4.	Income Taxes

The income tax provision includes the following:

	Fiscal Year
	2016			2015			2014

Current:
Federal	$	10,118		$	-		$	(2,435	)
State and local		(120	)		(39	)		(55	)
Foreign		3,883			5,601			3,220
		13,881			5,562			730

Deferred:
Federal		(11,273	)		(2,238	)		63,105
State and local		(205	)		(290	)		69
Foreign		66			(287	)		507
		(11,412	)		(2,815	)		63,681
	$	2,469		$	2,747		$	64,411

Current federal income tax benefits of $2,435 in the 2014 fiscal year was 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 repatriated $61,000 in cash from Nelco Products Pte Ltd. in the 2016 fiscal year, and the Company recorded a non-cash charge in the fourth quarter of the 2014 fiscal year 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. No such charge was recorded in the 2016 or 2015 fiscal years.

State income tax benefits from loss carryforwards to future years were recognized as deferred tax assets in the 2016, 2015 and 2014 fiscal years.

	Fiscal Year
	2016			2015			2014

United States	$	(3,331	)	$	(6,704	)	$	(2,080	)
Foreign		23,829			29,494			24,162
Earnings before income taxes	$	20,498		$	22,790		$	22,082

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
	2016			2015			2014

Statutory U.S. Federal tax rate		35.0	%		34.0	%		34.0	%
State and local taxes, net of Federal benefit		1.2	%		-1.1	%		-0.2	%
Foreign tax rate differentials		-21.0	%		-22.2	%		-19.6	%
Valuation allowance on deferred tax assets		-0.2	%		0.6	%		2.4	%
Adjustment on tax accruals and other		3.3	%		1.3	%		-3.0	%
Foreign tax credits		-1.1	%		-0.5	%		-0.6	%
Deferred tax liability on undistributed foreign earnings		-4.5	%		0.0	%		289.6	%
Claim for refund		0.0	%		0.0	%		-10.5	%
Permanent differences and other		-0.7	%		0.0	%		-0.4	%
		12.0	%		12.1	%		291.7	%

The Company had federal net operating loss carryforwards of $0 and $8,611 in the 2016 and 2015 fiscal years, respectively, state net operating loss carryforwards of approximately $10,083 and $14,360 in the 2016 and 2015 fiscal years, respectively, and total net foreign operating loss carryforwards of approximately $30,871 and $33,672 in the 2016 and 2015 fiscal years, respectively. The foreign net operating loss carryforwards were not utilized in the 2016 fiscal year and the Company has set up a valuation allowance for such carryforwards. The state net operating loss carryforwards will expire in 2017 through 2035.

The Company had foreign tax credit carryforwards of $524 and $486 at February 28, 2016 and March 1, 2015, respectively, which expire in 2026. As of February 28, 2016 and March 1, 2015, research and development and other credits were $0 and $392, respectively.

The Company had New York State investment tax credit carryforwards of $478 and $709 in the 2016 and 2015 fiscal years, respectively. The New York State investment tax credits expire in fiscal years 2017 through 2018. The Company had Kansas tax credits of $225 in both fiscal years 2016 and 2015, 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 Company had Arizona tax credits of $135 in both fiscal years 2016 and 2015, for which no benefit has been provided.

The deferred tax asset valuation allowance of $11,115 as of February 28, 2016 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 2016 fiscal year, the valuation allowance decreased by $772 primarily due to the write-off of net operating loss carryforwards generated in Zhuhai and the expiration of New York State investment tax credit 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 February 28, 2016 and March 1, 2015 were as follows:

	February 28,			March 1,
	2016			2015

Deferred tax assets:
Depreciation and amortization	$	3,761		$	3,856
Net operating loss carryforwards		10,800			14,686
Tax credits carryforward		1,363			1,811
Stock options		1,925			1,899
Other, net		578			531
		18,427			22,783
Valuation allowance on deferred tax assets		(11,115	)		(11,887	)
Total deferred tax assets, net of valuation allowance		7,312			10,896
Deferred tax liabilities:
Depreciation		(526	)		(446	)
Undistributed earnings		(48,865	)		(63,958	)
Other		(1,281	)		(1,257	)
Total deferred tax liabilities		(50,672	)		(65,661	)
Net deferred tax liability	$	(43,360	)	$	(54,765	)

On the Consolidated Balance Sheets, the net deferred tax asset of $584 at February 28, 2016 was included in other assets and the net deferred tax asset of $3,324 at March 1, 2015 was included in prepaid expenses and other current assets.

At February 28, 2016 and March 1, 2015, the Company had gross unrecognized tax benefits of $1,295 and $1,204, respectively, 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 February 28, 2016 were recognized, the Company’s effective tax rate would change.

As discussed in Note 15, on February 28, 2016 the Company early adopted Accounting Standards Update 2015-17

Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes

on a prospective basis. Therefore, the prior year balance sheet presentation has not been adjusted.

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

	Unrecognized Tax Benefits
	February 28,			March 1,			March 2,
	2016			2015			2014

Balance, beginning of year	$	1,135		$	276		$	3,053
Gross decreases-tax positions in prior period					(21	)		(2,776	)
Gross increases-current period tax positions		271			880			-
Audit settlements		(57	)		-			-
Lapse of statute of limitations		(94	)		-			(1	)
Balance, end of year	$	1,255		$	1,135		$	276

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 2016 fiscal year upon the expiration of statutes of limitations.

A list of open tax years by major jurisdiction follows:

California	2012	-	2016
New York	2013	-	2016
France	2014	-	2016
Singapore	2009	-	2016

The Company had approximately $51 and $70 of accrued interest and penalties as of February 28, 2016 and March 1, 2015, 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 2015 fiscal year, the New York State Department of Taxation closed an examination of the Company’s tax returns for the 2008, 2009, 2010 and 2011 fiscal years without audit adjustments assessed.