INCOME TAX EXPENSE

9 Months Ended

Jun. 30, 2014

8.	INCOME TAX EXPENSE

The third quarter 2014 effective income tax rate from continuing operations was 24.2% compared to 38.7% in the third quarter of 2013. The effective income tax rate in the first nine months of 2014 was 29.7% compared to 40.5% in the corresponding period of 2013. The income tax expense in the third quarter and first nine months of 2014 was favorably impacted by a $1.0 million decrease of uncertain tax positions as a result of a lapse of the applicable statute of limitations reducing the third quarter and year-to-date effective tax rate by 6.8% and 2.5%; additional fiscal 2013 research credit benefit reducing the third quarter and year-to-date effective tax rate by 2.8% and 1.0%; and additional fiscal 2013 foreign tax credit benefit reducing the third quarter and year-to-date effective tax rate by 2.1% and 0.8%.

The income tax expense in the third quarter and first nine months of 2013 was unfavorably impacted by the increase in uncertain tax positions related to foreign transfer pricing increasing the third quarter and year-to-date effective tax rate by 2.7% and 1.0%; and the establishment of a valuation allowance on a state tax credit deferred tax asset increasing the third quarter and year-to-date effective tax rate by 2.2% and 0.8%. The income tax expense in the first nine months of 2013 was unfavorably impacted by an adjustment to the foreign valuation allowance increasing the year-to-date effective tax rate by 6.1%. The income tax expense in the third quarter and first nine months of 2013 was favorably impacted by the write down of a foreign deferred tax liability associated with a foreign tradename decreasing the third quarter and year-to-date effective tax rate by 3.3% and 0.5%. The income tax expense in the first nine months of 2013 was favorably impacted by the extension of the research credit as a result of the American Taxpayer Relief Act of 2012 reducing the year-to-date effective tax rate by 2.1%.

The Company estimates the fiscal 2014 effective tax rate from continuing operations will be approximately 33%. The Company anticipates a $0.2 million reduction in the amount of unrecognized tax benefits in the next twelve months as a result of a lapse of the applicable statute of limitations.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

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