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Income Taxes | 12 Months Ended
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Aug. 31, 2014
Income Taxes [Abstract] |
Income Taxes | F. INCOME TAXES For financial reporting purposes earnings before income taxes include the following components:
|  | For the years ended August 31,
$ in thousands |  | 2014 |  | 2013 |  | 2012
United States |  | $ | 70,066 |  | $ | 99,781 |  | $ | 57,884
Foreign |  |  | 8,589 |  |  | 7,526 |  |  | 7,224
|  | $ | 78,655 |  | $ | 107,307 |  | $ | 65,108
Significant components of the income tax provision are as follows:
|  | For the years ended August 31,
$ in thousands |  | 2014 |  | 2013 |  | 2012
Current: |  |  |  |  |  |  |  |  |
Federal |  | $ | 29,015 |  | $ | 33,498 |  | $ | 21,694
State |  |  | 2,176 |  |  | 2,303 |  |  | 1,026
Foreign |  |  | 4,147 |  |  | 4,173 |  |  | 2,979
Total current |  |  | 35,338 |  |  | 39,974 |  |  | 25,699
Deferred: |  |  |  |  |  |  |  |  |
Federal |  |  | (6,936) |  |  | (1,554) |  |  | (3,829)
State |  |  | (346) |  |  | (178) |  |  | 614
Foreign |  |  | (913) |  |  | (1,505) |  |  | (653)
Total deferred |  |  | (8,195) |  |  | (3,237) |  |  | (3,868)
Total income tax provision |  | $ | 27,143 |  | $ | 36,737 |  | $ | 21,831
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 |  | 2014 |  | 2013 |  | 2012
|  | Amount |  | % |  | Amount |  | % |  | Amount |  | %
U.S. statutory rate |  | $ | 27,529 |  | 35.0 |  | $ | 37,558 |  | 35.0 |  | $ | 22,788 |  | 35.0
State and local taxes, net of federal tax benefit |  |  | 1,067 |  | 1.4 |  |  | 1,365 |  | 1.3 |  |  | 1,337 |  | 2.0
Foreign tax rate differences |  |  | (116) |  | (0.1) |  |  | (103) |  | (0.1) |  |  | (338) |  | (0.5)
Domestic production activities deduction |  |  | (2,170) |  | (2.8) |  |  | (2,638) |  | (2.5) |  |  | (1,900) |  | (2.9)
Research and development and fuel tax credits |  |  | (89) |  | (0.1) |  |  | (289) |  | (0.3) |  |  | (105) |  | (0.2)
Other |  |  | 922 |  | 1.1 |  |  | 844 |  | 0.8 |  |  | 49 |  | 0.1
Effective rate |  | $ | 27,143 |  | 34.5 |  | $ | 36,737 |  | 34.2 |  | $ | 21,831 |  | 33.5
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 |  | 2014 |  | 2013
Deferred tax assets: |  |  |  |  |  |
Deferred rental revenue |  | $ | 2,812 |  | $ | 835
Employee benefits liability |  |  | 1,256 |  |  | 1,191
Net operating loss carry forwards |  |  | 433 |  |  | 21
Defined benefit pension plan |  |  | 1,524 |  |  | 1,396
Share-based compensation |  |  | 2,106 |  |  | 2,299
State tax credits |  |  | 87 |  |  | 98
Inventory |  |  | 1,396 |  |  | 909
Warranty |  |  | 3,354 |  |  | 2,449
Vacation |  |  | 191 |  |  | 182
Accrued expenses and allowances |  |  | 10,955 |  |  | 8,043
Total deferred tax assets |  | $ | 24,114 |  | $ | 17,423
Deferred tax liabilities: |  |  |  |  |  |
Intangible assets |  |  | (10,247) |  |  | (11,160)
Property, plant and equipment |  |  | (6,919) |  |  | (8,493)
Inventory |  |  | (121) |  |  | (89)
Other |  |  | (980) |  |  | (229)
Total deferred tax liabilities |  |  | (18,267) |  |  | (19,971)
Net deferred tax assets (liabilities) |  | $ | 5,847 |  | $ | (2,548)
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, 2014 and 2013 has not been established. The Company does not intend to repatriate earnings of its foreign subsidiaries and accordingly, has not provided a U.S. deferred income tax liability on these undistributed earnings that are indefinitely reinvested. The Company would recognize a deferred income tax liability if the Company were to determine that such earnings are no longer indefinitely reinvested. At August 31, 2014, undistributed earnings of the Company’s foreign subsidiaries amounted to approximately $21.7 million. Determination of the estimated amount of unrecognized deferred tax liability on these undistributed earnings is not practicable. 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 |  | 2014 |  | 2013
Unrecognized Tax Benefits at September 1 |  | $ | 902 |  | $ | 871
Increases for positions taken in current year |  |  | 50 |  |  | 57
Increases for positions taken in prior years |  |  | 2,721 |  |  | 239
Settlements with taxing authorities |  |  | - |  |  | (6)
Reduction resulting from lapse of applicable statute of limitations |  |  | (62) |  |  | (269)
Other increases (decreases) |  |  | - |  |  | 10
Unrecognized Tax Benefits at August 31 |  | $ | 3,611 |  | $ | 902
The net amount of unrecognized tax benefits at August 31, 2014 and 2013 that, if recognized, would impact the Company’s effective tax rate was $1.0 million and $0.9 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 $0.9 million and $0.5 million for the years ended August 31, 2014 and 2013, respectively. The Company files income tax returns in the United States and in state, local, and foreign jurisdictions. The Company is no longer subject to examination by tax authorities in most jurisdictions for years prior to 2011. The U.S. Internal Revenue Service (IRS) began an income tax audit for the year 2011 in 2014. At August 31, 2014, the Company does not believe the outcome of the IRS examination is likely to be material to our consolidated financial statements. 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 Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 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=26873400&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 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 5: 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 6: 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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