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Income Taxes | 12 Months Ended
--- | ---
Jun. 30, 2012
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The current and deferred components of the provision for income taxes consist of the following:
|  | June 30,
|  | 2012 |  | 2011 |  | 2010
|  | (In thousands)
Current: |  |  |  |  |  |
Federal |  | $ | (385 | ) |  | $ | (4 | ) |  | $ | (3,514 | )
State |  | 115 |  |  | 324 |  |  | 227 |
Total current income tax (benefit) expense |  | (270 | ) |  | 320 |  |  | (3,287 | )
Deferred: |  |  |  |  |  |
Federal |  | (63 | ) |  | (7,867 | ) |  | 629 |
State |  | (14 | ) |  | (1,620 | ) |  | 129 |
Total deferred income tax (benefit) expense |  | (77 | ) |  | (9,487 | ) |  | 758 |
Income tax benefit |  | $ | (347 | ) |  | $ | (9,167 | ) |  | $ | (2,529 | )
Income tax expense or benefit from continuing operations is generally determined without regard to other categories of earnings, such as discontinued operations and OCI. An exception is provided in ASC 740 when there is aggregate income from categories other than continuing operations and a loss from continuing operations in the current year. In this case, the tax benefit allocated to continuing operations is the amount by which the loss from continuing operations reduces the tax expenses recorded with respect to the other categories of earnings, even when a valuation allowance has been established against the deferred tax assets. In instances where a valuation allowance is established against current year losses, income from other sources, including gain from post retirement benefits recorded as a component of OCI, is considered when determining whether sufficient future taxable income exists to realize the deferred tax assets. As a result, for the year ended June 30, 2011, the Company recorded a tax expense of $9.8 million in OCI related to the gain on postretirement benefits, and recorded a corresponding tax benefit of $9.8 million in continuing operations. A reconciliation of income tax benefit to the federal statutory tax rate is as follows:
|  | June 30, 2012 |  |  | June 30, 2011 |  |  | June 30, 2010 |
Statutory tax rate |  | 34 | % |  | 34 | % |  | 34 | %
|  | (In thousands)
Income tax benefit at statutory rate |  | $ | (10,090 | ) |  | $ | (21,585 | ) |  | $ | (9,004 | )
State income tax (net of federal tax benefit) |  | (1,167 | ) |  | (2,765 | ) |  | (1,238 | )
Dividend income exclusion |  | (85 | ) |  | (532 | ) |  | (765 | )
Valuation allowance |  | 11,794 |  |  | 16,529 |  |  | 8,752 |
Change in contingency reserve (net) |  | (561 | ) |  | (1,308 | ) |  | 7 |
Research tax credit (net) |  | (15 | ) |  | (16 | ) |  | (66 | )
Other (net) |  | (223 | ) |  | 510 |  |  | (215 | )
Income tax benefit |  | $ | (347 | ) |  | $ | (9,167 | ) |  | $ | (2,529 | )
The primary components of the temporary differences which give rise to the Company’s net deferred tax liabilities are as follows:
|  | June 30,
|  | 2012 |  | 2011 |  | 2010
|  | (In thousands)
Deferred tax assets: |  |  |  |  |  |
Postretirement benefits |  | $ | 32,481 |  |  | $ | 20,226 |  |  | $ | 27,589 |
Accrued liabilities |  | 3,958 |  |  | 4,138 |  |  | 4,376 |
Capital loss carryforward |  | 2,865 |  |  | 2,945 |  |  | 1,971 |
Net operating loss carryforward |  | 47,114 |  |  | 37,170 |  |  | 17,261 |
Intangible assets |  | 919 |  |  | — |  |  | — |
Other |  | 1,295 |  |  | 4,328 |  |  | 2,464 |
Total deferred tax assets |  | 88,632 |  |  | 68,807 |  |  | 53,661 |
Deferred tax liabilities: |  |  |  |  |  |
Fixed assets |  | (4,117 | ) |  | (7,881 | ) |  | (5,551 | )
Intangible assets |  | — |  |  | (1,032 | ) |  | (4,498 | )
Other |  | (794 | ) |  | (814 | ) |  | (726 | )
Total deferred tax liabilities |  | (4,911 | ) |  | (9,727 | ) |  | (10,775 | )
Valuation allowance |  | (84,954 | ) |  | (60,390 | ) |  | (43,860 | )
Net deferred tax liability |  | $ | (1,233 | ) |  | $ | (1,310 | ) |  | $ | (974 | )
