Provision for Taxes

12 Months Ended

Mar. 31, 2012

Disclosure Text Block [Abstract]

Note 15: Provision for Taxes

Note 15.  Provision for Taxes

Earnings before taxes and the provision for taxes consisted of the following:

	Years Ended March 31,
	2012		2011		2010
	(In thousands)
Pretax earnings:
U.S.	$	302,748	$	270,695	$	89,350
Non-U.S.		22,888		18,619		10,840
Total pretax earnings	$	325,636	$	289,314	$	100,190
Current provision (benefit)
Federal	$	10,899	$	14,784	$	(23,965	)
State		5,514		7,475		1,965
Non-U.S.		4,786		3,861		34
		21,199		26,120		(21,966	)
Deferred provision (benefit)
Federal		89,327		70,653		53,174
State		8,310		7,300		3,472
Non-U.S.		1,433		1,666		(113	)
		99,070		79,619		56,533
Provision for income tax expense	$	120,269	$	105,739	$	34,567
Income taxes paid (net of income tax refunds received)	$	10,739	$	14,265	$	1,558

The difference between the tax provision at the statutory federal income tax rate and the tax provision attributable to income before taxes was as follows:

	Years Ended March 31,
	2012			2011			2010
	(In percentages)
Statutory federal income tax rate		35.00	%		35.00	%		35.00	%
Increase (reduction) in rate resulting from:
State taxes, net of federal benefit		2.70	%		3.24	%		3.50	%
Foreign rate differential		(0.55	)%		(0.34	)%		(1.17	)%
Federal tax credits		(0.21	)%		(0.18	)%		(0.46	)%
Interest on deferred tax		0.12	%		0.13	%		0.52	%
Dividend received deduction		(0.06	)%		(0.08	)%		(0.09	)%
Change in valuation allowance		-	%		-	%		(2.70	)%
Other		(0.07	)%		(1.22	)%		(0.10	)%
Actual tax expense of operations		36.93	%		36.55	%		34.50	%

Significant components of our deferred tax assets and liabilities were as follows:

	March 31,
	2012		2011
	(In thousands)
Deferred tax assets:
Net operating loss and credit carry forwards	$	3,080	$	3,559
Accrued expenses		126,361		132,140
Policy benefit and losses, claims and loss expenses payable, net		15,493		10,355
Unrealized gains		6,649		8,834
Other		-		583
Total deferred tax assets	$	151,583	$	155,471
Deferred tax liabilities:
Property, plant and equipment	$	519,409	$	421,521
Deferred policy acquisition costs		2,838		5,207
Other		328		-
Total deferred tax liabilities		522,575		426,728
Net deferred tax liability	$	370,992	$	271,257

The net operating loss and credit carry-forwards in the above table are primarily attributable to $27.7 million of state net operating losses that will begin to expire March 31, 2013 if not utilized.

ASC 740 prescribes a minimum recognition and measurement methodology that a tax position is required to meet before being recognized in the financial statements. The total amount of unrecognized tax benefits at April 1, 2011 was $9.5 million. This entire amount of unrecognized tax benefits if resolved in our favor, would favorably impact our effective tax rate. During the current year we recorded tax expense (net of settlements), resulting from uncertain tax positions in the amount of $2.3 million. At March 31, 2012, the amount of unrecognized tax benefits and the amount that would favorably affect our effective tax rate was $11.8 million.

A reconciliation of the total amounts of unrecognized tax benefits at the beginning and end of the period are as follows:

	Unrecognized Tax Benefits
	(In thousands)
Unrecognized tax benefits as of March 31, 2011	$	9,503
Additions based on tax positions related to the current year		2,424
Reductions for tax positions of prior years		-
Settlements		(147	)
Unrecognized tax benefits as of March 31, 2012	$	11,780

We recognize interest related to unrecognized tax benefits as interest expense, and penalties as operating expenses. At April 1, 2011, the amount of interest and penalties accrued on unrecognized tax benefits was $3.8 million, net of tax. During the current year we recorded expense from interest in the amount of $0.2 million, net of tax. At March 31, 2012, the amount of interest and penalties accrued on unrecognized tax benefits was $4.0 million, net of tax.

We file income tax returns in the U.S. federal jurisdiction, and various states and foreign jurisdictions. With some exceptions, we are no longer subject to audit for years prior to the fiscal year ended March 31, 2009.