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Note 11 - Income Taxes | 12 Months Ended
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Jun. 30, 2016
Notes to Financial Statements |
Income Tax Disclosure [Text Block] | (11) Income Taxes Income tax expense (benefit) attributable to income from operations consists of the following for the fiscal years ended June 30 (in thousands):
|  | 2016 |  |  | 2015 |  |  | 2014 |
Current: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 27,660 |  |  | $ | 15,064 |  |  | $ | 20,693 |
State |  |  | 2,898 |  |  |  | 489 |  |  |  | 1,900 |
Foreign |  |  | 88 |  |  |  | 55 |  |  |  | 60 |
Total current |  |  | 30,646 |  |  |  | 15,608 |  |  |  | 22,653 |
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | (237 | ) |  |  | 2,979 |  |  |  | (941 | )
State |  |  | 207 |  |  |  | 759 |  |  |  | (1,921 | )
Foreign |  |  | 703 |  |  |  | 195 |  |  |  | (320 | )
Total deferred |  |  | 673 |  |  |  | 3,933 |  |  |  | (3,182 | )
Income Tax Expense (Benefit) |  | $ | 31,319 |  |  | $ | 19,541 |  |  | $ | 19,471 |
ETHAN ALLEN INTERIORS INC. AND SUBSIDIARIES The following is a reconciliation of expected income tax expense (benefit) (computed by applying the federal statutory income tax rate to income before taxes) to actual income tax expense (benefit) (in thousands):
|  | 2016 |  |  | 2015 |  |  | 2014 |
Expected Income Tax Expense |  | $ | 30,785 |  |  |  | 35.0 | % |  | $ | 19,839 |  |  |  | 35.0 | % |  | $ | 21,841 |  |  |  | 35.0 | %
State income taxes, net of federal income tax |  |  | 2,514 |  |  |  | 2.9 | % |  |  | 1,597 |  |  |  | 2.8 | % |  |  | 2,209 |  |  |  | 3.5 | %
Valuation allowance |  |  | 339 |  |  |  | 0.4 | % |  |  | 409 |  |  |  | 0.7 | % |  |  | (1,540 | ) |  |  | -2.5 | %
Section 199 Qualified Production Activities deduction |  |  | (1,513 | ) |  |  | -1.7 | % |  |  | (998 | ) |  |  | -1.8 | % |  |  | (1,342 | ) |  |  | -2.2 | %
Unrecognized tax expense (benefit) |  |  | (479 | ) |  |  | -0.5 | % |  |  | (641 | ) |  |  | -1.1 | % |  |  | (904 | ) |  |  | -1.4 | %
Other, net |  |  | (327 | ) |  |  | -0.4 | % |  |  | (665 | ) |  |  | -1.2 | % |  |  | (793 | ) |  |  | -1.3 | %
Actual income tax expense (benefit) |  | $ | 31,319 |  |  |  | 35.6 | % |  | $ | 19,541 |  |  |  | 34.5 | % |  | $ | 19,471 |  |  |  | 31.2 | %
The deferred income tax asset and liability balances at June 30 (in thousands) include:
|  | 2016 |  |  | 2015 |
Deferred tax assets: |  |  |  |  |  |  |  |
Employee compensation accruals |  |  | 4,343 |  |  |  | 4,555 |
Stock based compensation |  |  | 2,665 |  |  |  | 2,639 |
Deferred rent credits |  |  | 6,705 |  |  |  | 5,943 |
Net operating loss carryforwards |  |  | 3,375 |  |  |  | 4,059 |
Goodwill |  |  | 1,729 |  |  |  | 2,748 |
Other, net |  |  | 2,659 |  |  |  | 3,241 |
Total deferred tax assets |  |  | 21,476 |  |  |  | 23,185 |
Less: Valuation allowance |  |  | (2,155 | ) |  |  | (1,816 | )
Net deferred tax assets |  | $ | 19,321 |  |  | $ | 21,369 |
|  | 2016 |  |  | 2015 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Property, plant and equipment |  |  | 654 |  |  |  | 1,358 |
Intangible assets other than goodwill |  |  | 14,260 |  |  |  | 14,261 |
Commissions |  |  | 3,478 |  |  |  | 3,999 |
Other, net |  |  | - |  |  |  | 149 |
Total deferred tax liability |  |  | 18,392 |  |  |  | 19,767 |
Total net deferred tax asset |  | $ | 929 |  |  | $ | 1,602 |
The deferred tax balances are classified in the Consolidated Balance Sheets as follows at June 30 (in thousands):
|  | 2016 |  |  | 2015 |
Current assets |  | $ | 3,174 |  |  | $ | 2,301 |
Non-current assets |  |  | 3,001 |  |  |  | 3,932 |
Current liabilities |  |  | - |  |  |  | - |
Non-current liabilities |  |  | 5,246 |  |  |  | 4,631 |
Total net deferred tax asset |  | $ | 929 |  |  | $ | 1,602 |
