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Income Taxes
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6 Months Ended |
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Sep. 30, 2013
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| Income Tax Expense (Benefit) [Abstract] | |
| Income Taxes |
Income Taxes
The Company uses an estimated annual effective tax rate based on expected annual income to determine the quarterly provision for income taxes before discrete items. The impact of discrete items is recorded in the quarter in which they occur. The Company utilizes the liability method of accounting for income taxes and deferred taxes which are determined based on the differences between the financial statements and tax basis of assets and liabilities given the enacted tax laws. The Company evaluates the need for valuation allowances on the net deferred tax assets under the rules of ASC 740 Income Taxes. In assessing the realizability of the Company's deferred tax assets, the Company considered whether it is more likely than not that some or all of the deferred tax assets will be realized though the generation of future taxable income. In making this determination, the Company assessed all of the evidence available at the time including recent earnings, forecasted income projections and historical performance. In fiscal year 2013, the Company determined that the negative evidence outweighed the objectively verifiable positive evidence and recorded a full valuation allowance against deferred tax assets. The Company will continue to reassess realizability going forward.
The Company recorded $68,000 and $87,000 of income tax expense in the three and six months ended September 30, 2013, respectively, using an effective income tax rate of (6.5)%. The expense resulted primarily from a state tax based on gross margin, not pre-tax income.
In the three and six months ended September 30, 2012, the Company recorded a net tax benefit of $677,000 and $1.9 million, respectively, which resulted from an estimated annual effective tax rate of 34.0% for the fiscal year plus the effects of a discrete item. For the six months ended September 30, 2012, there was $181,000 of discrete tax expense resulting primarily from the deferred impact of estimated changes in state apportionment factors and from tax shortfalls related to settlements of share-based compensation. An income tax benefit of $382,000 and $108,000 was included in discontinued operations for the three and six months ended September 30, 2012, respectively.
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