Income Taxes

3 Months Ended

Sep. 30, 2012

Income Taxes

Income Taxes

4.   Income Taxes

The effective tax rate for the periods presented is the result of the mix of income earned in various tax jurisdictions that apply a broad range of income tax rates, as well as the impact of permanent items.  Our provision for income taxes for the three months ended September 30, 2012 differs from the tax computed at the U.S. federal statutory income tax rate due primarily to non-deductible stock-based compensation expense.  Our effective tax rate for the three months ended September 30, 2012 was a provision of 53.6% compared to a benefit of 29.0% for the three months ended September 30, 2011.

Deferred income taxes are recognized based on temporary differences between the financial statement and tax bases of assets and liabilities. Deferred tax assets and liabilities are measured using the statutory tax rates and laws expected to apply to taxable income in the years in which the temporary differences are expected to reverse. Valuation allowances are provided against net deferred tax assets if, based upon the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the future generation of taxable income and the timing of the temporary differences becoming deductible.  Management considers, among other available information, scheduled reversals of deferred tax liabilities, projected future taxable income, limitations of availability of net operating loss carry-forwards, and other matters in making this assessment. At September 30, 2012 our total valuation allowance was approximately $5.6 million.

We do not provide deferred taxes on unremitted earnings of foreign subsidiaries since we intend to indefinitely reinvest those earnings either currently or sometime in the foreseeable future. Unrecognized provisions for taxes on undistributed earnings of foreign subsidiaries, which are considered indefinitely reinvested, are not material to our consolidated financial position or results of operations.