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Income Taxes | 12 Months Ended
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Aug. 31, 2012
Income Taxes [Abstract] |
Income Taxes | D. INCOME TAXES For financial reporting purposes earnings before income taxes include the following components:
|  | For the years ended August 31,
$ in thousands |  | 2012 |  | 2011 |  | 2010
United States |  | $ | 57,884 |  | $ | 53,879 |  | $ | 34,165
Foreign |  |  | 7,224 |  |  | 2,635 |  |  | 2,617
|  | $ | 65,108 |  | $ | 56,514 |  | $ | 36,782
Significant components of the income tax provision are as follows:
|  | For the years ended August 31,
$ in thousands |  | 2012 |  | 2011 |  | 2010
Current: |  |  |  |  |  |  |  |  |
Federal |  | $ | 21,694 |  | $ | 18,705 |  | $ | 11,077
State |  |  | 1,026 |  |  | 1,309 |  |  | 770
Foreign |  |  | 2,979 |  |  | 2,526 |  |  | 1,573
Total current |  |  | 25,699 |  |  | 22,540 |  |  | 13,420
Deferred: |  |  |  |  |  |  |  |  |
Federal |  |  | (3,829) |  |  | (1,484) |  |  | 501
State |  |  | 614 |  |  | (29) |  |  | (1,364)
Foreign |  |  | (653) |  |  | (1,315) |  |  | (637)
Total deferred |  |  | (3,868) |  |  | (2,828) |  |  | (1,500)
Total income tax provision |  | $ | 21,831 |  | $ | 19,712 |  | $ | 11,920
Total income tax provision resulted in effective tax rates differing from that of the statutory United States Federal income tax rates. The reasons for these differences are:
|  | For the years ended August 31,
$ in thousands |  | 2012 |  | 2011 |  | 2010
|  | Amount |  | % |  | Amount |  | % |  | Amount |  | %
U.S. statutory rate |  | $ | 22,788 |  | 35.0 |  | $ | 19,780 |  | 35.0 |  | $ | 12,874 |  | 35.0
State and local taxes, net of federal tax benefit |  |  | 1,337 |  | 2.0 |  |  | 889 |  | 1.6 |  |  | 540 |  | 1.5
State tax credits |  |  | - |  | - |  |  | - |  | - |  |  | (1,393) |  | (3.8)
Foreign tax rate differences |  |  | (338) |  | (0.5) |  |  | (257) |  | (0.5) |  |  | (122) |  | (0.3)
Domestic production activities deduction |  |  | (1,900) |  | (2.9) |  |  | (1,301) |  | (2.3) |  |  | (608) |  | (1.7)
Research and development, phone, and fuel tax credits |  |  | (105) |  | (0.2) |  |  | (239) |  | (0.4) |  |  | (28) |  | (0.1)
Other |  |  | 49 |  | 0.1 |  |  | 840 |  | 1.5 |  |  | 657 |  | 1.8
Effective rate |  | $ | 21,831 |  | 33.5 |  | $ | 19,712 |  | 34.9 |  | $ | 11,920 |  | 32.4
In fiscal 2010, the Company recognized investment tax credits from the state of Nebraska’s economic development program, the Nebraska Advantage Act. These credits, which expire in fiscal 2018, reduced income tax expense by $1.4 million. 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 used for income tax purposes. Significant components of the Company's deferred tax assets and liabilities are as follows:
|  | August 31,
$ in thousands |  | 2012 |  | 2011
Deferred tax assets: |  |  |  |  |  |
Deferred rental revenue |  | $ | 382 |  | $ | 1,233
Employee benefits liability |  |  | 1,282 |  |  | 1,305
Net operating loss carryforwards |  |  | 284 |  |  | 74
Defined benefit pension plan |  |  | 1,554 |  |  | 1,306
Share-based compensation |  |  | 2,284 |  |  | 1,614
State tax credits |  |  | 48 |  |  | 802
Inventory |  |  | 633 |  |  | 789
Warranty |  |  | 1,686 |  |  | 1,268
Vacation |  |  | 224 |  |  | 200
Accrued expenses and allowances |  |  | 6,610 |  |  | 5,039
Total deferred tax assets |  | $ | 14,987 |  | $ | 13,630
Deferred tax liabilities: |  |  |  |  |  |
Intangible assets |  |  | (6,195) |  |  | (7,088)
Property, plant and equipment |  |  | (8,210) |  |  | (9,054)
Inventory |  |  | (115) |  |  | (113)
Other |  |  | (296) |  |  | (1,058)
Total deferred tax liabilities |  |  | (14,816) |  |  | (17,313)
Net deferred tax liabilities |  | $ | 171 |  | $ | (3,683)
In assessing the ability to realize deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, management believes it is more likely than not that the Company will realize the benefits of these deductible differences. Accordingly, a valuation allowance for deferred tax assets at August 31, 201 2 and 201 1 has not been established. The determination of the unrecognized deferred tax liability for permanently reinvested foreign earnings is not practical as t he Company does not intend to repatriate earnings of its non-U.S. subsidiaries and accordingly, has not provided a U.S. deferred income tax liability for cumulative earnings on non-U.S. affiliates and associated companies that have been reinvested indefinitely. The Company continues to analyze the potential tax impact should it elect to repatriate non-U.S. earnings and would recognize a deferred income tax liability if the Company were to determine that such earnings are no longer indefinitely reinvested. The Company recognizes tax benefits only for tax positions that are more likely than not to be sustained upon examination by tax authorities. The amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely to be realized upon settlement. Unrecognized tax benefits are tax benefits claimed in the Company’s tax returns that do not meet these recognition and measurement standards. A reconciliation of changes in pre-tax unrecognized tax benefits is as follows:
|  | August 31,
$ in thousands |  | 2012 |  | 2011
Unrecognized Tax Benefits at September 1 |  | $ | 1,565 |  | $ | 1,112
Increases for positions taken in current year |  |  | 2 |  |  | 78
Increases for positions taken in prior years |  |  | 61 |  |  | 448
Decreases for positions taken in prior years |  |  | (44) |  |  | -
Settlements with taxing authorities |  |  | (42) |  |  | -
Reduction resulting from lapse of applicable statute of limitations |  |  | (173) |  |  | (87)
Other increases (decreases) |  |  | (60) |  |  | 14
Unrecognized Tax Benefits at August 31 |  | $ | 1,309 |  | $ | 1,565
The net amount of unrecognized tax benefits at August 31, 201 2 and 201 1 that, if recognized, would impact the Company’s effective tax rate was $1.3 million and $1.6 million, respectively. Recognition of these tax benefits would have a favorable impact on the Company’s effective tax rate. The Company recognizes accrued interest and penalties related to unrecognized tax benefits in income tax expense. Total accrued pre-tax liabilities for interest and penalties included in the unrecognized tax benefits liability were $0.5 million and $0.5 million for the years ended August 31, 201 2 and 201 1, respectively. The Company files income tax returns in the U.S. federal jurisdiction, and various state and foreign jurisdictions. The Company is no longer subject to examination by tax authorities in most jurisdictions for years prior to 2009. While it is expected that the amount of unrecognized tax benefits will change in the next twelve months as a result of the expiration of statutes of limitations, the Company does not expect this change to have a significant impact on its results of operations or financial position.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 136, 172 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=6881521&loc=d3e23780-122690 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 43, 44, 45, 46, 47, 48, 49 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319 + Details
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