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Income Taxes
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9 Months Ended |
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Dec. 31, 2012
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Income Taxes
Our anticipated annual effective tax rate before discrete events of approximately 34.8% has been applied to our consolidated pre-tax income for the nine month period ended December 31, 2012. Our anticipated annual effective tax rate after discrete events of approximately 35.2% differs from the tax rate before the discrete event due to the additional accrued interest and penalties recorded on uncertain tax positions (discussed below). Our anticipated annual effective tax rate was different than the U.S. federal statutory rate primarily due to state taxes, a difference in rates between the U.S. and foreign jurisdictions, and certain permanent differences, such as nondeductible meals and entertainment and compensation expenses. For the nine months ended December 31, 2011, the Company’s provision for income taxes reflects an effective rate of approximately 38.0% and an after discrete event rate of 37.1%. The effective tax rate was higher than the U.S. statutory rate due to state taxes, a difference in rates between the U.S. and foreign jurisdictions, and certain permanent differences, such as nondeductible compensation expenses. For the three month period ended December 31, 2012 and 2011, the Company recorded tax expense of $4,161 and $4,074 on pre-`tax income of $11,899 and $11,007, respectively. For the nine month period ended December 31, 2012 and 2011, the Company recorded tax expense of $11,585 and $3,294 on pre-tax income of $32,910 and $9,075, respectively.
As of December 31, 2012, we have established a long-term liability for uncertain tax positions in the amount of $1,509. There have been no material adjustments to the liability during the nine month period ended December 31, 2012. All of our unrecognized tax benefits at December 31, 2012 would affect our effective income tax rate if recognized, though the Company does not expect to recognize any tax benefits in the next twelve months. The Company recognizes related accrued interest and penalties as income tax expense and has accrued $106 for the nine months ended December 31, 2012, resulting in a cumulative total accrual of $1,615.
Tax years 2007 through 2010 generally remain open to examination by the major taxing jurisdictions to which we are subject. The Company’s U.S. federal income tax returns are under exam for the Predecessor’s tax period ending April 30, 2010 and the tax years ended March 31, 2010, 2009 and 2008. The Company’s Canadian federal income tax returns are under exam for the Predecessor’s tax years ended March 31, 2008, 2009 and 2010. See Note 10, “Commitments and Contingencies”.
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Thermon Holding Corp.
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| Income Taxes |
Income Taxes
Our anticipated annual effective tax rate before discrete events of approximately 34.8% has been applied to our consolidated pre-tax income for the nine month period ended December 31, 2012. Our anticipated annual effective tax rate after discrete events of approximately 35.2% differs from the tax rate before the discrete event due to the additional accrued interest and penalties recorded on uncertain tax positions (discussed below). Our anticipated annual effective tax rate was different than the U.S. federal statutory rate primarily due to state taxes, a difference in rates between the U.S. and foreign jurisdictions, and certain permanent differences, such as nondeductible meals and entertainment and compensation expenses. For the nine months ended December 31, 2011, the Company’s provision for income taxes reflects an effective rate before discrete events of approximately 38.0% and an after discrete event rate of 37.1%. The effective tax rate was higher than the U.S. statutory rate due to state taxes, a difference in rates between the U.S. and foreign jurisdictions, and certain permanent differences, such as nondeductible compensation expenses. For the three month period ended December 31, 2012 and 2011, the Company recorded tax expense of $4,161 and $4,074 on pre-tax income of $11,899 and $11,007, respectively. For the nine month period ended December 31, 2012 and 2011, the Company recorded tax expense of $11,585 and $3,294 on pre-tax income of $32,910 and $9,075, respectively.
As of December 31, 2012, we have established a long-term liability for uncertain tax positions in the amount of $1,509. There have been no material adjustments to the liability during the nine month period ended December 31, 2012. All of our unrecognized tax benefits at December 31, 2012 would affect our effective income tax rate if recognized, though the Company does not expect to recognize any tax benefits in the next twelve months. The Company recognizes related accrued interest and penalties as income tax expense and has accrued $106 for the nine months ended December 31, 2012, resulting in a cumulative total accrual of $1,615.
Tax years 2007 through 2010 generally remain open to examination by the major taxing jurisdictions to which we are subject. The Company’s U.S. federal income tax returns are under exam for the Predecessor’s tax period ended April 30, 2010 and the tax years ended March 31, 2010, 2009 and 2008. The Company’s Canadian federal income tax returns are under exam for the Predecessor’s tax years ended March 31, 2008, 2009 and 2010. See Note 10, “Commitments and Contingencies”.
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