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Income Taxes | 12 Months Ended
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Feb. 28, 2022
Income Tax Disclosure [Abstract] |
Income Taxes | (13) Income Taxes The following table represents components of the provision for income taxes for fiscal years ended (in thousands):
|  | 2022 |  |  | 2021 |  |  | 2020 |
Current: |  |  |  |  |  |  |  |  |
Federal |  | $ | 7,284 |  |  | $ | 9,627 |  |  | $ | 10,838 |
State and local |  |  | 2,516 |  |  |  | 2,279 |  |  |  | 1,642 |
Total current |  |  | 9,800 |  |  |  | 11,906 |  |  |  | 12,480 |
Deferred: |  |  |  |  |  |  |  |  |
Federal |  |  | 3,004 |  |  |  | (2,217 | ) |  |  | 526 |
State and local |  |  | 158 |  |  |  | (496 | ) |  |  | (47 | )
Total deferred |  |  | 3,162 |  |  |  | (2,713 | ) |  |  | 479 |
Total provision for income taxes |  | $ | 12,962 |  |  | $ | 9,193 |  |  | $ | 12,959 |
The Company’s effective tax rate on earnings from operations for the year ended February 28, 2022, was 30.9%, compared to 27.6% and 25.3% in 2021 and 2020, 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:
|  | 2022 |  |  | 2021 |  |  | 2020 |  |
Statutory rate |  |  | 21.0 |  | % |  | 21.0 |  | % |  | 21.0 |  | %
Provision for state income taxes, net of federal income tax benefit |  |  | 5.8 |  |  |  | 4.4 |  |  |  | 2.5 |  |
Change in valuation allowance |  |  | — |  |  |  | — |  |  |  | 0.8 |  |
Federal true-up |  |  | 0.3 |  |  |  | 0.8 |  |  |  | 0.4 |  |
Stock compensation and Section 162(m) limitation |  |  | 3.8 |  |  |  | 1.5 |  |  |  | 0.5 |  |
Other |  |  | — |  |  |  | — |  |  |  | 0.1 |  |
|  |  | 30.9 |  | % |  | 27.6 |  | % |  | 25.3 |  | %
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 operations. To the extent there are deferred tax assets that are more likely than not to be realized, a valuation allowance would be recorded. Management does not expect to be able to utilize the foreign tax credit before it expires in 2026. Therefore, a full valuation allowance was established in fiscal year 2020. IRS code Section 162(m) limits the amount of deductible compensation for tax purposes paid to certain covered employees. The components of deferred income tax assets and liabilities are summarized as follows (in thousands) for fiscal years ended:
Deferred tax assets |  | 2022 |  |  | 2021 |
Allowance for doubtful receivables |  | $ | 280 |  |  | $ | 198 |
Inventories |  |  | 1,032 |  |  |  | 1,047 |
Employee compensation and benefits |  |  | 659 |  |  |  | 725 |
Pension and noncurrent employee compensation benefits |  |  | 1,827 |  |  |  | 4,246 |
Operating lease liabilities |  |  | 3,870 |  |  |  | 4,700 |
Net operating loss and foreign tax credits |  |  | 1,033 |  |  |  | 1,067 |
Other |  |  | 274 |  |  |  | 291 |
Total deferred tax assets |  | $ | 8,975 |  |  | $ | 12,274 |
Less: valuation allowance |  |  | (408 | ) |  |  | (408 | )
Total deferred tax assets, net |  | $ | 8,567 |  |  | $ | 11,866 |
Deferred tax liabilities |  |  |  |  |  |
Property, plant and equipment |  | $ | 6,167 |  |  | $ | 4,517 |
Goodwill and other intangible assets |  |  | 9,889 |  |  |  | 10,240 |
Right-of-use assets |  |  | 3,797 |  |  |  | 4,631 |
Property tax |  |  | 40 |  |  |  | 131 |
Other |  |  | 79 |  |  |  | 24 |
Total deferred tax liabilities |  | $ | 19,972 |  |  | $ | 19,543 |
Net deferred income tax liabilities |  | $ | 11,405 |  |  | $ | 7,677 |
At fiscal year-end 2022, the Company had federal net operating loss (“NOL”) carry forwards of approximately $2.6 million. This NOL is related to the acquisitions of Flesh and Impressions Direct. The NOL is subject to a Section 382 limitation of $0.2 million per year and expiring in 2040. Based on historical earnings and expected sufficient future taxable income, management believes it will be able to fully utilize the NOL. 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 2022 and 2021, unrecognized tax benefits related to uncertain tax positions, including accrued interest and penalties of $0.1 million and $0.1 million, respectively, are included in other liabilities on the consolidated balance sheets and would impact the effective rate if recognized. The interest expense associated with the unrecognized tax benefit is not material. A reconciliation of the change in the unrecognized tax benefits for fiscal years ended 2022 and 2021 is as follows (in thousands):
|  | 2022 |  |  | 2021 |
Balance at March 1, 2021 |  | $ | 130 |  |  | $ | 100 |
Additions based on tax positions |  |  | 66 |  |  |  | 63 |
Reductions due to lapses of statues of limitations |  |  | (30 | ) |  |  | (33 | )
Balance at February 28, 2022 |  | $ | 166 |  |  | $ | 130 |
The Company is subject to U.S. federal income tax as well as income tax of multiple state jurisdictions. The Company has concluded all U.S. federal income tax matters for years through 2016. All material state and local income tax matters have been concluded for years through 2013. 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 no t recognize any interest or penalties for the fiscal years ended 2022, 2021 and 2020.

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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/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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