Note 10 - Income Taxes

12 Months Ended

Jun. 30, 2014

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

10. INCOME TAXES

The components of income from continuing operations before income taxes are as follows (in thousands):

	2014		2013		2012
U.S. Operations	$	26,965	$	35,805	$	26,366
Non-U.S. Operations		40,838		23,493		35,229
Total	$	67,803	$	59,298	$	61,595

The Company utilizes the asset and liability method of accounting for income taxes. Deferred income taxes are determined based on the estimated future tax effects of differences between the financial and tax bases of assets and liabilities given the provisions of the enacted tax laws. The components of the provision for income taxes on continuing operations (in thousands) were as shown below:

	2014			2013			2012
Current:
Federal	$	9,653		$	9,099		$	5,176
State		415			1,382			403
Non-U.S.		11,329			7,179			7,778
Total Current		21,397			17,660			13,357
Deferred:
Federal	$	(2,017	)	$	(454	)	$	2,109
State		(376	)		18			640
Non-U.S.		(950	)		(1,980	)		(407	)
Total Deferred		(3,343	)		(2,416	)		2,342
Total	$	18,054		$	15,244		$	15,699

A reconciliation from the U.S. Federal income tax rate on continuing operations to the total tax provision is as follows (in thousands):

	2014			2013			2012
Provision at statutory tax rate		35.0	%		35.0	%		35.0	%
State taxes		0.0	%		1.5	%		1.1	%
Impact of Foreign Operations		-5.6	%		-6.5	%		-6.3	%
Federal tax credits		-0.7	%		-2.2	%		-0.7	%
Life Insurance Proceeds		-1.7	%		0.0	%		0.0	%
Other		-0.4	%		-2.1	%		-3.6	%
Effective income tax provision		26.6	%		25.7	%		25.5	%

Changes in the effective tax rates from period to period may be significant as they depend on many factors including, but not limited to, size of the Company’s income or loss and any one-time activities occurring during the period.

The Company's income tax provision from continuing operations for the fiscal year ended June 30, 2014 was impacted by the following items: (i) a benefit of $0.5 million related to the R&D tax credit that expired during the fiscal year on December 31, (ii) a benefit of $0.5 million related to a decrease in the statutory tax rate in the United Kingdom on prior period deferred tax liabilities recorded during the first quarter during the fiscal year, (iii) a benefit of $1.1 million due to non-taxable life insurance proceeds received in the third quarter and (iv) a benefit of $3.8 million due to the mix of income earned in jurisdictions with beneficial tax rates.

The Company's income tax provision from continuing operations for the fiscal year ended June 30, 2013 was impacted by the following items: (i) a benefit of $0.4 million related to the retroactive extension of the R&D credit recorded during the third quarter, (ii) a benefit of $0.3 million related to a decrease in the statutory tax rate in the United Kingdom on prior period deferred tax liabilities recorded during the first and fourth quarters, (iii) a benefit of $1.0 million from the reversal of a deferred tax liability that was determined to be no longer required during the third quarter and (iv) a benefit of $2.8 million due to the mix of income earned in jurisdictions with beneficial tax rates.

The Company's income tax provision from continuing operations for the fiscal year ended June 30, 2012 was impacted by the following items: (i) a benefit of $1.3 million from the reversal of income tax contingency reserves that were determined to be no longer needed due to the lapsing of the statute of limitations and re-measurement of existing tax contingency reserves based on recently completed tax examinations, (ii) a benefit of $0.4 million related to a decrease in the statutory tax rate in the United Kingdom on prior period deferred tax liabilities recorded during the first quarter, and (iii) a benefit of $4.5 million due to the mix of income earned in jurisdictions with beneficial tax rates.

