Income Taxes

9 Months Ended

Jun. 30, 2011

Income Taxes

Income Taxes

10. Income Taxes

The United States statutory tax rate applicable to the Company for the three months and nine months ended June 30, 2011 and 2010 was 35% and 34%, respectively. The Company's effective tax rates for the three months ended June 30, 2011 and 2010 were 32.0% and 33.1%, respectively. The Company's effective tax rates for the nine months ended June 30, 2011 and 2010 were 32.1% and 33.3%, respectively. Despite the lower statutory rate applicable to the Company's taxable income in fiscal year 2010, the higher effective tax rate during each of the periods ended June 30, 2010 primarily resulted from the delay by the United States Congress of the extension of the research and experimentation tax credit to periods beyond calendar year 2009. As a result of this delay, the Company was prohibited from recognizing approximately $150,000 of such tax credits during calendar year 2010. Recently, the United States Congress extended the research and experimentation tax credit program through December 2012. During fiscal year 2011, the Company has recognized research and experimentation tax credits applicable to each quarterly period in fiscal year 2011, as well as the $150,000 of credits earned, but not recognized, in fiscal year 2010.

From time to time the Company is the subject of audits by various tax authorities that can result in claims and assessments and additional tax payments, penalties and interest. The United States Internal Revenue Service is in the process of conducting an audit of the Company's United States Federal income tax returns for fiscal years 2009, 2008 and 2007. Management believes that the outcome of such audit will not have a material effect on the Company's financial position, results of operations or cash flows.