Income Taxes

3 Months Ended

Dec. 31, 2011

Income Taxes [Abstract]

Income Taxes

15. Income Taxes

The Company recorded income tax provisions associated with income from continuing operations of $1.2 million and $1.4 million for the three months ended December 31, 2011 and 2010, respectively, representing effective tax rates of 36.0% and 33.6%, respectively. The difference between the U.S. federal statutory tax rate of 35% and the Company’s effective tax rate for the three months ended December 31, 2011 and 2010 reflects the impact of state income taxes, permanent tax items and discrete tax benefits.

In addition, in December 2010 the U.S. adopted the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010, which retroactively extended the term of the federal tax credit for research activities to the beginning of calendar 2010 and extended the credit through the end of calendar 2011. The Company recognized a discrete benefit of approximately $0.1 million in the three months ended December 31, 2010 related to the nine months ended September 30, 2010. The tax credit recognized for research activities for the three months ended December 31, 2011 and 2010 was less than $0.1 million for each period.

The Company recorded an income tax expense from discontinued operations of $0.9 million and income tax benefit from the sale of discontinued operations of $0.6 million in the three months ended December 31, 2011. The Company recorded an income tax benefit from discontinued operations of $0.7 million in the three months ended December 31, 2010. The effective tax rate applied to discontinued operations was 36.6% and 6.9% for the three months ended December 31, 2011 and 2010, respectively. The tax rate for the three months ended December 31, 2010 is lower than the U.S. federal statutory tax rate of 35% because of a non-deductible goodwill impairment of $5.7 million.

The total amount of unrecognized tax benefits including interest and penalties that, if recognized, would affect the effective tax rate as of December 31, 2011 and September 30, 2011, respectively, are $1.5 million and $1.6 million. Currently, the Company does not expect the liability for unrecognized tax benefits to change significantly in the next 12 months with the above balances classified on the condensed consolidated balance sheets in other long-term liabilities. Interest and penalties related to unrecognized tax benefits are recorded in income tax expense.

The Company files income tax returns, including returns for its subsidiaries, in the U.S. federal jurisdiction and in various state jurisdictions. Uncertain tax positions are related to tax years that remain subject to examination. The Internal Revenue Service (“IRS”) commenced an examination of the Company’s U.S. income tax return for fiscal 2010 in the first quarter of fiscal 2012. The IRS completed an examination of the Company’s U.S. income tax return for fiscal 2009 and a payment was made in the third quarter of fiscal 2011 associated with timing adjustments. U.S. income tax returns for fiscal 2007 and 2008 remain subject to examination by federal tax authorities. Tax returns for state and local jurisdictions for fiscal years 2003 through 2010 remain subject to examination by state and local tax authorities.