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Income Taxes
 12 Months Ended
May 31, 2012
Income Taxes [Abstract]  
Income Taxes
NOTE 8   Income Taxes

The Corporation had no federal and state income tax benefit for the years ended May 31, 2012 and 2011.

The difference between the Corporation’s statutory federal income tax rate 34 percent in fiscal 2012 and 2011, and the effective income tax rate is due primarily to state income taxes and changes in deferred tax assets valuation allowance and are as follows:

 

                 
     Year Ended May 31,  
     2012     2011  
    (Dollars in thousands)  

Income taxes at statutory federal rate

   $ (6,584 )    $ (9,062 ) 

State income taxes

     (47 )      (731 ) 

State net operating loss

     (1,047 )      (1,699 ) 

New Energy Efficient Home Credit

     (117 )      (297 ) 

Alternative Fuel Credit

     (12 )      (19 ) 

Other federal credits

     (7 )      (26 ) 

Increase in deferred tax assets valuation allowance

     7,436       12,019  

Other, net

     378       (185 ) 
   

 

 

    

 

 

  

Income tax benefit

   $ —     $ —  
   

 

 

    

 

 

  

Effective tax rate

     0 %      0 % 
   

 

 

    

 

 

  

 

Components of the net deferred tax assets include:

 

                 
     May 31,  
     2012     2011  
    (Dollars in thousands)  

Current deferred tax assets

                

Accrued marketing programs

   $ 207     $ 196  

Accrued warranty expense

     1,842       1,352  

Accrued workers’ compensation

     843       1,031  

Accrued vacation

     345       383  

Other

     180       322  
   

 

 

    

 

 

  

Gross current deferred tax assets

     3,417       3,284  
   

 

 

    

 

 

  
     

Noncurrent deferred tax assets

                

Liability for certain post-retirement benefits

     2,286       2,167  

Accrued warranty expense

     525       643  

Federal net operating loss carryforward

     22,747       16,481  

Federal tax credit carryforward

     1,038       894  

State net operating loss carryforward

     6,775       5,728  

Depreciation

     755       569  

Other

     (90 )      251  
   

 

 

    

 

 

  

Gross noncurrent deferred tax assets

     34,036       26,733  
   

 

 

    

 

 

  

Total gross deferred tax assets

     37,453       30,017  

Valuation allowance

     (37,453 )      (30,017 ) 
   

 

 

    

 

 

  

Net deferred tax assets

   $ —     $ —  
   

 

 

    

 

 

  

The Corporation’s gross deferred tax assets of approximately $37 million consist of approximately $24 million in federal net operating loss and tax credit carryforwards, $7 million in state net operating loss carryforwards and $6 million resulting from temporary differences between financial and tax reporting. The federal net operating loss and tax credit carryforwards have a life expectancy of twenty years. The state net operating loss carryforwards have a life expectancy, depending on the state where a loss was incurred, between five and twenty years. If the Corporation, after considering future negative and positive evidence regarding the realization of deferred tax assets, determines that a lesser valuation allowance is warranted, it would record a reduction to income tax expense and the valuation allowance in the period of determination.

For the majority of taxing jurisdictions the Corporation is no longer subject to examination by taxing authorities for years before 2008. The Corporation did not incur any interest or penalties related to income tax matters in fiscal years 2012 and 2011.