INCOME TAXES Level 1 (Notes)

12 Months Ended

Jul. 31, 2012

INCOME TAXES [Abstract]

Income Tax Disclosure [Text Block]

INCOME TAXES

The provision for income tax expense (benefit) consists of the following at July 31 (in thousands):

	2012			2011			2010
Current
Federal	$	(252	)	$	—		$	3,529
Foreign	358			(118		)	22
State	(165		)	155			1,046
Current Income Tax Total	(59		)	37			4,597
Deferred
Federal	2,038			2,479			(939		)
Foreign	(171		)	11			(7		)
State	455			563			(295		)
Deferred Income Tax Total	2,322			3,053			(1,241		)
Total Income Tax Expense	$	2,263		$	3,090		$	3,356

Principal reasons for variations between the statutory federal rate and the effective rates were as follows for the years ended July 31:

	2012		2011		2010
U.S. federal income tax rate	34.0	%	34.0	%	34.0	%
Depletion deductions allowed for mining	(16.5	)	(8.7	)	(9.2	)
State income tax expense, net of federal tax expense	2.3		2.9		3.9
Foreign tax restructuring	—		0.8		—
Difference in effective tax rate of foreign subsidiaries	1.2		(2.4	)	1.3
Empowerment zone credits	(1.7	)	(1.2	)	(1.2	)
Valuation allowance increase (decrease)	11.4		(1.7	)	(3.6	)
Other	(3.6	)	1.8		1.0
Effective income tax rate	27.1	%	25.5	%	26.2	%

The Consolidated Balance Sheets included the following tax effects of cumulative temporary differences as of July 31 (in thousands):

	2012					2011
	Assets			Liabilities		Assets			Liabilities
Depreciation	$	—		$	10,622	$	—		$	5,116
Deferred compensation	3,210			—		2,943			—
Postretirement benefits	8,200			—		4,364			—
Net operating loss	2,339			—		—			—
Allowance for doubtful accounts	260			—		232			—
Deferred marketing expenses	—			21		—			442
Other assets	183			—		174			—
Accrued expenses	2,116			—		1,241			—
Tax credits	4,233			—		3,106			—
Amortization	—			304		—			247
Inventories	256			—		162			—
Depletion	—			500		—			530
Stock-based compensation	279			—		426			—
Reclamation	227			—		225			—
Other assets – foreign	40			—		—			132
Valuation allowance	(4,061		)	—		(3,106		)	—
Total deferred taxes	$	17,282		$	11,447	$	9,767		$	6,467

As of July 31, 2012, we had AMT credit carryforwards for federal income tax purposes of approximately $4,061,000, which can be carried forward indefinitely or until utilized. A number of factors determine whether or not we will be able to utilize the AMT credit carryforwards. We believe it is more likely than not that we will not realize a benefit from the carryforwards; therefore, a valuation allowance has been established for the full amount of the deferred tax benefit related to the AMT tax credits.

We provided for income taxes related to previously untaxed earnings of foreign subsidiaries during fiscal 2011. Due to the availability of foreign tax credits, the additional income tax expense related to these foreign earnings was not material.

Our liability for unrecognized tax benefits (“UTBs”) based on tax positions related to the current and prior fiscal years did not change during fiscal 2012. Reconciliations of the beginning and ending amount of UTBs were as follows for the years ended July 31 (in thousands):

	2012		2011			2010
Gross balance – beginning of year	$	273	$	643		$	200
Gross increases - tax positions in current year	—		—			443
Gross decreases - tax positions from prior years	—		(370		)	—
Gross balance – end of year	$	273	$	273		$	643

The amount of UTBs that, if recognized as of July 31, 2012, would affect our effective tax rate was $142,000. We classify interest and penalty accruals related to UTBs as income tax expense. During fiscal 2012, we recognized an immaterial amount of interest and penalties. As of July 31, 2012, we had accrued $7,000 for the payment of interest and penalties.

We are subject to U.S. federal income tax as well as income tax in multiple state and foreign jurisdictions. Our federal income tax returns for the fiscal years ended July 31, 2009, 2010 and 2011 remain open and are currently under examination. Foreign and U.S. state jurisdictions have statutes of limitations generally ranging from 3 to 5 years. The state impact of any federal income tax changes remains subject to examination by various states for a period of up to one year after formal notification to the states. There are no material open or unsettled state, local or foreign income tax audits. We believe our accrual for tax liabilities is adequate for all open audit years.