Note 11 - Income Taxes
|12 Months Ended|
Jun. 30, 2014
|Income Tax Disclosure [Abstract]|
|Income Tax Disclosure [Text Block]||
(11) Income Taxes
Income tax expense (benefit) attributable to income from operations consists of the following for the fiscal years ended June 30 (in thousands):
The following is a reconciliation of expected income tax expense (benefit) (computed by applying the federal statutory income tax rate to income before taxes) to actual income tax expense (benefit) (in thousands):
The deferred income tax asset and liability balances at June 30 (in thousands) include:
The deferred tax balances are classified in the Consolidated Balance Sheets as follows at June 30 (in thousands):
We evaluate our deferred taxes to determine if the “more likely than not” standard of evidence has not been met thereby supporting the need for a valuation allowance.
A valuation allowance must be established for deferred tax assets when it is more likely than not that the assets will not be realized. At the end of the fourth quarter of fiscal 2014, our U.S. retail segment operations returned to a position of cumulative pre-tax profits for the most recent 36 month period, we had six quarters of pre-tax operating profits over the last eight consecutive quarters, we reported growth in net sales and our business plan projected continued profitability. This positive evidence provides support that our future tax benefits more likely than not will be realized. Accordingly, at the end of the fourth quarter of fiscal 2014, we released all of the U.S. retail segment valuation allowance against net deferred state tax assets. We recorded a tax benefit of $2 million for the reversal of the valuation allowance against those assets, with a non-cash benefit to earnings in the quarter ended June 30, 2014. We retained a valuation allowance against the Belgian foreign deferred tax assets in our retail segment. At June 30, 2014 this valuation allowance was approximately $1.4 million.
During fiscal 2012, we released all of United States federal and Canadian valuation allowance against net deferred tax assets established during fiscal 2010. 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.
The Company’s deferred income tax assets at June 30, 2014 with respect to the net operating losses expire as follows (in thousands):
Deferred U.S. federal income taxes are not provided for unremitted foreign earnings of our foreign subsidiaries because we expect those earnings will be permanently reinvested.
Uncertain Tax Positions
We recognize interest and penalties related to income tax matters as a component of income tax expense. If the $4.7 million of unrecognized tax benefits and related interest and penalties as of June 30, 2014 were recognized, approximately $3.1 million would be recorded as a benefit to income tax expense. A reconciliation of the beginning and ending amount of unrecognized tax benefits including related interest and penalties as of June 30, 2014 and 2012 is as follows (in thousands):
It is reasonably possible that various issues relating to approximately $2.2 million of the total gross unrecognized tax benefits as of June 30, 2014 will be resolved within the next twelve months as exams are completed or statutes expire. If recognized, approximately $1.4 million of unrecognized tax benefits would reduce our tax expense in the period realized. However, actual results could differ from those currently anticipated.
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, Belgium and Honduras. As of June 30, 2014, the Company and certain subsidiaries are currently under audit from 2006 through 2012 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.
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.
Reference 1: http://www.xbrl.org/2003/role/presentationRef