Income Taxes

3 Months Ended

Jun. 30, 2011

Income Taxes

Income Taxes

7. Income Taxes

The effective tax rates from continuing operations for the three months ended June 30, 2011 and 2010 were as follows:

	Three Months Ended June 30
	2011			2010
Effective income tax rate		17.8	%		(77.6	)%

Income tax expense is based on the Company's estimate of the effective tax rate expected to be applicable for the respective full year. For the first quarter of fiscal 2012, the effective tax rate was different than the statutory rate due primarily to the recognition of net operating losses, as deferred tax assets, which were offset by increases in the valuation allowance. Other items effecting the rate in the current year quarter include foreign and state taxes and a discrete item related to a decrease in unrecognized tax benefits. For the first quarter of fiscal 2011, the effective tax rate was different than the statutory rate due primarily to the recognition of net operating losses, as deferred tax assets, which were offset by increases in the valuation allowance. In addition, an increase in the valuation allowance was recorded due to the correction of an error, as more fully described in Note 1 to Condensed Consolidated Financial Statements. Other items effecting the rate in the prior year quarter include foreign and state taxes and a discrete item related to an increase in unrecognized tax benefits.

Although the timing and outcome of tax settlements are uncertain, it is reasonably possible that during the next 12 months a reduction in unrecognized tax benefits may occur in the range of zero to $0.8 million based on the outcome of tax examinations and as a result of the expiration of various statutes of limitations. The Company is routinely audited and is currently under examination by the Internal Revenue Service ("IRS") for the tax year ended March 31, 2010. Due to the ongoing nature of current examinations in multiple jurisdictions, other changes could occur in the amount of gross unrecognized tax benefits during the next 12 months which cannot be estimated at this time.