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Income Taxes
9 Months Ended
Mar. 31, 2012
Income Tax Disclosure [Abstract]  
Income Taxes
INCOME TAXES
The effective income tax rate from continuing operations was 34.0% for the three months and 36.2% for the nine months ended March 31, 2012 and 39.6% for the three months and 40.7% for the nine months ended March 31, 2011. The Company uses an estimated annual effective tax rate, which is based on expected annual income, statutory tax rates and tax planning opportunities available in the various jurisdictions in which the Company operates, to determine its quarterly provision for income taxes. Certain significant or unusual items are separately recognized in the quarter in which they occur and can be a source of variability in the effective tax rates from quarter to quarter. The effective tax rate for the third quarter and first nine months of fiscal 2012 was lower than the comparable periods of the prior year primarily as a result of reduced losses incurred in the United Kingdom and the acquisition of Daniels on October 25, 2011 and the increased income in its lower tax rate jurisdiction. Prior to the acquisition of Daniels, no tax benefits were recorded for losses incurred in the United Kingdom. The Company will continue to maintain a valuation allowance on its net deferred tax assets related to those carryforward losses until an appropriate level of profitability is attained such that the losses may be utilized. If the Company is able to realize any of these deferred tax assets in the future, the provision for income taxes will be reduced by a release of the corresponding valuation allowance. In addition, in the third quarter of fiscal 2012, the Company recorded a discrete adjustment to recognize a decrease of $820 in its liability for uncertain tax positions as the result of an expiration of the statute of limitations. The Company's tax rate for the three and nine months ended March 31, 2012 was unfavorably impacted by $1,178 related to nondeductible transaction costs incurred in connection with the acquisition of Daniels. The fiscal 2012 and 2011 effective income tax rates differed from the federal statutory rate primarily due to the items noted previously, as well as the effect of state and local income taxes. There were no other material changes in unrecognized tax benefits during the first nine months of fiscal 2012.
In connection with the acquisition of Daniels, we recorded a $2,102 reserve related to an uncertain tax position recorded by Daniels in prior years. We also recorded an indemnification asset for the same amount as the sellers of Daniels are contractually required to reimburse the Company for any assessment that may arise.