Income Taxes

3 Months Ended

Jun. 30, 2013

Income Tax Expense (Benefit) [Abstract]

Income Taxes

Income Taxes

The following table compares our income tax benefit and effective tax rates for the three months months ended June 30, 2013 and 2012:

	Three months ended
	June 30,
(Dollars in thousands)	2013			2012
Income tax benefit	$	(105	)	$	(529	)
Effective tax rate	41		%	16.6		%

For the three months ended June 30, 2013, the effective tax rate was different than the statutory rate due primarily to the intra-period tax allocation rules associated with the discontinued operations. Other items affecting the rate include a decrease in unrecognized tax benefits attributable to the expiration of statute of limitations, recognition of net operating losses as deferred tax assets, which were offset by increases in the valuation allowance, and other U.S. permanent book to tax differences.

For the three months ended June 30, 2012, the effective tax rate was different than the statutory rate due primarily to the intra-period tax allocation rules associated with the discontinued operations. Other items affecting the rate include recognition of net operating losses as deferred tax assets, which were offset by increases in the valuation allowance, and other U.S. permanent book to tax differences.

Because of our losses in prior periods, we have recorded a valuation allowance offsetting substantially all of our deferred tax assets. The amount of the valuation allowance, however, could be reduced in the near term. The exact timing and the portion of the valuation allowance released are subject to change based on the level of profitability that we are able to achieve for the remainder of fiscal 2014 and our visibility into future period results. We expect that any release of the valuation allowance will be recorded as an income tax benefit or an adjustment to paid-in capital at the time of release, significantly increasing our reported net income. Our recorded tax rate may increase in subsequent periods following a significant release of the valuation allowance and our net income may be negatively affected in periods following the release. Any valuation allowance release will not affect the amount of cash paid for income taxes.