Income Taxes

12 Months Ended

Jun. 30, 2014

Income Tax Disclosure [Abstract]

Income Taxes

(12) Income Taxes

The components of income before the provision for income taxes are as follows:

	2014		2013		2012
Domestic operations	$	30,884	$	21,181	$	16,418
Foreign operations		13,790		13,369		8,322
	$	44,674	$	34,550	$	24,740

The components of the provision for income taxes are as follows:

	2014			2013			2012
Federal:
Current	$	12,720		$	9,428		$	6,533
Deferred		(2,728	)		(2,011	)		(1,476	)
State and local:
Current		1,547			1,568			716
Deferred		(113	)		(628	)		(277	)
Foreign:
Current		4,490			3,875			2,287
Deferred		(242	)		(10	)		(24	)
	$	15,674		$	12,222		$	7,759

Income taxes payable, which is included in accrued expenses, was $6,403 and $3,956 at June 30, 2014 and 2013, respectively.

The tax effects of temporary differences that give rise to the deferred tax assets and liabilities at June 30, 2014 and 2013 are presented below:

	2014			2013
Deferred tax assets:
Accrued environmental remediation liabilities not  currently deductible	$	-		$	102
Accrued deferred compensation		2,970			2,791
Accrual for sales deductions not currently deductible		5,901			2,989
Additional inventoried costs for tax purposes		236			206
Allowance for doubtful accounts receivable		87			139
Depreciation and amortization		6,074			2,690
Accrual for payments to former senior management and other personnel related costs		126			57
Contingent consideration		1,313			1,949
Foreign deferred tax assets		477			246
Domestic net operating loss carryforwards		158			200
Foreign net operating loss carryforwards		857			758
Total gross deferred tax assets		18,199			12,127
Valuation allowances		(1,015	)		(958	)
		17,184			11,169
Deferred tax liabilities:
Foreign deferred tax liabilities		(6	)		(6	)
Goodwill		(4,627	)		(2,306	)
Accrued environmental remediation liabilities not currently deductible		(216	)		-
Other		(246	)		(107	)
Total gross deferred tax liabilities		(5,095	)		(2,419	)
Net deferred tax assets	$	12,089		$	8,750

The following table shows the current and non current deferred tax assets (liabilities) at June 30, 2014 and 2013:

	2014			2013
Current deferred tax assets, net	$	490		$	701
Non-current deferred tax assets, net		11,605			8,055
Current deferred tax liabilities		-			-
Non current deferred tax liabilities		(6	)		(6	)
Net deferred tax assets	$	12,089		$	8,750

The net change in the total valuation allowance for the year ended June 30, 2014 was an increase of $57. The net change in the total valuation allowance for the year ended June 30, 2013 was an increase of $12.  A valuation allowance is provided when it is more likely than not that some portion, or all, of the deferred tax assets will not be realized.  The Company has established valuation allowances primarily for net operating loss carryforwards in certain foreign countries.  In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets are not expected to be realized. The assessment of the amount of value assigned to the Company’s deferred tax assets under the applicable accounting rules is judgmental.  Management is required to consider all available positive and negative evidence in evaluating the likelihood that the Company will be able to realize the benefit of its deferred tax assets in the future. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which net operating loss carryforwards are utilizable and temporary differences become deductible.  Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, taxable income in carryback years if carryback is permitted and tax planning strategies in making this assessment. In order to fully realize the net deferred tax assets recognized at June 30, 2014, the Company will need to generate future taxable income of approximately $30,700.

Based upon the level of historical taxable income and projections for taxable income over the periods which the deferred tax assets are deductible, management believes it is more likely than not the Company will realize the benefits of these deductible differences.  There can be no assurance, however, that the Company will generate any earnings or any specific level of continuing earnings in the future.  The amount of the deferred tax asset considered realizable, however, could be reduced in the near term if estimates of future taxable income during the carryforward period are reduced.

Deferred taxes have not been provided for undistributed earnings of foreign subsidiaries amounting to approximately $95,255 at June 30, 2014 since substantially all of these earnings are expected to be indefinitely reinvested in foreign operations.  A deferred tax liability will be recognized when the Company expects that it will recover these undistributed earnings in a taxable manner, such as through the receipt of dividends or sale of the investments   The Company intends to indefinitely reinvest the remaining undistributed earnings and has no plan for further repatriation. Determination of the amount of unrecognized deferred U.S. income tax liabilities, net of unrecognized foreign tax credits, is not practical to calculate because of the complexity of this hypothetical calculation resulting in various methods available, each with different U.S. tax consequences.

A reconciliation of the statutory federal income tax rate and the effective tax rate for continuing operations for the fiscal years ended June 30, 2014, 2013 and 2012 follows:

	2014			2013			2012
Federal statutory tax rate		35.0	%		35.0	%		35.0	%
State and local taxes, net of federal income tax benefit		2.5			3.0			3.0
Decrease (increase) in valuation allowance		(0.1	)		-			0.2
Foreign tax rate differential		(1.1	)		(2.1	)		(3.0	)
Impact of repatriation of non-US earnings		-			-			(2.1	)
Other		(1.2	)		(0.5	)		(1.7	)
Effective tax rate		35.1	%		35.4	%		31.4	%

We operate in various tax jurisdictions, and although we believe that we have provided for income and other taxes in accordance with the relevant regulations, if the applicable regulations were ultimately interpreted differently by a taxing authority, we may be exposed to additional tax liabilities.

There are no material unrecognized tax benefits included in the consolidated balance sheet that would, if recognized, have a material effect on the Company’s effective tax rate. The Company is continuing its practice of recognizing interest and penalties related to income tax matters in income tax expense. The Company did not recognize interest and penalties during the years ended June 30, 2014 and June 30, 2013.  The Company files U.S. federal, U.S. state, and foreign tax returns, and is generally no longer subject to tax examinations for fiscal years prior to 2010 (in the case of certain foreign tax returns, fiscal year 2009).