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Note 7 - Income Taxes

12 Months Ended

Apr. 30, 2014

7. INCOME TAXES

Due to the immaterial error discussed in this Amendment No. 1, amounts in this footnote have been revised. For further discussion of the revision, see footnote 2, Correction of Immaterial Errors.

Income tax expense attributable to earnings consisted of the following components:

	Years ended April 30,
	2014		2013		2012
Current tax expense
Federal	$	44,078	$	23,519	$	9,937
State		5,657		4,455		2,345
		49,735		27,974		12,282
Deferred tax expense		17,089		31,828		52,994
Total income tax provision	$	66,824	$	59,802	$	65,276

The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and deferred tax liabilities were as follows:

	As of April 30,
	2014			2013
Deferred tax assets
Accrued liabilities	$	23,292		$	16,066
Deferred compensation		6,272			6,050
Equity compensation		3,598			916
Unrecognized tax benefits		3,113			3,128
State net operating losses and tax credits		2,757			3,902
Other		98			100
Total gross deferred tax assets		39,130			30,162
Less valuation allowance		—			—
Total net deferred tax assets		39,130			30,162
Deferred tax liabilities
Property and equipment depreciation		(318,565	)		(295,951	)
Goodwill		(14,989	)		(11,919	)
Other		(307	)		66
Total gross deferred tax liabilities		(333,861	)		(307,804	)
Net deferred tax liability	$	(294,731	)	$	(277,642	)

At April 30, 2014, the Company had net operating loss carryforwards for state income tax purposes of approximately $71,471, which are available to offset future state taxable income. These net operating loss carryforwards expire during the years 2017 through 2033. In addition, the Company had state alternative minimum tax credit carryforwards of approximately $129, which are available to reduce future state regular income taxes over an indefinite period.

There was no valuation allowance recorded for deferred tax assets as of April 30, 2014 and 2013. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion 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. Management considers the scheduled reversal of deferred tax liabilities, projected taxable income, and tax planning strategies in making this assessment.

Total reported tax expense applicable to the Company’s continuing operations varies from the tax that would have resulted from applying the statutory U.S. federal income tax rates to income before income taxes. Out of period adjustments of $2,760 were recorded in fiscal 2014.

	Years ended April 30,
	2014		2013		2012
Income taxes at the statutory rates		35.0%		35.0%		35.0%
Federal tax credits		(2.1)		(1.8)		(2.2)
State income taxes, net of federal tax benefit		3.2		2.4		2.8
Out of period adjustments		(1.4)		—		—
Other		(0.2)		1.0		0.7
		34.5%		36.6%		36.3%

The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company had a total of $9,244 and $8,938 in gross unrecognized tax benefits at April 30, 2014 and 2013, respectively which is recorded in other long-term liabilities in the consolidated balance sheet. Of this amount, $6,131 represents the amount of unrecognized tax benefits that, if recognized, would impact our effective tax rate. Unrecognized tax benefits increased $306 during the twelve months ended April 30, 2014, due primarily to the expiration of certain statute of limitations offset by a greater increase associated with income tax filing positions for the current year.

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

	2014			2013
Beginning balance	$	8,938		$	7,538
Additions based on tax positions related to current year		1,229			2,807
Additions for tax positions of prior years		415			—
Reductions for tax positions of prior years		—			(37	)
Reductions due to lapse of applicable statute of limitations		(1,338	)		(1,370	)
Settlements		—			—
Ending balance	$	9,244		$	8,938

The total net amount of accrued interest and penalties for such unrecognized tax benefits was $402 and $286 at April 30, 2014 and 2013, respectively, and is included in other long-term liabilities. Net interest and penalties included in income tax expense for the twelve month period ended April 30, 2014 was an increase in tax expense of $116 and an increase of $37 for the year ended April 30, 2013.

A number of years may elapse before an uncertain tax position is audited and ultimately settled. It is difficult to predict the ultimate outcome or the timing of resolution for uncertain tax positions. It is reasonably possible that the amount of unrecognized tax benefits could significantly increase or decrease within the next twelve months. These changes could result from the expiration of the statute of limitations, examinations or other unforeseen circumstances. The Company currently has no ongoing federal or state income tax examinations. The Company does not have any outstanding litigation related to tax matters.

At this time, the Company’s best estimate of the reasonably possible change in the amount of the gross unrecognized tax benefits is a decrease of $2,661 during the next twelve months mainly due to the expiration of certain statute of limitations. The federal statute of limitations remains open for the years 2010 and forward. Tax years 2009 and forward are subject to audit by state tax authorities depending on open statute of limitations waivers and the tax code of each state.

In July 2013, the Financial Accounting Standards Board issued Accounting Standards Update No. 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists, to provide guidance on the presentation of unrecognized tax benefits. The pronouncement requires unrecognized tax benefits to be offset on the balance sheet by any same-jurisdiction net operating loss or tax credit carryforward that would be used to settle the position with a tax authority. The pronouncement is effective for fiscal years beginning after December 15, 2013 and will be adopted by the Company May 1, 2014. We do not expect it to have a material impact on our consolidated financial statements.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

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