Note 14 - Income Taxes

12 Months Ended

Jun. 30, 2013

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

(14) Income Taxes

The following table presents the Domestic and Foreign components of income before income taxes and the expense (benefit) for income taxes as well as the taxes charged or credited to stockholders’ equity:

	Year ended June 30
(amounts in thousands)	2013			2012			2011
Income from operations before income taxes
Domestic	$	17,387		$	10,445		$	21,880
Foreign		1,119			369			46
	$	18,506		$	10,814		$	21,926
Income tax expense (benefit) charged to the consolidated statements of income:
Current:
Federal	$	2,711		$	731		$	5,073
State and local		162			68			244
Benefit applied to reduce goodwill		46			46			46
Foreign		138			(30	)		43
Total current		3,057			815			5,406
Deferred:
Federal		422			1,493			143
State and local		(52	)		(154	)		(149	)
Foreign		23			46			125
Total deferred		393			1,385			119
Total income tax expense charged to the consolidated statements of income	$	3,450		$	2,200		$	5,525
Income taxes charged (credited) to Stockholders’ equity:
Current benefit of equity-based compensation	$	(459	)	$	(494	)	$	(164	)
Deferred tax expense (benefit) from recognition of pension liability		970			(1,398	)		652
Income taxes charged (credited) to Stockholders’ equity	$	511		$	(1,892	)	$	488

A reconciliation of the expected consolidated income tax expense, computed by applying a 35% U.S. Federal corporate income tax rate to income before income taxes, to income tax expense, is as follows:

(amounts in thousands)	2013			2012			2011
Consolidated income tax expense at 35%	$	6,477		$	3,785		$	7,674
State taxes, net of Federal benefit		33			(126	)		(4	)
Nontaxable interest income		(17	)		(59	)		(67	)
Change in valuation allowance		60			109			100
Effect of foreign operations		(231	)		(114	)		153
Non-deductible equity-based compensation		(108	)		(46	)		(107	)
Research credits		(2,108	)		(1,168	)		(1,148	)
Domestic production tax benefit		(403	)		(205	)		(619	)
Change in uncertain tax positions		(151	)		5			(419	)
Other		(102	)		19			(38	)
	$	3,450		$	2,200		$	5,525

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

(amounts in thousands)	2013			2012
Deferred tax assets:
Inventories	$	1,465		$	1,737
Deferred compensation		474			445
Retirement benefits		1,482			2,426
Postretirement benefits		789			870
Equity-based compensation		4,100			4,248
Nondeductible reserves		781			776
Federal and state tax attribute carryforwards		4,633			4,542
State net operating loss carryforwards		356			389
Gross deferred tax assets		14,080			15,433
Valuation allowance		(4,652	)		(4,592	)
Net deferred tax assets		9,428			10,841
Deferred tax liabilities:
Property, plant and equipment, principally due to differences in depreciation		(4,772	)		(5,179	)
Intangible assets including goodwill		(5,507	)		(5,150	)
Gross deferred tax liabilities		(10,279	)		(10,329	)
Net deferred tax assets (liabilities)	$	(851	)	$	512

(amounts in thousands)	2013			2012
Presented as:
Current deferred tax asset	$	1,820		$	1,984
Long-term deferred tax liability		(2,671	)		(1,472	)
Net deferred tax assets (liabilities)	$	(851	)	$	512

In assessing the realizable value of the deferred tax assets, the Company considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. The Company considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based on the level of historical taxable income and projections for future taxable income, the Company believes it is more likely than not that it will realize the benefits of the deferred tax assets, net of the existing valuation allowance.

As of June 30, 2013 and 2012, the Company has $8.1 million and $8.4 million of gross state net operating loss carryforwards, respectively, which begin to expire in 2020. The Company does not believe it is more likely than not that it will realize the full deferred tax benefits of the state net operating losses. As of June 30, 2013, the Company has a valuation allowance with respect to the state net operating losses of $0.3 million, unchanged from June 30, 2012.

As of June 30, 2013, the Company has gross state tax credit carryforwards of $6.8 million, which will begin to expire in 2014. State tax credits of $0.2 million may only be realized after utilization of the net operating loss carryforwards. The Company does not believe it is more likely than not that it will realize the deferred tax benefits of the state tax credits before their expiration. As of June 30, 2013, the Company has a valuation allowance with respect to the state tax credits of $4.4 million, unchanged from June 30, 2012.

United States income taxes have not been provided on undistributed earnings of the China subsidiary because such earnings are considered to be permanently reinvested and it is not practicable to estimate the amount of tax that may be payable upon distribution.

A reconciliation of beginning and ending unrecognized tax benefits is as follows:

(amounts in thousands)
Balance at June 30, 2012	$	239
Lapse of statute of limitations		(143	)
Balance at June 30, 2013	$	96

As of June 30, 2013, the Company had $0.1 million, a decrease of $0.1 million from June 30, 2012, of unrecognized tax benefits that would affect the Company’s effective tax rate if recognized.

In accordance with the Company’s accounting policy, the Company recognizes accrued interest and penalties related to unrecognized tax benefits as a component of income tax expense. For the years ended June 30, 2013 and 2012 the Company recognized, and has accrued in the liability for uncertain tax positions, a negligible amount related to accrued interest and penalties.

The Company remains subject to income tax examinations for its U.S. federal taxes for fiscal years 2010 through 2013, and for foreign and state and local taxes for the fiscal years 2010 through 2013. It is reasonably possible that the liability associated with the Company’s unrecognized tax benefits will increase or decrease within the next twelve months as a result of possible examinations or the expiration of the statutes of limitations. At this time, an estimate of the range of reasonably possible outcomes cannot be made. Of the $0.1 million and $0.2 million of unrecognized tax benefit liabilities, interest, and penalties as of June 30, 2013 and 2012, the Company has classified all as other liabilities on the Company’s consolidated balance sheets.