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Note 3 - Income Taxes
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9 Months Ended |
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Mar. 31, 2012
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| 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 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, and
Mexico. As of March 31, 2012, the Company and certain of
its subsidiaries are currently under Federal audit in the
U.S. for the year 2010, state and local audits in the U.S.
for the years 2006 through 2010 and Canada for
years 2008 through 2010. 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.
The
Company established a full valuation allowance as of June
30, 2010. At that time, due to the preponderance of
negative evidence, management’s assessment was that
realization of tax assets was not reasonably assured.
During the quarter ended March 31, 2012, we changed our
assessment and determined it is now more likely than not
that we will be able to realize the benefits of our
deferred federal, state and foreign deferred tax assets. As
a result, we released all of our United States federal and
Canadian valuation allowances against net deferred tax
assets. We have retained a valuation allowance against
various state and local deferred tax assets in our retail
segment.
The
Company’s consolidated effective tax rate was a
negative 378.7% and a negative 46.6% for the three and nine
months ended March 31, 2012 respectively, and negative
13.0% and negative 26.7% for the three and nine months
ended March 31, 2011 respectively. The current quarter
effective tax rate includes the benefit from the reversal
of the valuation allowance, the recognition of certain
previously unrecognized tax benefits, partially 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.
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