The Company has approximately $121.7 million and $132.9 million of federal and state net operating loss carryforwards that will begin to expire in the years ending June 30, 2025 and June 30, 2020, respectively. The Company also has approximately $7.6 million and $6.5 million of federal and state capital loss carryforwards, respectively, that may only be used to offset capital gains that begin expiring in June 30, 2013. At June 30, 2012, the Company had total deferred tax assets of $88.6 million and net deferred tax assets before valuation allowance of $83.7 million. The Company considered whether a valuation allowance should be recorded against deferred tax assets based on the likelihood that the benefits of the deferred tax assets would or would not ultimately be realized in future periods. In making such assessment, significant weight was given to evidence that could be objectively verified such as recent operating results and less consideration was given to less objective indicators such as future earnings projections. After consideration of positive and negative evidence, including the recent history of losses, the Company cannot conclude that it is more likely than not to generate future earnings sufficient to realize the Company’s deferred tax assets as of June 30, 2012. Accordingly, a valuation allowance of $85.0 million has been recorded to offset this deferred tax asset. The valuation allowance increased by $24.6 million, $16.5 million, and $10.6 million in the fiscal years ended June 30, 2012, 2011 and 2010, respectively. A tabular reconciliation of the total amounts (in absolute values) of unrecognized tax benefits is as follows:
|  | Year Ended June 30,
|  | 2012 |  | 2011 |  | 2010
|  | (In thousands)
Unrecognized tax benefits at beginning of year |  | $ | 3,902 |  |  | $ | 5,218 |  |  | $ | 4,382 |
Increases in tax positions for prior years |  | — |  |  | — |  |  | — |
(Decreases) increases in tax positions for current year |  | — |  |  | (1,316 | ) |  | 836 |
Settlements |  | (691 | ) |  | — |  |  | — |
Lapse in statute of limitations |  | — |  |  | — |  |  | — |
Unrecognized tax benefits at end of year |  | $ | 3,211 |  |  | $ | 3,902 |  |  | $ | 5,218 |
At June 30, 2012 and 2011, the Company has approximately $3.1 million and $3.6 million, respectively, of unrecognized tax benefits that, if recognized, would affect the effective tax rate, subject to the valuation allowance. The Company believes it is reasonably possible that approximately $41,000 of its total unrecognized tax benefits could be released in the next 12 months. The Company is currently appealing a decision reached by the Internal Revenue Service regarding its June 30, 2003 through June 30, 2008 tax returns, and in January 2012 the appeals officer gave a preliminary indication that the audit result will be upheld. Additionally, in January 2012, the State of California completed an audit of the Company's June 30, 2006 and June 30, 2007 tax returns, and the Company also reached a Settlement Agreement with the State of California regarding the Company's June 30, 2002 to June 30, 2005 research and development tax credit claims. As a result of these decisions, the Company released $0.7 million of unrecognized tax benefit in the third quarter of fiscal 2012, which resulted in a tax benefit of $0.7 million excluding interest and penalties. The Company files income tax returns in the U.S. and in various state jurisdictions with varying statutes of limitations. The Company is no longer subject to U.S. income tax examinations for the fiscal years prior to June 30, 2003. The Company’s policy is to recognize interest expense and penalties related to income tax matters as a component of income tax expense. As of June 30, 2012 and 2011, the Company recorded $10,000 and $47,000, respectively, in accrued interest and penalties associated with uncertain tax positions. Additionally, the Company recorded income (expense) of $37,000, $(12,000), and $(10,000) related to interest and penalties on uncertain tax positions in the years ended June 30, 2012, 2011 and 2010, respectively.

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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 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 2: 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 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 Reference 4: 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 5: 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 6: 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 7: 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 8: 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 + Details
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