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Income Taxes
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6 Months Ended |
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Sep. 30, 2012
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Income Taxes
Our anticipated annual effective tax rate before discrete events of approximately 35.0% has been applied to our consolidated pre-tax income for the six month period ended September 30, 2012. Our anticipated annual effective tax rate after discrete events of approximately 35.3% 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 six months ended September 30, 2011, the Company’s provision for income taxes reflects an effective benefit rate before discrete events of approximately 36.3% and an after discrete event benefit rate of 40.4%. 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 September 30, 2012 and 2011, the Company recorded tax expense of $3,790 and $2,109 on pre-tax income of $10,777 and $5,923, respectively. For the six month period ended September 30, 2012 and 2011, the Company recorded tax expense of $7,424 and a tax benefit of $780 on pre-tax income of $21,011 and a pre-tax loss of $1,932, respectively.
As of September 30, 2012, we have established a long-term liability for uncertain tax positions in the amount of $1,578. There have been no material adjustments to the liability during the six month period ended September 30, 2012. All of our unrecognized tax benefits at September 30, 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 $73 for the six months ended September 30, 2012, resulting in a cumulative total accrual of $272.
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. As of September 30, 2012 no adjustments have been proposed. 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 35.0% has been applied to our consolidated pre-tax income for the six month period ended September 30, 2012. Our anticipated annual effective tax rate after discrete events of approximately 35.3% 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 six months ended September 30, 2011, the Company’s provision for income taxes reflects an effective benefit rate before discrete events of approximately 36.3% and an after discrete event benefit rate of 40.4%. 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 September 30, 2012 and 2011, the Company recorded tax expense of $3,790 and $2,109 on pre-tax income of $10,777 and $5,923, respectively. For the six month period ended September 30, 2012 and 2011, the Company recorded tax expense of $7,424 and a tax benefit of $780 on pre-tax income of $21,011 and a pre-tax loss of $1,932, respectively.
As of September 30, 2012, we have established a long-term liability for uncertain tax positions in the amount of $1,578. There have been no material adjustments to the liability during the six month period ended September 30, 2012. All of our unrecognized tax benefits at September 30, 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 $73 for the six months ended September 30, 2012, resulting in a cumulative total accrual of $272.
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. As of September 30, 2012 no adjustments have been proposed. 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 9, “Commitments and Contingencies”.
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