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Income Taxes | 12 Months Ended
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Aug. 31, 2015
Income Taxes [Abstract] |
Income Taxes | F. INCOME TAXES For financial reporting purposes earnings (losses) before income taxes include the following components:
|  | For the years ended August 31,
$ in thousands |  | 2015 |  | 2014 |  | 2013
United States |  | $ | 49,668 |  | $ | 70,066 |  | $ | 99,781
Foreign |  |  | (2,917) |  |  | 8,589 |  |  | 7,526
|  | $ | 46,751 |  | $ | 78,655 |  | $ | 107,307
Significant components of the income tax provision are as follows:
|  | For the years ended August 31,
$ in thousands |  | 2015 |  | 2014 |  | 2013
Current: |  |  |  |  |  |  |  |  |
Federal |  | $ | 15,908 |  | $ | 29,015 |  | $ | 33,498
State |  |  | 1,426 |  |  | 2,176 |  |  | 2,303
Foreign |  |  | 2,830 |  |  | 4,147 |  |  | 4,173
Total current |  |  | 20,164 |  |  | 35,338 |  |  | 39,974
Deferred: |  |  |  |  |  |  |  |  |
Federal |  |  | (406) |  |  | (6,936) |  |  | (1,554)
State |  |  | 45 |  |  | (346) |  |  | (178)
Foreign |  |  | 639 |  |  | (913) |  |  | (1,505)
Total deferred |  |  | 278 |  |  | (8,195) |  |  | (3,237)
Total income tax provision |  | $ | 20,442 |  | $ | 27,143 |  | $ | 36,737
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 |  | 2015 |  | 2014 |  | 2013
|  | Amount |  | % |  | Amount |  | % |  | Amount |  | %
U.S. statutory rate |  | $ | 16,363 |  | 35.0 |  | $ | 27,529 |  | 35.0 |  | $ | 37,558 |  | 35.0
State and local taxes, net of federal tax benefit |  |  | 911 |  | 1.9 |  |  | 1,067 |  | 1.4 |  |  | 1,365 |  | 1.3
Foreign tax rate differences |  |  | 1,311 |  | 2.8 |  |  | (116) |  | (0.1) |  |  | (103) |  | (0.1)
Domestic production activities deduction |  |  | (1,548) |  | (3.3) |  |  | (2,170) |  | (2.8) |  |  | (2,638) |  | (2.5)
Research and development and fuel tax credits |  |  | (71) |  | (0.1) |  |  | (89) |  | (0.1) |  |  | (289) |  | (0.3)
Deferred tax asset valuation allowance |  |  | 2,949 |  | 6.3 |  |  | - |  | - |  |  | - |  | -
Other |  |  | 527 |  | 1.1 |  |  | 922 |  | 1.1 |  |  | 844 |  | 0.8
Effective rate |  | $ | 20,442 |  | 43.7 |  | $ | 27,143 |  | 34.5 |  | $ | 36,737 |  | 34.2
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 |  | 2015 |  | 2014
Deferred tax assets: |  |  |  |  |  |
Deferred revenue |  | $ | 1,411 |  | $ | 2,812
Net operating loss carry forwards |  |  | 1,703 |  |  | 433
Defined benefit pension plan |  |  | 2,754 |  |  | 2,780
Share-based compensation |  |  | 1,814 |  |  | 2,106
State tax credits |  |  | 87 |  |  | 87
Inventory |  |  | 1,883 |  |  | 1,396
Warranty |  |  | 2,672 |  |  | 3,354
Vacation |  |  | 181 |  |  | 191
Accrued expenses and allowances |  |  | 12,135 |  |  | 10,955
Other |  |  | 527 |  |  | -
Gross deferred tax assets |  |  | 25,167 |  |  | 24,114
Valuation allowance |  |  | (2,949) |  |  | -
Net deferred tax assets |  | $ | 22,218 |  | $ | 24,114
Deferred tax liabilities: |  |  |  |  |  |
Intangible assets |  |  | (17,514) |  |  | (10,247)
Property, plant and equipment |  |  | (6,687) |  |  | (6,919)
Inventory |  |  | (83) |  |  | (121)
Other |  |  | - |  |  | (980)
Total deferred tax liabilities |  |  | (24,284) |  |  | (18,267)
Net deferred tax (liabilities) assets |  | $ | (2,066) |  | $ | 5,847
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. Because the Company has a recent history of generating cumulative losses in a certain foreign tax jurisdiction, management did not consider projections of future taxable income as persuasive evidence for the recoverability of deferred tax assets in that jurisdiction. Therefore, the Company recorded a valuation allowance of $2.9 million as of August 31, 2015. 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, 2015, undistributed earnings of the Company’s foreign subsidiaries amounted to approximately $26.8 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 |  | 2015 |  | 2014
Unrecognized Tax Benefits at September 1 |  | $ | 3,611 |  | $ | 902
Increases for positions taken in current year |  |  | 57 |  |  | 50
Increases for positions taken in prior years |  |  | 547 |  |  | 2,721
Reduction resulting from lapse of applicable statute of limitations |  |  | (122) |  |  | (62)
Decreases for positions taken in prior years |  |  | (257) |  |  | -
Unrecognized Tax Benefits at August 31 |  | $ | 3,836 |  | $ | 3,611
The net amount of unrecognized tax benefits at August 31, 2015 and 2014 that, if recognized, would impact the Company’s effective tax rate was $1.5 million and $1.0 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 $1.2 million and $0.9 million for the years ended August 31, 2015 and 2014, respectively. 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. 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 2012. Subsequent to the fiscal year-end, the U.S. Internal Revenue Service (IRS) completed its audit for fiscal 2011.

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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 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 2: 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 Reference 3: 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 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 + Details
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