Note 4 - Income Taxes

12 Months Ended

Mar. 02, 2014

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

4. Income Taxes

The income tax provision includes the following:

	Fiscal Year
	2014			2013			2012
Current:
Federal	$	(2,435	)	$	(2,804	)	$	(696	)
State and local		(55	)		172			(194	)
Foreign		3,220			5,419			5,077
		730			2,787			4,187
Deferred:
Federal		63,105			1,652			(239	)
State and local		69			(314	)		658
Foreign		507			(201	)		(397	)
		63,681			1,137			22
	$	64,411		$	3,924		$	4,209

Current federal income tax benefits of $2,435 and $2,804 recognized in the 2014 and 2013 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.

The Company continuously evaluates the liquidity and capital requirements of its operations in the United States and of its foreign subsidiaries.  As a result of such evaluation, the Company recorded a non-cash charge for the accrual of U.S. deferred income taxes in the amount of $63,958 on undistributed earnings of the Company's subsidiary in Singapore during the fourth quarter of the 2014 fiscal year.

State income tax benefits from loss carryforwards to future years are recognized as deferred tax assets in the 2014 and 2013 fiscal years.

The components of earnings before income taxes were as follows:

	Fiscal Year
	2014			2013			2012
United States	$	(2,080	)	$	(4,196	)	$	(1,447	)
Foreign		24,162			25,081			29,098
Earnings before income taxes	$	22,082		$	20,885		$	27,651

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
	2014			2013			2012
Statutory U.S. Federal tax rate		34.0	%		34.0	%		34.0	%
State and local taxes, net of Federal benefit		(0.2	)		(0.8	)		(0.6	)
Foreign tax rate differentials		(19.6	)		(22.3	)		(19.9	)
Valuation allowance on deferred tax assets		2.4			0.4			3.1
Adjustment on tax accruals and reserves		(3.0	)		4.8			(2.4	)
Foreign tax credits		(0.6	)		(0.3	)		(0.3	)
Deferred tax liability on undistributed earnings		289.6			-			-
Claim for refund		(10.5	)		-			-
Permanent differences and other		(0.4	)		2.9			1.3
		291.7	%		18.7	%		15.2	%

The Company had federal net operating loss carryforwards of approximately $2,042 and $0 in the 2014 and 2013 fiscal years, respectively, state net operating loss carryforwards of approximately $8,899 and $7,013 in the 2014 and 2013 fiscal years, respectively, and total net foreign operating loss carryforwards of approximately $33,835 and $35,681 in the 2014 and 2013 fiscal years, respectively. The federal net operating loss carryforwards will expire in 2032 through 2034. The China net operating loss carryforwards will expire in 2015 through 2019, while the France net operating loss carryforward has an unlimited carryforward period. The state net operating loss carryforwards will expire in 2017 through 2034.

The Company has foreign tax credit carryforwards of $424 and $354 at March 2, 2014 and March 3, 2013, respectively, which expire in 2021 through 2024. As of March 2, 2014 and March 3, 2013, research and development credits of $321 and $282, respectively, expire in 2031 through 2034.

The Company had New York State investment tax credit carryforwards of $709 and $710 in the 2014 and 2013 fiscal years, respectively. The New York State Investment tax credits expire in fiscal years 2015 through 2018. The Company has Kansas tax credits of $211 in both fiscal years 2014 and 2013, for which no benefit has been 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 will expire in the 2019 and 2020 fiscal years.

The deferred tax asset valuation allowance of $11,941 as of March 2, 2014 relates to foreign net operating losses and state tax credit carryforwards for which the Company does not expect to realize any tax benefit. During the 2014 fiscal year, the valuation allowance decreased by $524 primarily due to the expiration of foreign net operating loss carryforwards 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 assets and liabilities as of March 2, 2014 and March 3, 2013 were as follows:

	March 2,			March 3,
	2014			2013
Deferred tax assets:
Depreciation	$	4,593		$	4,190
Net operating loss carryforwards		12,210			11,917
Tax credits carryforward		1,695			1,343
Stock options		1,693			953
Other, net		665			1,387
		20,856			19,790
Valuation allowance on deferred tax assets		(11,941	)		(12,465	)
Total deferred tax assets, net of valuation allowance		8,915			7,325
Depreciation		(867	)		(419	)
Undistributed earnings		(63,958	)		-
Other		(1,616	)		(741	)
Total deferred tax liabilities		(66,441	)		(1,160	)
Net deferred tax (liability) asset	$	(57,526	)	$	6,165

The breakdown between current and non-current deferred tax assets follows:

	March 2,		March 3,
	2014		2013
Current	$	598	$	1,206
Non-current		-		5,771
Total deferred tax assets	$	598	$	6,977

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

At March 2, 2014, the Company had gross unrecognized tax benefits of $152 included in current liabilities and $124 included in other liabilities. The prior year unrecognized tax benefit of $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 was settled with the IRS in 2014 for $1,949 plus interest of $375. If any portion of the unrecognized tax benefits at March 2, 2014 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 2,			March 3,			February 26,
	2014			2013			2012
Balance, beginning of year	$	3,053		$	3,999		$	2,044
Gross increases-tax positions in prior period		-			-			2,715
Gross decreases-tax positions in prior period		(2,776	)		(235	)		(268	)
Gross increases-current period tax positions		-			-			264
Audit settlements		-			(711	)		(756	)
Lapse of statute of limitations		(1	)		-			-
Balance, end of year	$	276		$	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 none of the unrecognized tax benefits will be recognized in the 2014 fiscal year upon the expiration of statutes of limitations.

A list of open tax years by major jurisdiction follows:

California	2010	-	2014
New York	2008	-	2014
France	2012	-	2014
Singapore	2007	-	2014

The Company had approximately $98 and $95 of accrued interest and penalties as of March 2, 2014 and March 3, 2013, 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 2, 2014, no significant preliminary audit findings were received by the Company and no reserves have been recorded.