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Note 9 - Income Taxes
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3 Months Ended |
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Dec. 31, 2012
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| Income Tax Disclosure [Text Block] |
Note
9. Income Taxes
For
the three months ended December 31, 2012, the Company
recorded a provision for income taxes of approximately
$366,000, reflecting an effective tax rate of 40.2%. The
primary difference between the effective tax rate and the
statutory tax rate is related to nondeductible meals and
entertainment and expenses related to equity award
compensation.
During
the fourth quarter ended September 30, 2012, the Company
reversed a substantial portion of its deferred tax asset
valuation allowance to record the amount of deferred tax
assets that we believe are more likely than not to be
realized. This determination was based on weighing
both the positive and negative evidence available including,
but not limited to, our earnings history, our projected
future taxable income, our business strategy and the nature
of each of our deferred tax assets. The reduction
in the valuation allowance in the fourth quarter of fiscal
year 2012 resulted in a non-cash income tax benefit of
approximately $3.5 million. As of September 30,
2012, the Company had a remaining valuation allowance of
approximately $975,000 related to state net operating loss
carry forwards the Company does not expect to utilize.
For
the three months ended December 31, 2011, the Company
recorded a provision for income taxes of approximately
$49,000, reflecting an effective tax rate of
4.7%. For the three months ended December 31,
2011, the Company’s tax provision included estimated
current federal alternative minimum taxes and state franchise
taxes, but was primarily related to deferred tax expense
related to book and income tax basis difference in goodwill
on prior asset acquisitions. The change in
valuation allowance was $373,000. This change
consisted of $395,000 of tax benefit as a result of a
reduction in valuation allowance after considering current
financial condition and potential future taxable
income. This reduction was partially offset by a
$22,000 increase in valuation allowance from the current year
AMT tax credit generated as its utilization does not meet the
“more likely than not” criteria.
Deferred
taxes recognize the impact of temporary differences between
the amounts of the assets and liabilities recorded for
financial statement purposes and these amounts measured in
accordance with tax laws. The Company’s realization of
net operating loss carry-forward and other deferred tax
temporary differences is contingent upon future taxable
earnings. The Company reviewed its deferred tax asset for
expected utilization using a “more likely than
not” criteria by assessing the available positive and
negative factors surrounding its recoverability.
As
of December 31, 2012, we do not have any unrecognized tax
benefits. It is the Company’s practice to
recognize interest and penalties accrued on any unrecognized
tax benefits as a component of income tax
expense. The Company does not expect any material
changes in its unrecognized tax positions over the next 12
months.
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