Significant components of the Company’s deferred income taxes are as follows (in thousands):

	2014			2013
Deferred tax liabilities:
Depreciation and amortization	$	(20,934	)	$	(18,778	)
Total deferred tax liability	$	(20,934	)	$	(18,778	)
Deferred tax assets:
Accrued compensation	$	4,463		$	3,464
Accrued expenses and reserves		3,040			2,429
Pension		10,975			12,246
Inventory		1,549			1,588
Other		758			806
Net operating loss and credit carry forwards		3,685			3,164
Total deferred tax asset	$	24,470		$	23,697
Less: Valuation allowance		(530	)		(520	)
Net deferred tax asset (liability)	$	3,006		$	4,399

The Company estimates the degree to which deferred tax assets, including net operating loss and credit carry forwards will result in a benefit based on expected profitability by tax jurisdiction and provides a valuation allowance for tax assets and loss carry forwards that it believes will more likely than not go unrealized. The valuation allowances at June 30, 2014 apply to the tax benefit of state loss carry forwards, which management has concluded that it is more likely than not that these tax benefits will not be realized. The increase (decrease) in the valuation allowance from the prior year was less than $0.1 million, ($0.3) million, and $0.6 million in 2014, 2013, and 2012, respectively.

As of June 30, 2014, the Company had gross state net operating loss ("NOL") and credit carry forwards of approximately $40.7 million and $2.8 million, respectively, which may be available to offset future state income tax liabilities and expire at various dates from 2015 through 2034. In addition, the Company had foreign NOL carry forwards of approximately $2.6 million, $1.4 million of which carry forward indefinitely, $1.0 million that carry forward for 10 years and $0.2 million that carry forward for 5 years.

The Company’s income taxes currently payable for federal and state purposes have been reduced by the benefit of the tax deduction in excess of recognized compensation cost from employee stock compensation transactions. The provision for income taxes that is currently payable has not been adjusted by approximately $1.7 million and $2.0 million of such benefits of the Company that have been allocated to additional paid in capital in 2014 and 2013, respectively.

A provision has not been made for U.S. or additional non-U.S. taxes on $127.9 million of undistributed earnings of international subsidiaries that could be subject to taxation if remitted to the U.S. It is not practicable to estimate the amount of tax that might be payable on the remaining undistributed earnings. Our intention is to reinvest these earnings permanently or to repatriate the earnings only when it is tax effective to do so. Accordingly, we believe that U.S. tax on any earnings that might be repatriated would be substantially offset by U.S. foreign tax credits.

The total provision for income taxes included in the consolidated financial statements was as follows (in thousands):

	2014			2013		2012
Continuing operations	$	18,054		$	15,244	$	15,699
Discontinued operations		(3,692	)		482		(9,109	)
	$	14,362		$	15,726	$	6,590

The changes in the amount of gross unrecognized tax benefits during 2014, 2013 and 2012 were as follows (in thousands):

	2014			2013			2012
Beginning Balance	$	1,286		$	1,298		$	2,146
Additions based on tax positions related to the current year		25			77			64
Additions for tax positions of prior years		-			19			394
Reductions for tax positions of prior years		(278	)		(108	)		(1,306	)
Ending Balance	$	1,033		$	1,286		$	1,298

If the unrecognized tax benefits in the table above were recognized in a future period, $0.6 million of the unrecognized tax benefit would impact the Company’s effective tax rate.

Within the next twelve months, the statute of limitations will close in various U.S., state and non-U.S. jurisdictions. As a result, it is reasonably expected that net unrecognized tax benefits from these various jurisdictions would be recognized within the next twelve months. The recognition of these tax benefits is not expected to have a material impact to the Company's financial statements. The Company does not reasonably expect any other significant changes in the next twelve months. The following tax years, in the major tax jurisdictions noted, are open for assessment or refund:

Country	Years Ending June 30,
United States		2011 to 2014
Canada		2010 to 2014
Germany		2010 to 2014
Ireland		2011 to 2014
Portugal		2010 to 2014
United Kingdom		2013 to 2014

The Company’s policy is to include interest expense and penalties related to unrecognized tax benefits within the provision for income taxes on the consolidated statements of operations. At both June 30, 2014 and June 30, 2013, the company had less than $0.1 million for accrued interest expense on unrecognized tax benefits.