INCOME TAXES

12 Months Ended

Jun. 30, 2012

Income Tax Disclosure [Text Block]

NOTE 15: INCOME TAXES

The provision (benefit) for income taxes consists of the following:

	Fiscal Year Ended June 30,
	2012			2011			2010
Current:
Federal	$	—		$	(725	)	$	(1,917	)
State		670			259			130
Foreign		2,403			1,782			1,544
		3,073			1,316			(243	)
Deferred:
Federal		(15,977	)		—			(789	)
State		(2,918	)		—			—
Foreign		(5	)		—			—
		(18,900	)		—			(789	)
Total	$	(15,827	)	$	1,316		$	(1,032	)

The income tax expense (benefits) for operations listed above were provided on the following pre-tax book income (loss) from continuing operations amounts:

	Fiscal Year Ended June 30,
	2012		2011		2010
Earnings (loss) from operations - U.S.	$	22,625	$	18,543	$	(7,883	)
Earnings from foreign operations		6,619		3,365		4,183
	$	29,244	$	21,908	$	(3,700	)

The total income tax expense (benefit) differs from the amount computed by applying the applicable U.S. federal income tax rate of 35% in fiscal 2012, 2011 and 2010 to earnings from continuing operations before income taxes for the following reasons:

	Fiscal Year Ended June 30,
	2012			2011			2010
Computed “expected tax expense (benefit)”	$	10,235		$	7,668		$	(1,295	)
Increases (reductions) in taxes resulting from:
State taxes, net of federal income tax benefit		436			168			85
Reversal of allowance for uncertain tax positions		—			—			(1,209	)
Refund claims relating to net operating loss (“NOL”) carrybacks and other credits		—			—			(1,374	)
Benefit related to gain on acquisition		—			(725	)		—
Permanent items		1,199			524			727
Foreign tax differential		(317	)		(399	)		(88	)
Deferred tax asset valuation allowance and related adjustments to NOL		(27,380	)		(5,920	)		2,217
Other, net		—			—			(95	)
	$	(15,827	)	$	1,316		$	(1,032	)

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities as of June 30, 2012 and 2011 are presented below:

	June 30, 2012			June 30, 2011
Deferred tax assets:
Accounts receivable	$	289		$	1,741
Accrued liabilities and other		1,669			1,025
Inventory valuation		3,117			3,979
Stock award compensation		3,583			202
Intangible assets		664			79
Federal, foreign and state net operating loss carryforwards and credits		14,192			25,406
Contributions		—			72
Deferred tax assets		23,514			32,504
Deferred tax liabilities:
Intangible assets		(542	)		—
Property, plant and equipment		(2,038	)		(3,270	)
Deferred tax liability		(2,580	)		(3,270	)
Net deferred tax assets before valuation allowance		20,934			29,234
Valuation allowance		(1,750	)		(29,179	)
Net deferred tax asset	$	19,184		$	55

In fiscal 2012, we recognized a tax benefit of $18.9 million from the reversal of substantially all of the valuation allowance on our net deferred tax assets. Realization of the future tax benefits is dependent on the Company’s ability to generate sufficient taxable income in future periods. Through fiscal 2011, the Company’s net deferred tax assets were substantially reserved due to the uncertainty of realization through future earnings. In fiscal 2012, the Company determined that based on all available evidence, positive and negative, including the Company’s taxable income over the past three fiscal years and expected future profitability, that certain of its deferred tax assets were more likely than not to be realized through future earnings.

At June 30, 2012, our share of the cumulative undistributed earnings of foreign subsidiaries was $14,183. No provision has been made for U.S. or additional foreign taxes on the undistributed earnings of foreign subsidiaries because we intend to continue to reinvest these earnings. Determination of the amount of unrecognized deferred tax liability associated with these earnings is not practicable.

At June 30, 2012, we have federal, state, and foreign net operating loss (“NOL”) carry forwards of approximately $13,922, $3,270, and $4,454, respectively, and various state and foreign tax credit carry forwards of $4,165 and $1,247, respectively. The federal NOL will expire from fiscal 2022 through fiscal 2030, while the state NOL and credits will expire from fiscal 2013 through fiscal 2030. The foreign NOL will begin to expire in fiscal 2028. We also have domestic credit carry forwards of $7,402 and foreign tax credits of $1,247 which are available to reduce federal income taxes, if any, through 2029 and begin to expire in 2013. All deferred tax assets relating to Canadian NOLs and credits have been (and remain so) fully reserved in the valuation allowance since June 30, 2009.

Due to our NOL carry forwards, we have accrued no interest or penalties for any unrecognized tax benefits; however, our policy is to recognize interest related to unrecognized tax benefits in interest expense. Penalties, if incurred, would be recognized as a component of income tax expense. In the normal course of business, we provide for uncertain tax positions and adjust our unrecognized tax benefits accordingly. We do not anticipate any significant changes to our recognized tax benefits over the next twelve months.

The following table is a reconciliation of the beginning and ending balances of unrecognized tax benefits. If our unrecognized benefits were to become recognized in the future, the ending balance for each respective year would then impact our effective tax rate at the time which the unrecognized benefits are ultimately recognized.

Unrecognized tax benefit, June 30, 2009	$	1,826
Decreases - tax positions of prior years		(1,826	)
Unrecognized tax benefit, June 30, 2010		—
Increases - tax positions of prior years		855
Unrecognized tax benefit, June 30, 2011		855
Increases - tax positions of prior years		2,639
Increases - tax positions of current year		123
Unrecognized tax benefit, June 30, 2012	$	3,617

We are no longer subject to U.S. federal income tax audit or tax adjustments for years prior to June 30, 2008, except to the extent we have NOLs and credits arising from any of those earlier years. Those loss years remain subject to audit at the time the NOL or credit is utilized. We are no longer subject to state and foreign income tax audit or tax adjustments for years prior to June 30, 2008.