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Income Taxes
3 Months Ended
Dec. 31, 2012
Income Taxes

12. Income Taxes

The Company recorded income tax provisions associated with income from continuing operations of $1.9 million and $1.2 million for the three months ended December 31, 2012 and 2011, respectively, representing effective tax rates of 30.6% and 36.0%, 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, 2012 and 2011 reflects the impact of state income taxes, permanent tax items and discrete tax benefits. The three months ended December 31, 2012 also reflects the impact of a gain on sale of Vessix for which there is tax expense recognized which has been offset by the reversal of a valuation allowance.

The Company did not have any discontinued operations activity in the three months ended December 31, 2012. The Company recorded an income tax expense from discontinued operations of $0.9 million and an income tax benefit of $0.6 million from the sale of discontinued operations in the three months ended December 31, 2011. The effective tax rate applied to discontinued operations was 36.6% for the three months ended December 31, 2011.

The total amount of unrecognized tax benefits including interest and penalties that, if recognized, would affect the effective tax rate as of December 31, 2012 and September 30, 2012, respectively, are $1.4 million for each period. 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 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.