XML 67 R16.htm IDEA: XBRL DOCUMENT v3.2.0.727
Income and other Taxes
9 Months Ended
Jun. 30, 2015
Income Tax Disclosure [Abstract]  
Income and other Taxes
Income and other Taxes
At September 30, 2014, the Company determined that it was more likely than not that certain deferred tax assets would be realized upon the sale of the Photovoltaic Business in fiscal year 2015. As a result, a net deferred tax valuation allowance release of $24.1 million was recorded as an income tax benefit during fiscal year 2014. The sale of the Photovoltaic Business closed on December 10, 2014 and the Company realized a gain on the transaction.
For the three months ended June 30, 2015, the Company reported $0.5 million of income tax expense from continuing operations losses and $1.6 million of income tax benefit within income from discontinued operations. For the nine months ended June 30, 2015, the Company reported $1.9 million of income tax benefit from continuing operations losses and $26.5 million of income tax expense within income from discontinued operations. The income tax expense within discontinued operations includes estimated alternative minimum tax and other adjustments prescribed by ASC 740 in allocating expected annual income tax expense (benefit) between continuing operations and discontinued operations.
During the nine months ended June 30, 2015, the Company utilized $24.1 million of deferred tax assets. The Company paid alternative minimum taxes of $0.6 million in the three and nine months ended June 30, 2015 and the remaining income tax expense will be offset mainly through utilization of $24.1 million of deferred tax assets and utilization of net operating loss carry forwards.

For the three months ended June 30, 2014, the Company reported $0.7 million of income tax benefit from losses from continuing operations and $0.7 million of income tax expense within income from discontinued operations. For the nine months ended June 30, 2014, the Company reported $1.4 million of income tax benefit from losses from continuing operations and $1.4 million of income tax expense within income from discontinued operations.

For the three months ended June 30, 2015, the effective tax rate was 49.6%, compared to 14.4% for the three months ended June 30, 2014. The higher tax rate for June 30, 2015 is primarily due to the methodology used for allocating income tax expense between continuing and discontinued operations under ASC 740. For the nine months ended June 30, 2015, the effective tax rate on continuing operations was 33.8%, compared to 9.7% for the nine months ended June 30, 2014 primarily due to the benefit of the loss from operations in 2015. In determining the effective tax rate, the Company uses estimates to forecast the results from continuing operations for the current fiscal year as well as permanent differences between book and tax accounting. The Company believes its forecast of losses from continuing operations is a reasonable estimate. Actual results from continuing operations may differ significantly from the estimates previously forecasted, resulting in significant changes from one period to the next in the tax expense or benefit from continuing operations being recognized.
The Company expects all remaining deferred tax assets will have a full valuation allowance at September 30, 2015. However, on a quarterly basis, the Company will evaluate the positive and negative evidence to assess whether the more likely than not criterion, mandated by ASC 740, has been satisfied in determining whether there will be further adjustments to the valuation allowance.

During the three and nine months ended June 30, 2015 and 2014, there were no material increases or decreases in unrecognized tax benefits and we do not anticipate any material increases or decreases in the amounts of unrecognized tax benefits for the remainder of fiscal year 2015. As of June 30, 2015 and September 30, 2014, we had approximately $493,000 and $445,000, respectively, of interest and penalties accrued as tax liabilities on our balance sheet.

We file income tax returns in the U.S. federal, state, and local jurisdictions. The Company's September 30, 2012, federal return was under examination by the Internal Revenue Service. The examination was completed in April 2015 and the Company was notified there were no changes to the originally filed return. There are no state income tax returns under examination. The following tax years remain open to assessment for each of the more significant jurisdictions where we are subject to income taxes: after fiscal year 2010 for the U.S. federal and the State of New Mexico, and after fiscal year 2009 for the state of California.

Included in discontinued operations during the three and nine months ended June 30, 2015 were $0.2 million of incentive tax credits received. Included in discontinued operations for the three and nine months ended June 30, 2014 were $0.2 million and $0.8 million, respectively, of New Mexico incentive tax credits received. The amount received was allocated to cost of goods sold, selling, general and administrative and research and development expense primarily based on the number of employees allocated to the related departments. These credits resulted in cash refunds and a reduction of future payroll and compensation taxes.