Income Tax Disclosure

12 Months Ended

Mar. 31, 2013

Income Tax Disclosure [Abstract]

Income Tax Disclosure Text Block

7. Income Taxes
The Company files a consolidated federal income tax return. The provision for income taxes is as follows:
		2013		2012		2011
		(In thousands)
Current:
Federal	$	21,356	$	4,193	$	2,854
State		3,629		704		1,225
		24,985		4,897		4,079
Deferred:
Federal		(2,770)		1,430		1,791
State		(180)		(62)		(74)
		(2,950)		1,368		1,717
Total income taxes	$	22,035	$	6,265	$	5,796
A reconciliation of the expected U.S. statutory rate to the effective rate follows:
		2013		2012		2011
Computed (expected tax rate)		35.0	%	35.0	%	35.0	%
State income taxes (net of federal tax benefit)		3.8		4.5		3.9
State tax credits		(0.8)		(2.8)		(2.1)
Research and development credit		(0.2)		(0.6)		(0.6)
Manufacturer’s deduction		(3.4)		(5.1)		(3.7)
Addition to (reversal of) uncertain tax positions		0.2		0.4		(7.3)
IRS audit adjustment		0.0		0.0		1.5
Other permanent differences not (taxable) deductible		0.1		0.7		(0.1)
Tax effect of pension contribution		0.0		2.2		0.0
Other		0.0		1.5		(1.9)
Effective income tax rate		34.7	%	35.8	%	24.7	%

The lower 2011 effective tax rate was primarily due to a reversal of uncertain tax positions in 2011 mostly due to the settlement of an Internal Revenue Service ("IRS")audit that year discussed below.

The following is a summary of the significant components of the Company's deferred income tax assets and liabilities as of March 31:

		2013		2012
		(In thousands)
Deferred income tax assets:
Future tax credits	$	2,808	$	3,251
Inventory valuation		2,893		1,408
Employee benefits		2,742		2,816
Insurance		3,422		3,812
Other comprehensive loss		14,416		14,867
Interest		118		80
Deferred gain on sale/leaseback		54		82
Prepaid revenue		1,619		2,348
Other		232		520
Severance		237		196
		28,541		29,380
Deferred income tax liabilities:
Property basis and depreciation difference		13,274		14,151
Pension		3,012		5,283
		16,286		19,434
Valuation allowance - non-current		758		906
Net deferred income tax asset	$	11,497	$	9,040

Net current deferred income tax assets of $9,400,000 and $8,637,000 as of March 31, 2013 and 2012, respectively, are recognized in the Consolidated Balance Sheets. Also recognized are net non-current deferred income tax assets of $2,097,000 as of March 31, 2013 and net non-current deferred income tax liabilitiesof $403,000 as of March 31, 2012.

Current rules on the accounting for uncertainty on income taxes prescribe a minimum recognition threshold for a tax position taken or expected to be taken in a tax return that is required to be met before being recognized in the financial statements. Those rules also provide guidance on derecognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition. The Company classifies the liability for uncertain tax positions in other accrued expenses or other long-term liabilities depending on their expected settlement. The change in the liability for the years ended March 31, 2013 and 2012 consists of the following:

		2013		2012
		(In thousands)
Beginning balance	$	2,350	$	2,174
Tax positions related to current year:
Additions		176		207
Tax positions related to prior years:
Additions		70		133
Reductions		(45)		(27)
Settlements		(81)		(137)
Balance as of March 31,	$	2,470	$	2,350

Included in the balances at March 31, 2013 and 2012 are $1,851,000 and $1,778,000, respectively, of tax positions that are highly certain but for which there is uncertainty about the timing. Because of the impact of deferred tax accounting, other than interest and penalties, the disallowance of these positions would not impact the annual effective tax rate but would accelerate the payment of cash to the tax authority to an earlier period.

The Company recognizes interest and penalties accrued on unrecognized tax benefits as well as interest received from favorable settlements within income tax expense. During the years ended March 31, 2013 and 2012, the Company recognized an approximate $58,000 decrease and $18,000 decrease, respectively, in interest and penalties. As of March 31, 2013 and 2012, the Company had approximately $184,000 and $126,000, respectively, of interest and penalties accrued associated with unrecognized tax benefits.

The Company files income tax returns in the U.S. federal jurisdiction and various states.

During the years ended March 31, 2011 and 2010, the Company was audited by the IRS for tax years 2006, 2007 and 2008 as well as by one state taxing authority for the 2006, 2007 and 2008fiscal years. The Company reached a settlement with the IRS for the 2006-2008 fiscal years during the year ended March 31, 2011. As a result, the Company was able to record the tax benefits of those settlements as reductions to the uncertain tax positions liability amounting to $3,767,000 for the year ended March 31, 2011.

Although management believes that an adequate provision has been made for uncertain tax positions, there is the possibility that the ultimate resolution could have an adverse effect on the earnings of the Company. Conversely, if resolved favorably in the future, the related provisions would be reduced, thus having a positive impact on earnings. It is anticipated that audit settlements will be reached during 2013 with a state taxing authority that could have an impact on earnings. Due to the uncertainty of amounts and in accordance with its accounting policies, the Company has not recorded any potential impact of these settlements.

The Company has State tax creditcarryforwards amounting to $1,202,000 (California, net of Federal impact) and $848,000 (Wisconsin, net of Federal impact), which are available to reduce future taxes payable in each respective state through 2022 (Wisconsin), and no expiration (California). The Company has performed the required assessment regarding the realization of deferred tax assets and at March 31, 2013, the Company has recorded a valuation allowance amounting to $758,000, which relates primarily to tax credit carryforwards which management has concluded it is more likely than not will not be realized in the ordinary course of operations. Although realization is not assured, management has concluded that it is more likely than not that the deferred tax assets for which a valuation allowance was determined to be unnecessary will be realized in the ordinary course of operations. The amount of net deferred tax assets considered realizable, however, could be reduced if actual future income or income taxes rates are lower than estimated or if there are differences in the timing or amount of future reversals of existing taxable or deductible temporary differences.