XML 27 R15.htm IDEA: XBRL DOCUMENT v2.4.0.6
Income Taxes
9 Months Ended
Dec. 31, 2011
Income Tax Disclosure [Abstract]  
Income Tax Disclosure Text Block

12.        Income Taxes

 

Income tax expense as a percentage of income from continuing operations before income tax expense was 16.4% and (10,915.8)% for the three month periods ended December 31, 2011 and 2010, respectively and 25.1% and 3,840.7% for the nine month periods then ended, respectively. Typically these percentages vary from the U.S. statutory rate primarily due to varying effective tax rates at the Company's foreign subsidiaries, and the jurisdictional mix of taxable income for these subsidiaries.  The unusual income tax percentage in fiscal year 2011 is due to the recording of a deferred tax asset valuation allowance described in the paragraph below. During the nine month period ended December 31, 2011, the Company received notice of a tax assessment related to a prior period for one of its foreign subsidiaries.  Income tax expense for the nine month period ended December 31, 2011 includes approximately $900,000 in past due taxes, interest, and penalties related to the assessment. 

 

During the third and fourth quarters of fiscal 2011, the Company recorded a non-cash charge of $42,983,000 included within its provision for income taxes.  This charge relates to the Company's determination that a full valuation allowance against its deferred tax assets generated in the U.S. and at three of the Company's foreign subsidiaries was necessary.  Accounting rules require a reduction of the carrying amounts of deferred tax assets by a valuation allowance if, based on the available and objectively verifiable evidence, it is more likely than not that such assets will not be realized.  The existence of cumulative losses for a certain threshold period is a significant form of negative evidence used in the assessment.  If a cumulative loss threshold is met, the accounting rules indicate that forecasts of future profitability are generally not sufficient positive evidence to overcome the presumption that a valuation allowance is necessary.

 

We estimate that the effective tax rate including discrete items related to continuing operations will be approximately 20% to 25% for fiscal 2012 based on the forecasted jurisdictional mix of taxable income.