Income Taxes (Tables)

12 Months Ended

Sep. 30, 2019

Income Taxes

Components of income (loss) before income taxes

Income (loss) from continuing operations before income taxes includes the following components (in thousands):

	Years Ended September 30,
	2019		2018		2017
	(in thousands)
United States	$	(535)	$	(51,049)	$	(70,566)
Foreign		52,881		65,935		59,484
Total	$	52,346	$	14,886	$	(11,082)

Significant components of the provision for income taxes

Significant components of the provision (benefit) for income taxes from continuing operations are as follows:

	Years Ended September 30,
	2019		2018		2017
	(in thousands)
Current:
Federal	$	(710)	$	(4,775)	$	(4,070)
State		2,898		976		878
Foreign		10,523		19,882		13,869
Total current		12,711		16,083		10,677
Deferred:
Federal		(4,553)		(7,874)		2,257
State		(135)		482		569
Foreign		3,017		(1,598)		1,155
Total deferred		(1,671)		(8,990)		3,981
Provision for income taxes	$	11,040	$	7,093	$	14,658

Reconciliation of income tax computed at the U.S. federal statutory tax rate to income tax expense

The reconciliation of income tax computed at the U.S. federal statutory tax rate to income tax expense is as follows:

	Years Ended September 30,
	2019		2018		2017
	(in thousands)
Tax expense at U.S. statutory rate	$	10,992	$	3,124	$	(3,877)
State income taxes, net of federal tax effect		1,416		(237)		(923)
Nondeductible expenses		1,720		1,186		(185)
Change in reserve for tax contingencies		(1,468)		(1,047)		(4,435)
Change in deferred tax asset valuation allowance		(10,007)		8,784		17,374
Foreign rate differential (1)		2,149		5,684		9,912
Tax credits		(4,767)		(2,656)		(3,459)
Impact of U.S. Tax Reform		—		(7,053)		—
Global Intangible Low-Tax Income		8,182		—		—
Stock Based Compensation		(448)		59		16
Non-controlling interest in equity arrangements		1,802		99		—
Other		1,469		(850)		235
Provision for income taxes	$	11,040	$	7,093	$	14,658

⁽¹⁾ In 2018, we recorded $3.5 million of tax expense related to foreign earnings which were not permanently reinvested prior to the enactment of the U.S. Tax Act. After enactment, certain foreign earnings are taxed at higher statutory rates than the U.S. which results in $2.1 million of incremental tax expense in 2019. In 2017, we provided for deferred taxes on all cumulative unremitted foreign earnings, as the earnings were no longer considered permanently reinvested resulting in a charge of $9.5 million.

Significant components of deferred tax assets and liabilities

Significant components of our deferred tax assets and liabilities are as follows:

	September 30,
	2019		2018
	(in thousands)
Deferred tax assets:
Accrued employee benefits	$	11,409	$	8,285
Allowances for loss contingencies		3,561		3,518
Deferred compensation		3,071		3,272
Intangible assets		—		1,361
Inventory valuation		8,036		1,154
Long-term contracts		6,995		7,751
Prepaid and accrued expenses		1,816		1,229
Retirement benefits		4,967		1,398
Tax credit carryforwards		33,118		35,137
Loss carryforwards		36,248		29,097
Other		818		264
Total gross deferred tax assets		110,039		92,466
Valuation allowance		(69,098)		(81,838)
Total deferred tax assets		40,941		10,628
Deferred tax liabilities:
Debt obligation basis difference		(4,582)		—
Deferred revenue		(12,135)		(2,351)
Intangible assets		(18,592)		—
Property, plant and equipment		(4,524)		(5,079)
Unremitted earnings		(977)		(823)
Other		(587)		(351)
Total deferred tax liabilities		(41,397)		(8,604)
Net deferred tax asset (liability)	$	(456)	$	2,024

Expiration of tax credit carryforwards

At September 30, 2019, we have federal and state income tax credit carryforwards (in thousands) which begin to expire as follows:

U.S. foreign tax credits	$	14,535	2027
U.S. research and development tax credits		14,439	2035
State research and development tax credits		25,748	Do not expire

Expiration of federal, state and foreign net operating losses

We have federal, state and foreign capital and net operating losses (in thousands) which begin to expire as follows:

U.S. net operating loss carryforwards	$	127,013	2033
U.S. capital loss carryforwards		5,451	2023
State loss carryforwards		55,619	2021
State capital loss carryforwards		23,038	2023
Foreign net operating loss carryforwards		13,548	Do not expire

Aggregate changes in the total gross unrecognized tax benefits

During fiscal 2019 and 2018, the aggregate changes in our total gross amount of unrecognized tax benefits are summarized as follows:

	September 30,
	2019		2018
	(in thousands)
Balance at beginning of year	$	9,942	$	13,248
Additions (reductions) for tax positions taken in prior years		8,458		(80)
Recognition of benefits from expiration of statutes		(776)		(1,770)
Additions for tax positions related to the current year		951		713
Reductions for tax positions related to acquisitions		—		(2,169)
Balance at end of year	$	18,575	$	9,942