(11) Income Taxes

The following table represents components of the provision for income taxes for fiscal years ended (in thousands):


	2016			2015			2014
Current:
Federal	$	18,421		$	14,006		$	17,755
State and local		2,724			2,451			2,946
Foreign		1,161			322			183

Total current		22,306			16,779			20,884
Deferred:
Federal		(1,269	)		(9,920	)		(1,550	)
State and local		(201	)		(1,459	)		(731	)

Total deferred		(1,470	)		(11,379	)		(2,281	)

Total provision for income taxes	$	20,836		$	5,400		$	18,603

The Company’s effective tax rate on earnings from operations for the year ended February 29, 2016, was 36.8%, as compared with a (13.8)% and 58.5% in 2015 and 2014, respectively. The following summary reconciles the statutory U.S. Federal income tax rate to the Company’s effective tax rate for the fiscal years ended:


	2016			2015			2014
Statutory rate		35.0	%		35.0	%		35.0	%
Provision for state income taxes, net of Federal income tax benefit		2.9			(1.9	)		3.9
Domestic production activities deduction		(2.2	)		3.5			(4.8	)
Impairment of goodwill		—			(50.0	)		20.5
Other		1.1			(0.4	)		3.9

		36.8	%		(13.8	)%		58.5	%

Deferred taxes are recorded to give recognition to temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements. The tax effects of these temporary differences are recorded as deferred tax assets and deferred tax liabilities. Deferred tax assets generally represent items that can be used as a tax deduction or credit in future years. Deferred tax liabilities generally represent items that have been deducted for tax purposes, but have not yet been recorded in the consolidated statements of earnings. To the extent there are deferred tax assets that are more likely than not to be realized, a valuation allowance would not be recorded. The components of deferred income tax assets and liabilities are summarized as follows (in thousands) for fiscal years ended:


	2016			2015
Current deferred tax assets (liabilities) related to:
Allowance for doubtful receivables	$	1,378		$	1,356
Inventories		3,093			2,745
Employee compensation and benefits		1,925			2,305
Other		(111	)		(134	)

	$	6,285		$	6,272

Non-current deferred tax (liabilities) assets related to:
Property, plant and equipment	$	(8,885	)	$	(9,087	)
Goodwill and other intangible assets		(10,044	)		(10,556	)
Pension and noncurrent employee compensation benefits		6,948			6,064
Net operating loss and foreign tax credits		3,480			113
Property tax		(560	)		(367	)
Currency exchange		6,090			2,842
Stock options		785			747
Valuation allowance		(1,380	)		—
Other		(3	)		(4	)

	$	(3,569	)	$	(10,248	)

Included in other assets on the consolidated balance sheets for the years ended February 28, 2015 and 2014 is approximately $2.3 million of refund receivable related to amended Canadian tax returns for fiscal years 2006-2008. In fiscal year 2016, the refund related to amended Canadian tax returns was reclassified as a foreign tax credit.

The Company established a valuation allowance related to its foreign tax credit of $1.4 million. As of the fiscal year ended 2016, the Company has federal net operating loss carry forwards of approximately $203,655 expiring in fiscal years 2024 through 2025. Based on historical earnings and expected sufficient future taxable income, management believes it will be able to fully utilize the net operating loss carry forwards.

Accounting standards require a two-step approach to determine how to recognize tax benefits in the financial statements where recognition and measurement of a tax benefit must be evaluated separately. A tax benefit will be recognized only if it meets a “more-likely-than-not” recognition threshold. For tax positions that meet this threshold, the tax benefit recognized is based on the largest amount of tax benefit that is greater than 50 percent likely of being realized upon ultimate settlement with the taxing authority.

At fiscal year-end 2016 and 2015, unrecognized tax benefits related to uncertain tax positions, including accrued interest and penalties of $261,000 and $330,000, respectively, are included in other liabilities on the consolidated balance sheets and would impact the effective rate if recognized. For fiscal year 2016, the unrecognized tax benefit includes an aggregate of $18,000 of interest expense. Approximately $18,000 of unrecognized tax benefits relate to items that are affected by expiring statutes of limitations within the next 12 months. A reconciliation of the change in the unrecognized tax benefits for fiscal years ended 2016 and 2015 is as follows (in thousands):


	2016			2015
Balance at beginning of year	$	330		$	246
Additions based on tax positions related to the current year		41			166
Reductions due to lapses of statutes of limitations		(110	)		(82	)

Balance at end of year	$	261		$	330

The Company is subject to U.S. federal income tax as well as income tax of multiple state jurisdictions and foreign tax jurisdictions. The Company has concluded all U.S. Federal income tax matters for years through 2010. All material state and local income tax matters have been concluded for years through 2010 and foreign tax jurisdictions through 2010.

The Company recognizes interest expense on underpayments of income taxes and accrued penalties related to unrecognized non-current tax benefits as part of the income tax provision. Other than amounts included in the unrecognized tax benefits, the Company did not recognize any interest or penalties for the fiscal years ended 2016, 2015 and 2014.