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Income Taxes
6 Months Ended
Sep. 30, 2014
Income Taxes
(3)

INCOME TAXES

Income tax expense for interim periods is based on estimates of the effective tax rate for the entire fiscal year. The effective tax rate applicable to pre-tax earnings, for the quarters and the six-month periods ended September 30, is as follows:

 

                                                   
     Quarter Ended
        September 30,        
   Six Months Ended
        September 30,        
      2014    2013    2014    2013

 

Effective tax rate applicable to pre-tax earnings

   25.7%    22.4%    25.0%    23.0%

The effective tax rates for the six months ended September 30, 2014 and 2013 are lower than the U.S. statutory income tax rate of 35% primarily because the company has not recognized a U.S. deferred tax liability associated with temporary differences related to investments in foreign subsidiaries that are essentially permanent in duration.

 

The company’s balance sheet at September 30, 2014 reflects the following in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 740, Income Taxes:

 

                        
(In thousands)       September 30,
    2014
 

Tax liabilities for uncertain tax positions

  $             20,154               

Income tax payable

    38,287               

The tax liabilities for uncertain tax positions are attributable to a foreign tax filing position and a permanent establishment issue related to a foreign joint venture. Penalties and interest related to income tax liabilities are included in income tax expense. Income tax payable is included in other current liabilities.

Unrecognized tax benefits, which would lower the effective tax rate if realized at September 30, 2014, are as follows:

 

                        
(In thousands)       September 30,
    2014
 

Unrecognized tax benefit related to state tax issues

  $             11,230               

Interest receivable on unrecognized tax benefit related to state tax issues

    28               

With limited exceptions, the company is no longer subject to tax audits by U.S. federal, state, local or foreign taxing authorities for years prior to 2007. The company has ongoing examinations by various U.S. federal, state and foreign tax authorities and does not believe that the results of these examinations will have a material adverse effect on the company’s financial position, results of operations, or cash flows.