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Income Taxes
9 Months Ended
Mar. 31, 2013
Income Taxes  
Income Taxes

Note 19.  Income Taxes

 

The Company accounts for income taxes in accordance with FASB ASC 740.  Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities as measured by the enacted tax rates which will be in effect when these differences reverse.  Deferred tax expense/(benefit) is the result of changes in deferred tax assets and liabilities.

 

The provision for federal, state and local income taxes for the three months ended March 31, 2013 and 2012 was tax expense of $1,327 and $1,057, respectively, with effective tax rates of 25% and 38%, respectively.  The provision for federal, state and local income taxes for the nine months ended March 31, 2013 and 2012 was tax expense of $5,353 and $1,788, respectively, with effective tax rates of 35% and 41%, respectively.  The effective tax rate for the three and nine months ended March 31, 2013 was lower compared to the three and nine months ended March 31, 2012 due primarily to an increase in benefits related to research and experimentation credits in Fiscal 2013, as compared to Fiscal 2012, as a result of a tax law extension passed in early 2013, with a retroactive January 1, 2012 effective date.  An increase in disqualifying dispositions of incentive stock options in the three and nine months ended March 31, 2013, as compared to March 31, 2012, provided additional benefits.  The overall decrease was partially offset by the effects of a Pennsylvania tax law change which lowered the Company’s apportionment factor within the state.  The impact of this change caused the Company to reduce its deferred tax assets by $232, and therefore increased the effective tax rate by 1.5% for the nine months ended March 31, 2013.  The Company expects its overall effective tax rate will be approximately 35% to 37% for the full year ended June 30, 2013.

 

The Company may recognize the tax benefit from an uncertain tax position claimed on a tax return only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position.  The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement.

 

As of March 31, 2013 and June 30, 2012, the Company reported total unrecognized tax benefits of $366 and $280, respectively.  As a result of the positions taken during the period, the Company has not recorded any interest and penalties for the period ended March 31, 2013 in the statement of operations and no cumulative interest and penalties have been recorded either in the Company’s statement of financial position as of March 31, 2013 and June 30, 2012.  The Company will recognize interest accrued on unrecognized tax benefits in interest expense and any related penalties in operating expenses.  The Company does not believe that the total unrecognized tax benefits will significantly increase or decrease in the next twelve months.

 

The Company files income tax returns in the United States federal jurisdiction, Pennsylvania, New Jersey and California.  The Company’s tax returns for Fiscal 2009 and prior generally are no longer subject to review as such years generally are closed.  The Company believes that an unfavorable resolution for open tax years would not be material to the financial position of the Company.