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Income Taxes | 12 Months Ended
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Mar. 31, 2012
Income Taxes [Abstract] |
Income Taxes | 10. Income Taxes Income (loss) before income taxes for the years ended March 31, 2012, 2011, and 2010 are provided in the table as follows (in thousands):
|  | For the years ended March 31, |
|  | 2012 |  |  | 2011 |  |  | 2010 |
Income (loss) before income tax expense: |  |  |  |  |  |  |  |  |
U.S | $ | (107,301 | ) | $ | (61,436 | ) | $ | (43,672 | )
Foreign |  | (28,157 | ) |  | (108,895 | ) |  | 80,428 |
Total | $ | (135,458 | ) | $ | (170,331 | ) | $ | 36,756 |
The components of income tax expense (benefit) attributable to continuing operations consist of the following (in thousands):
|  |  |  | For the years ended |  |  |  |
|  |  |  | March 31, |  |  |  |
|  | 2012 |  | 2011 |  |  | 2010 |
Current |  |  |  |  |  |  |  |
Federal | $ | — | $ | — |  | $ | — |
State |  | — |  | — |  |  | — |
Foreign |  | 1,369 |  | 12,438 |  |  | 23,215 |
Total current |  | 1,369 |  | 12,438 |  |  | 23,215 |
Deferred |  |  |  |  |  |  |  |
Federal |  | — |  | (221 | ) |  | 30 |
State |  | — |  | (34 | ) |  | 5 |
Foreign |  | — |  | 3,770 |  |  | (2,742 | )
Total deferred |  | — |  | 3,515 |  |  | (2,707 | )
Income tax expense | $ | 1,369 | $ | 15,953 |  | $ | 20,508 |
The reconciliation between the statutory federal income tax rate and the Company's effective income tax rate is shown below.
|  |  | For the years ended |  |  |
|  |  | March 31, |  |  |
| 2012 |  | 2011 |  | 2010 |
Statutory federal income tax rate | (34 | %) | (34 | %) | 34 | %
State income taxes, net of federal benefit | (2 | ) | (1 | ) | (6 | )
Deemed dividend | 3 |  | — |  | — |
Foreign income tax rate differential | 3 |  | 4 |  | (20 | )
Stock options | 1 |  | 1 |  | 3 |
Nondeductible expenses | — |  | — |  | 1 |
Research and development tax credit | (1 | ) | (1 | ) | (2 | )
Goodwill Impairment | — |  | 7 |  | — |
Valuation allowance | 31 |  | 33 |  | 46 |
Effective income tax rate | 1 | % | 9 | % | 56 | %
The following is a summary of the principal components of the Company's deferred tax assets and liabilities (in thousands):
|  | For the year ended |
|  | March 31, |
|  | 2012 |  |  | 2011 |
Deferred tax assets: |  |  |  |  |  |
Net operating loss carryforwards | $ | 225,640 |  | $ | 194,216 |
Research and development and other tax credit carryforwards |  | 9,251 |  |  | 9,324 |
Accruals and reserves |  | 39,101 |  |  | 45,917 |
Fixed assets and intangible assets |  | 2,316 |  |  | 3,042 |
Other |  | 19,007 |  |  | 20,277 |
Gross deferred tax assets |  | 295,315 |  |  | 272,776 |
Valuation allowance |  | (252,302 | ) |  | (220,596 | )
Total deferred tax assets |  | 43,013 |  |  | 52,180 |
Deferred tax liabilities: |  |  |  |  |  |
Intangible assets from acquisitions |  | — |  |  | (378 | )
Intercompany debt |  | (35,185 | ) |  | (33,872 | )
Other |  | (7,828 | ) |  | (17,930 | )
Total deferred tax liabilities |  | (43,013 | ) |  | (52,180 | )
Net deferred tax assets | $ | — |  | $ | — |
The Company has provided a full valuation allowance against its net deferred income tax assets since it is more likely than not that its deferred tax assets are not currently realizable due to the net operating losses incurred by the Company since its inception and net operating losses forecasted in the future. The Company has recorded a deferred tax asset of approximately $14.9 million reflecting the benefit of deductions from the exercise of stock options. This deferred tax asset has been fully reserved since it is more likely than not that the tax benefit from the exercise of stock options will not be realized. The tax benefit will be recorded as a credit to additional paid-in capital if realized. At March 31, 2012, the Company has aggregate net operating loss carryforwards in the U.S. for federal and state income tax purposes of approximately $620 million and $329 million, respectively, which expire in the years ending March 31, 2013 through 2032. Also included in the U.S. net operating losses is $3.7 million of acquired losses from Power Quality Systems, Inc. Of this amount, $52.3 million results from excess tax deductions from stock option exercised in 2006 through 2012. Pursuant to the guidance on accounting for stock-based compensation, the deferred tax asset relating to excess tax benefits from these exercises was not recognized for financial statement purposes. The future benefit from these deductions will be recorded as a credit to additional paid-in capital when realized. Research and development and other tax credit carryforwards amounting to approximately $7.4 million and $2.8 million are available to offset federal and state income taxes, respectively, and will expire in the years ending March 31, 2013 through 2032. At March 31, 2012, the Company has aggregate net operating loss carryforwards for its Austrian operation of approximately $67.0 million which can be carried forward indefinitely subject to certain annual limitations. AMSC China incurred a net operating loss of $13.8 million for the year ended March 31, 2012 which can be carried forward for five years. Also the Company had immaterial amounts of current and net operating loss carryforwards for its