Current deferred tax assets and liabilities and non-current deferred tax assets and liabilities have been presented net in the Consolidated Balance Sheets. ETHAN ALLEN INTERIORS INC. AND SUBSIDIARIES We evaluate our deferred taxes to determine if the “more likely than not” standard of evidence has not been met thereby supporting the need for a valuation allowance. A valuation allowance must be established for deferred tax assets when it is less than 50% likely that assets will be realized. At June 30 of 2016 and 2015, such an allowance was in place against the Belgian foreign tax assets, and at June 30, 2016 this valuation allowance was approximately $2.2 million. The Company’s deferred income tax assets at June 30, 2016 with respect to the net operating losses expire as follows (in thousands):
|  | Deferred |  |  |  | Net Operating |
|  | Income |  |  |  | Loss |
|  | Tax Assets |  |  |  | Carryforwards |
United States (State), expiring between 2017 and 2032 |  | $ | 1,086 |  |  |  | $ | 24,130 |
Foreign, Expiring in 2034 |  |  | 2,289 |  |  |  |  | 6,809 |
Deferred U.S. federal income taxes are not provided for unremitted foreign earnings of our foreign subsidiaries because we expect those earnings will be permanently reinvested. Uncertain Tax Positions We recognize interest and penalties related to income tax matters as a component of income tax expense. If the $2.2 million of unrecognized tax benefits and related interest and penalties as of June 30, 2016 were recognized, approximately $1.4 million would be recorded as a benefit to income tax expense. A reconciliation of the beginning and ending amount of unrecognized tax benefits including related interest and penalties as of June 30, 2016 and 2015 is as follows (in thousands):
|  | 2016 |  |  | 2015 |
Beginning balance |  | $ | 3,117 |  |  | $ | 4,699 |
Additions for tax positions taken |  |  | 776 |  |  |  | 568 |
Reductions for tax positions taken in prior years |  |  | (1,530 | ) |  |  | (1,555 | )
Settlements |  |  | (193 | ) |  |  | (596 | )
Ending balance |  | $ | 2,170 |  |  | $ | 3,117 |
It is reasonably possible that various issues relating to approximately $0.4 million of the total gross unrecognized tax benefits as of June 30, 2016 will be resolved within the next twelve months as exams are completed or statutes expire. If recognized, approximately $0.3 million of unrecognized tax benefits would reduce our tax expense in the period realized. However, actual results could differ from those currently anticipated. The Company conducts business globally and, as a result, the Company or one or more of its subsidiaries files income tax returns in the U.S., various state, and foreign jurisdictions. In the normal course of business, the Company is subject to examination by the taxing authorities in such major jurisdictions as the U.S. Canada, Mexico, Belgium and Honduras. As of June 30, 2016, the Company and certain subsidiaries are currently under audit from 2010 through 2015 in the U.S. While the amount of uncertain tax benefits with respect to the entities and years under audit may change within the next twelve months, it is not anticipated that any of the changes will be significant.

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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 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 2: 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=65882285&loc=d3e32559-109319 Reference 3: 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=65882285&loc=d3e32718-109319 Reference 4: 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=65882285&loc=d3e32639-109319 Reference 5: 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=65882285&loc=d3e32537-109319 + Details
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