Income Taxes

9 Months Ended

Jun. 30, 2012

Income Taxes [Abstract]

Income Taxes

14. Income Taxes

The Company recorded income tax provisions associated with income from continuing operations of $1.8 million and $1.5 million for the three months ended June 30, 2012 and 2011, respectively, representing effective tax rates of 35.6% and 33.3%, respectively. The Company recorded income tax provisions associated with income from continuing operations of $4.2 million and $4.7 million for the nine months ended June 30, 2012 and 2011, respectively, representing effective tax rates of 36.7% and 35.1%, respectively. The difference between the U.S. federal statutory tax rate of 35.0% and the Company’s effective tax rate for the three and nine months ended June 30, 2012 and 2011 reflects the impact of state income taxes, permanent tax items and discrete tax benefits.

The Company recorded an income tax expense from discontinued operations of less than $0.1 million and an income tax benefit from discontinued operations of $1.6 million for each of the three months ended June 30, 2012 and 2011, respectively. The Company recorded an income tax expense from discontinued operations of $1.1 million and an income tax benefit from discontinued operations of $4.1 million for each of the nine months ended June 30, 2012 and 2011, respectively. The Company recorded an income tax expense of less than $0.1 million and an income tax benefit of $0.7 million from the sale of discontinued operations for the three and nine months ended June 30, 2012. The effective tax rate applied to discontinued operations was 96.5% and 197.7% for the three months ended June 30, 2012 and 2011, respectively, and 65.0% and 32.5% for the nine months ended June 30, 2012 and 2011, respectively. The effective tax rates as calculated include tax return to accrual adjustments. The tax rate for the nine months ended June 30, 2011 is lower than the U.S. federal statutory tax rate of 35.0% because of a non-deductible goodwill impairment charge of $5.7 million on a pre-tax loss of $12.7 million.

The total amount of unrecognized tax benefits including interest and penalties that, if recognized, would affect the effective tax rate as of June 30, 2012 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 its examination in the third quarter of fiscal 2012 and a minimal payment was made in the fourth quarter of fiscal 2012 associated with a timing adjustment. 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 years prior to fiscal 2009 are no longer subject to examination by federal tax authorities. Tax returns for state and local jurisdictions for fiscal years 2003 through 2011 remain subject to examination by state and local tax authorities.