwards		11,917			9,753
Tax credits carryforward		1,343			2,019
Other, net		369			2,220
		19,442			20,027
Valuation allowance on deferred
tax assets		(12,465	)		(11,661	)
Net deferred tax assets		6,977			8,366

Depreciation		(468	)		(741	)
Offshore Singapore earnings subject
to local tax		(344	)		(321	)
Total deferred tax liabilities		(812	)		(1,062	)
Net deferred tax	$	6,165		$	7,304

The breakdown between current and long-term deferred tax assets follows:


		March 3,		February 26,
		2013		2012
Current	$	1,206	$	1,300
Non-current		5,771		7,066
Total deferred tax assets	$	6,977	$	8,366

On the Consolidated Balance Sheets, the current net deferred tax assets are included in prepaid expenses and other current assets. The non-current net deferred tax assets are included in other assets.

At March 3, 2013, the Company had gross unrecognized tax benefits of $164 included in current liabilities and $174 included in other liabilities. The unrecognized tax benefits included $2,715 relating to a claim for refund filed to recoup the tax benefit for the Company's remaining investment in New England Laminates (U.K.) Ltd. If any portion of the unrecognized tax benefits at March 3, 2013 were recognized, the Company's effective tax rate would change.

A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows:


		Unrecognized Tax Benefits
		March 3,		February 26,
		2013			2012
Balance, beginning of year	$	3,999		$	2,044
Gross increases-tax positions
in prior period		-			2,715
Gross decreases-tax positions
in prior period		(235	)		(268	)
Gross increases-current period
tax positions		-			264
Gross decreases-current period
tax positions		-			-
Audit settlements		(711	)		(756	)
Lapse of statute of limitations		-			-
Balance, end of year	$	3,053		$	3,999

The amount of unrecognized tax benefits may increase or decrease in the future for various reasons, including adding or subtracting amounts for current year tax positions, expiration of statutes of limitation on open income tax years, changes in the Company's judgment about the level of uncertainty, status of tax examinations, and legislative changes. Changes in prior period tax positions are the result of a re-evaluation of the probability of realizing the benefit of a particular tax position based on new information. It is reasonably possible that approximately $0 to $2.7 million of unrecognized tax benefits will be recognized in the 2014 fiscal year upon the conclusion of the Internal Revenue Service review of amended returns.

A list of open tax years by major jurisdiction follows:


United States	2010-2013
Arizona	2009-2013
California	2009-2013
New York	2008-2013
France	2011-2013
Singapore	2006-2013

The Company had approximately $95 and $137 of accrued interest and penalties as of March 3, 2013 and February 26, 2012, respectively. The Company's policy is to include applicable interest and penalties related to unrecognized tax benefits as a component of current income tax expense.

During the 2012 fiscal year, the New York State Department of Taxation commenced an examination of the Company's tax returns for the 2008, 2009, 2010 and 2011 fiscal years. As of March 3, 2013, no preliminary audit findings were received by the Company and no reserves have been recorded.