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Income Taxes
 12 Months Ended
Mar. 31, 2012
Income Taxes  
Income Taxes

10.  Income Taxes

 

Under current accounting standards, we must recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. We measure the tax benefits recognized in the financial statements from such a position based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate resolution. The application of income tax law is inherently complex. Laws and regulations in this area are voluminous and are often ambiguous. As such, we are required to make many subjective assumptions and judgments regarding our income tax exposures. Interpretations of and guidance surrounding income tax law and regulations change over time and may result in changes to our subjective assumptions and judgments which can materially affect amounts recognized in our balance sheets and statements of income. Our assessment of tax positions as of March 31, 2012 and 2011, determined that there were no material uncertain tax positions. Our federal tax returns for all years after 2008 and our state tax returns after 2007 are subject to future examination by tax authorities for all our tax jurisdictions. We recognize interest and penalties related to income tax matters in other expense and general and administration expense, respectively.

 

The components of the provision for income taxes are as follows:

 

 

 

Year ended March 31,

 

(Dollars in thousands)

 

2012

 

2011

 

Current tax provision

 

 

 

 

 

Federal

 

$

4,233

 

$

3,291

 

State

 

437

 

691

 

 

 

4,670

 

3,982

 

Deferred tax provision:

 

 

 

 

 

Federal

 

(237

)

(342

)

State

 

(21

)

(72

)

 

 

(258

)

(414

)

 

 

$

4,412

 

$

3,568

 

 

The components of net deferred tax assets and liabilities are as follows:

 

 

 

March 31,

 

 

 

2012

 

2011

 

Current deferred tax assets:

 

 

 

 

 

Accrued employee-related expenses

 

$

211

 

$

354

 

Asset reserves

 

196

 

204

 

Stock option deductible differences

 

99

 

79

 

Inventory

 

204

 

8

 

 

 

710

 

645

 

 

 

 

 

 

 

Long-term deferred tax liability:

 

 

 

 

 

Property, plant and equipment

 

(1,299

)

(1,125

)

Goodwill and intangibles

 

(1,220

)

(1,587

)

 

 

(2,519

)

(2,712

)

 

 

 

 

 

 

Net deferred tax liability

 

$

(1,809

)

$

(2,067

)

 

A reconciliation of our income tax provision and the amounts computed by applying statutory rates to income before income taxes is as follows:

 

 

 

Year ended March 31,

 

 

 

2012

 

2011

 

Income taxes at statutory rates

 

$

4,193

 

$

3,313

 

State income taxes, net of federal benefit

 

285

 

272

 

Tax benefit of stock option exercises

 

61

 

90

 

Section 199 manufacturing deduction

 

(347

)

(273

)

Other

 

220

 

166

 

 

 

$

4,412

 

$

3,568