Note 3 - Income Taxes
|
9 Months Ended |
---|---|
Mar. 31, 2013
|
|
Income Tax Disclosure [Text Block] |
(3)
Income
Taxes
The
Company reviews its expected annual effective income tax
rates and makes changes on a quarterly basis as necessary
based on certain factors such as changes in forecasted annual
operating income; changes to actual or forecasted permanent
book to tax differences; impacts from future tax audits with
state, federal or foreign tax authorities; impacts from tax
law changes; or change in judgment as to the realizability of
deferred tax assets. The Company identifies items which are
not normal and are non-recurring in nature and treats these
as discrete events. The tax effect of discrete items is
recorded in the quarter in which the discrete events occur.
Due to the volatility of these factors, the Company's
consolidated effective income tax rate can change
significantly on a quarterly basis.
The
Company conducts business globally and, as a result, the
Company or one or more of its subsidiaries files income tax
returns in the U.S., various state, and foreign
jurisdictions. In the normal course of business, the Company
is subject to examination by the taxing authorities in such
major jurisdictions as the U.S, Canada, Mexico and Honduras.
As of March 31, 2013, the Company and certain subsidiaries
are currently under audit from 2006 through 2010 in the U.S.
While the amount of uncertain tax benefits with respect to
the entities and years under audit may change within the next
twelve months, it is not anticipated that any of the changes
will be significant. It is reasonably possible that some of
these audits may be completed during the next twelve months.
It is reasonable to expect that various issues relating to
uncertain tax benefits will be resolved within the next
twelve months as exams are completed or as statutes expire
and will impact the effective tax rate.
As
a result of losses we sustained for fiscal 2010 and 2009,
which were brought on by the severe economic factors which
began in fiscal 2009, we recorded a $34.1 million valuation
allowance against deferred tax assets, with a non-cash charge
to earnings in the fourth quarter of fiscal 2010. At the end
of the third quarter of fiscal 2012, our operations had
returned to a position of cumulative pre-tax operating
profits for the most recent 36 month period, we had eight
consecutive quarters of pre-tax operating profits, our
written business and backlog had grown significantly, and our
business plan projected continued profitability. The
preponderance of this positive evidence provides support that
our future tax benefits more likely than not will be
realized. Accordingly, at the end of the third quarter of
fiscal 2012, we released all of United States federal, most
of the state, and all of the Canadian valuation allowance
against net deferred tax assets. We recorded a tax benefit of
$21.6 million for the reversal of the valuation allowance
against those assets, with a non-cash benefit to earnings in
the quarter ended March 31, 2012.
We
retained a valuation allowance against various state and
local deferred tax assets in our retail segment. At March 31,
2013 this valuation allowance was approximately $2.3
million.
The
Company’s consolidated effective tax rate was 32.2% and
35.4% for the three and nine months ended March 31, 2013,
respectively and a negative 378.7% and a negative 46.6% for
the three and nine months ended March 31, 2012 respectively.
The current quarter effective tax rate primarily includes tax
expense on the current quarter’s net income, interest
expense on uncertain tax positions, and the impact of
maintaining valuation allowances, partly offset by the
recognition of some uncertain tax positions. The prior period
effective tax rate includes the benefit from the reversal of
the valuation allowance, and the recognition of previously
unrecognized tax benefits, partly offset by the tax expense
on the current quarter’s net income, interest expense
on uncertain tax positions, and the impact of maintaining
valuation allowances on deferred tax assets in the retail
segment.
|