The following table summarizes the tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities:

<table><tr><td rowspan="2"></td><td colspan="2">As of August 31,</td></tr><tr><td>2018</td><td>2017</td></tr><tr><td>Deferred tax assets:</td><td></td><td></td></tr><tr><td>Allowance for doubtful accounts</td><td>$     154</td><td>$     228</td></tr><tr><td>Inventories</td><td>982</td><td>1,462</td></tr><tr><td>Accruals</td><td>584</td><td>800</td></tr><tr><td>Warranty reserve</td><td>50</td><td>120</td></tr><tr><td>Pension accrual</td><td>2,567</td><td>5,078</td></tr><tr><td>Deferred compensation</td><td>260</td><td>358</td></tr><tr><td>Deferred revenue</td><td>—</td><td>334</td></tr><tr><td>Foreign currency loss on previously taxed income</td><td>96</td><td>—</td></tr><tr><td>Loan finance costs</td><td>27</td><td>27</td></tr><tr><td>Restricted stock grants</td><td>547</td><td>792</td></tr><tr><td>Non-qualified stock options</td><td>94</td><td>26</td></tr><tr><td>Other</td><td>296</td><td>280</td></tr><tr><td></td><td>5,657</td><td>9,505</td></tr><tr><td>Deferred tax liabilities:</td><td></td><td></td></tr><tr><td>Prepaid liabilities</td><td>(25)</td><td>(29)</td></tr><tr><td>Unrepatriated earnings</td><td>—</td><td>(2,298)</td></tr><tr><td>Unrealized gain/loss on restricted investments</td><td>(112)</td><td>(177)</td></tr><tr><td>Depreciation and amortization</td><td>(4,173)</td><td>(5,362)</td></tr><tr><td>Other</td><td>—</td><td>(25)</td></tr><tr><td></td><td>(4,310)</td><td>(7,891)</td></tr><tr><td>Net deferred tax assets (liabilities)</td><td>$   1,347</td><td>$    1,614</td></tr></table>

During fiscal 2018, the Company recorded a transition tax adjustment associated with its accumulated unrepatriated foreign earnings reducing long-term deferred tax liabilities by \$2,298 and increasing short- and long-term accrued income taxes by \$153 and \$1,766, respectively. Consistent to prior to the passage of the Tax Act, we do not currently take the position that undistributed foreign subsidiaries’ earnings are considered to be permanently reinvested.

A summary of the Company’s adjustments to its uncertain tax positions in fiscal years ended August 31, 2018, 2017 and 2016 are as follows:

<table><tr><td></td><td>2018</td><td>2017</td><td>2016</td></tr><tr><td>Balance, at beignninfg o the year</td><td>$    1,257</td><td>$    1,229</td><td>$    1,249</td></tr><tr><td>Increase for tax positions related to the current year</td><td>47</td><td>65</td><td>37</td></tr><tr><td>Increase for tax positions related to prior years</td><td>595</td><td>16</td><td>98</td></tr><tr><td>Increase for interest and penalties</td><td>71</td><td>6</td><td>102</td></tr><tr><td>Decreases for lapses of statute of limitations</td><td>(81)</td><td>(59)</td><td>(257)</td></tr><tr><td>Balance, at end of year</td><td>$   1,889</td><td>$   1,257</td><td>$   1,229</td></tr></table>

The unrecognized tax benefits mentioned above include an aggregate of \$751 of accrued interest and penalty balances related to uncertain tax positions. The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. An increase in accrued interest and penalty charges of approximately \$71, net of Federal tax expense, was recorded as a tax expense during the current fiscal year. The Company does not anticipate that its accrual for uncertain tax positions will change by a material amount over the next twelve-month period, as it does not

expect to settle any potential disputed items with the appropriate taxing authorities nor does it expect the statute of limitations to expire for any items.

The Company is subject to U.S. Federal income tax, as well as to income tax of multiple state, local and foreign tax jurisdictions. The statute of limitations for all material U.S. Federal, state, and local tax filings remains open for fiscal years subsequent to 2014. For foreign jurisdictions, the statute of limitations remains open in the U.K. for fiscal years subsequent to 2014 and in France for fiscal years subsequent to 2017.

# Note 8—Operating Leases

The Company is obligated under various operating leases, primarily for real property and equipment. Future minimum lease payments under noncancelable operating leases (with initial or remaining lease terms in excess of one year) as of August 31, 2018, are as follows:

<table><tr><td>Year ending August 31,</td><td>Future Operating 
Lease Payments</td></tr><tr><td>2019</td><td>$        2,144</td></tr><tr><td>2020</td><td>2,054</td></tr><tr><td>2021</td><td>1,865</td></tr><tr><td>2022</td><td>1,284</td></tr><tr><td>2023</td><td>1,128</td></tr><tr><td>2024 and thereafter</td><td>3,302</td></tr><tr><td>Total future minimum lease payments</td><td>$        11,777</td></tr></table>

Total rental expense for all operating leases amounted to \$3,114, \$2,516 and \$1,631 for the years ended August 31, 2018, 2017 and 2016, respectively.

# Note 9—Benefits and Pension Plans

# 401(k) Plans

The Company has a defined contribution plan adopted pursuant to section 401(k) of the Internal Revenue Code of 1986 (the “Chase 401(k) Plan”). Any qualified employee who has attained age 21 and has been employed by the Company for at least six months may contribute a portion of his or her salary to the plan and the Company will match 100% of the first one percent of salary contributed and 50% thereafter, up to an amount equal to three and one-half percent of such employee’s annual salary.

Through our wholly-owned subsidiary NEPTCO, the Company has two additional 401(k) savings plans, one for union employees and one for nonunion employees (the nonunion plan was merged into the Chase 401(k) Plan effective January 1, 2018). Under these plans, substantially all employees of NEPTCO are eligible to participate by making pre-tax contributions to these plans. Participants may elect to defer between 1% and 10% of their annual compensation. The Company may contribute \$0.75 for each \$1.00 of participant deferrals up to 6% of the non-union participant’s compensation. The Company may match union employee contributions by \$0.50 for each \$1.00 of participant deferrals up to 6% of the participant’s compensation.

The Company’s contribution expense for all 401(k) plans was \$702, \$519 and \$571 for the years ended August 31, 2018, 2017 and 2016, respectively.