other foreign operations which can be carried forward indefinitely. Section 382 of the US Internal Revenue Code of 1986, as amended (the "IRC"), provides limits on the extent to which a corporation that has undergone an ownership change (as defined) can utilize any NOL and general business tax credit carryforwards it may have. The Company performed a study to determine whether Section 382 could limit the use of its carryforwards in this manner. After completing this study, the Company has concluded that the limitation will not have a material impact on its ability to utilize its net operating loss carryforwards. The Company evaluates its permanent reinvestment assertions with respect to foreign earnings at each reporting period. During the year ended March 31, 2012, the Company changed its permanent reinvestment assertion with respect to only a portion of its unremitted earnings in its Austrian subsidiary. The repatriation was in the form of a loan in the amount of $13.2 million, plus accrued interest through March 31, 2012. No income taxes were due as a result of the repatriation because of substantial tax benefits available in the United States. The Company's subsidiary in Austria has accumulated approximately $147 million of the total $149 million of estimated undistributed earnings as of March 31, 2012, which continues to be permanently reinvested by the Company. For all other foreign subsidiaries a provision has not been made for United States or additional foreign taxes on undistributed earnings of foreign subsidiaries as the Company plans to utilize these undistributed earnings primarily to finance operating requirements of subsidiaries outside of the United States. In the event of distribution of those earnings in the form of dividends or otherwise, the Company would be subject to U.S. income taxes, subject to an adjustment, if any, for foreign tax credits. Determination of the amount of U.S. income tax liability that would be incurred is not practicable because of the complexities associated with this hypothetical calculation. Accounting for income taxes requires a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if, based on the technical merits, it is more likely than not that the position will be sustained upon audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon ultimate settlement. The Company reevaluates these uncertain tax positions on a quarterly basis. This evaluation is based on factors including, but not limited to, changes in facts or circumstances, changes in tax law, effectively settled issues under audit and new audit activity. Any changes in these factors could result in the recognition of a tax benefit or an additional charge to the tax provision. The Company has gross unrecognized tax benefits of approximately $1.1 million and $0.3 million at March 31, 2012 and 2011, respectively. These amounts represent the amount of unrecognized tax benefits that, if recognized, would result in a reduction of the Company's effective tax rate. During the quarter ended September 30, 2011, the Company concluded a tax audit for the period January 1, 2006 through March 31, 2008 with its foreign subsidiary in Austria. The results of the audit concluded that previously deducted amounts for certain trademark and management fees related to corporate affairs charges would no longer be tax deductible. A tabular roll-forward of the Company's uncertainties in income tax provision liability is presented below (in thousands):
Balance at March 31, 2010 | $ | 195
Increase for tax positions |  | 102
Balance at March 31, 2011 |  | 297
Increase for tax positions |  | 764
Balance at March 31, 2012 | $ | 1,061
The Company accounts for interest and penalties related to uncertain tax positions as part of its provision for federal and state income taxes. The Company has not recognized any interest and penalties in the current statement of operations because of the Company's offsetting net operating losses and tax credits that are available to be carried forward. Any unrecognized tax benefits, if recognized, would favorably affect its effective tax rate in any future period. The Company does not expect that the amounts of unrecognized benefits will change significantly within the next 12 months. Interest and penalties were recorded beginning in the year ended March 31, 2011, but were immaterial amounts. The Company conducts business globally and, as a result, its subsidiaries file income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. Major tax jurisdictions include the U.S., China and Austria. All U.S. income tax filings for years ending March 31, 1995 through 2012 remain open and subject to examination and all years from the year ended March 31, 2007 through 2013 remain open and subject to examination in Austria. Tax filings in China for calendar years 2008 through 2011 will remain open and subject to examination.

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- 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. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 136, 172 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 43, 44, 45, 46, 47, 48, 49 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=6881521&loc=d3e23780-122690 + Details
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