INCOME TAXES

12 Months Ended

Sep. 30, 2013

INCOME TAXES

INCOME TAXES

NOTE 4 INCOME TAXES

        The components of the provision for income taxes are as follows:

	Years Ended September 30,
	2013			2012			2011
	(in thousands)
Current:
Federal	$	315,820		$	108,297		$	42,377
Foreign		14,551			13,201			14,259
State		32,916			10,542			8,112
		363,287			132,040			64,748
Deferred:
Federal		35,530			196,373			185,076
Foreign		(1,409	)		(6,484	)		(4,117	)
State		(4,564	)		7,042			6,692
		29,557			196,931			187,651
Total provision	$	392,844		$	328,971		$	252,399

        The amounts of domestic and foreign income before income taxes are as follows:

	Years Ended September 30,
	2013		2012		2011
	(in thousands)
Domestic	$	1,071,435	$	886,484	$	666,073
Foreign		42,862		16,096		20,994
	$	1,114,297	$	902,580	$	687,067

        Deferred income taxes are provided for the temporary differences between the financial reporting basis and the tax basis of our assets and liabilities. Recoverability of any tax assets are evaluated and necessary allowances are provided. The carrying value of the net deferred tax assets is based on management's judgments using certain estimates and assumptions that we will be able to generate sufficient future taxable income in certain tax jurisdictions to realize the benefits of such assets. If these estimates and related assumptions change in the future, additional valuation allowances may be recorded against the deferred tax assets resulting in additional income tax expense in the future.

        The components of our net deferred tax liabilities are as follows:

	September 30,
	2013		2012
	(in thousands)
Deferred tax liabilities:
Property, plant and equipment	$	1,161,134	$	1,103,769
Available-for-sale securities		117,567		154,463
Other		55		4
Total deferred tax liabilities		1,278,756		1,258,236
Deferred tax assets:
Pension reserves		2,146		9,482
Self-insurance reserves		8,357		7,737
Net operating loss and foreign tax credit carryforwards		54,867		59,730
Financial accruals		48,963		39,833
Other		7,487		6,533
Total deferred tax assets		121,820		123,315
Valuation allowance		49,631		56,564
Net deferred tax assets		72,189		66,751
Net deferred tax liabilities	$	1,206,567	$	1,191,485

        The change in our net deferred tax assets and liabilities is impacted by foreign currency remeasurement.

        As of September 30, 2013, we had state and foreign net operating loss carryforwards for income tax purposes of $15.6 million and $35.5 million, respectively, and foreign tax credit carryforwards of approximately $45.2 million (of which $41.4 million is reflected as a deferred tax asset in our Consolidated Financial Statements prior to consideration of our valuation allowance) which will expire in fiscal 2014 through 2023. The valuation allowance is primarily attributable to state and foreign net operating loss carryforwards of $1.2 million and $11.0 million, respectively, and foreign tax credit carryforwards of $37.4 million which more likely than not will not be utilized.

        Effective income tax rates as compared to the U.S. Federal income tax rate are as follows:

	Years Ended September 30,
	2013			2012			2011
U.S. Federal income tax rate		35.0	%		35.0	%		35.0	%
Effect of foreign taxes		1.1			0.7			0.6
State income taxes, net of federal tax benefit		1.5			1.4			1.8
U.S. domestic production activities		(2.1	)		(1.1	)		(0.5	)
Other		(0.2	)		0.4			(0.2	)
Effective income tax rate		35.3	%		36.4	%		36.7	%

        We recognize accrued interest related to unrecognized tax benefits in interest expense, and penalties in other expense in the Consolidated Statements of Income. As of September 30, 2013 and 2012, we had accrued interest and penalties of $5.2 million and $6.1 million, respectively.

        A reconciliation of the change in our gross unrecognized tax benefits for the fiscal year ended September 30, 2013 and 2012 is as follows:

	September 30,
	2013			2012
	(in thousands)
Unrecognized tax benefits at October 1,	$	8,438		$	6,878
Gross decreases—tax positions in prior periods		(914	)		(4	)
Gross increases—tax positions in prior periods		1,896			2,632
Gross decreases—current period effect of tax positions		(437	)		(384	)
Gross increases—current period effect of tax positions		147			142
Expiration of statute of limitations for assessments		(1,001	)		(826	)
Unrecognized tax benefits at September 30,	$	8,129		$	8,438

        As of September 30, 2013 and September 30, 2012, our liability for unrecognized tax benefits would affect the effective tax rate if recognized. The liabilities for unrecognized tax benefits and related interest and penalties are included in other noncurrent liabilities in our Consolidated Balance Sheets.

        For the next 12 months, we cannot predict with certainty whether we will achieve ultimate resolution of any uncertain tax position associated with our international operations that could result in increases or decreases of our unrecognized tax benefits. However, we believe it is reasonably possible that the reserve for uncertain tax positions may increase by approximately $7.6 million to $10.2 million during the next 12 months due to an international matter.

        We file a consolidated U.S. federal income tax return, as well as income tax returns in various states and foreign jurisdictions. The tax years that remain open to examination by U.S. federal and state jurisdictions include fiscal 2009 through 2012. Audits in foreign jurisdictions are generally complete through fiscal 2001.