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Income Taxes | 12 Months Ended
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Sep. 30, 2014
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The provision for income taxes was as follows during fiscal 2014, 2013 and 2012:
| Year ended September 30,
| 2014 |  | 2013 |  | 2012
| (In thousands)
Current: |  |  |  |  |
Federal | $ | 42,570 |  |  | $ | 31,469 |  |  | $ | 42,502 |
State | 4,221 |  |  | 2,755 |  |  | 4,899 |
Foreign | 7,487 |  |  | 3,994 |  |  | 3,959 |
| 54,278 |  |  | 38,218 |  |  | 51,360 |
Deferred: |  |  |  |  |
Federal | (15,401 | ) |  | (468 | ) |  | (6,843 | )
State | (1,093 | ) |  | 2,069 |  |  | (925 | )
Foreign | 468 |  |  | 2,070 |  |  | 647 |
| (16,026 | ) |  | 3,671 |  |  | (7,121 | )
Total provision | $ | 38,252 |  |  | $ | 41,889 |  |  | $ | 44,239 |
The foreign provision was based on foreign pretax earnings of $43.3 million, $24.3 million and $26.9 million in fiscal 2014, 2013 and 2012, respectively. Current foreign tax expense related to foreign tax withholdings was $7.7 million, $4.8 million and $6.3 million in fiscal 2014, 2013 and 2012, respectively. Foreign withholding tax and related foreign tax credits are included in federal current tax expense above. Deferred tax assets and liabilities at September 30, 2014 and 2013 were as follows:
| September 30,
| 2014 |  | 2013
| (In thousands)
Deferred tax assets: |  |  |
Net operating loss carryforward | $ | 18,618 |  |  | $ | 21,529 |
Research credit carryforward | 5,018 |  |  | 4,074 |
Accrued Bonus | 8,484 |  |  | 3,591 |
Capital loss carryforward | 519 |  |  | 165 |
Investments | 1,059 |  |  | 1,101 |
Accrued compensation | 1,381 |  |  | 1,662 |
Share-based compensation | 20,238 |  |  | 16,443 |
Deferred revenue | 629 |  |  | 2,139 |
Accrued lease costs | 1,007 |  |  | 1,127 |
Property and equipment | 2,837 |  |  | 2,155 |
Other | 4,212 |  |  | 3,502 |
| 64,002 |  |  | 57,488 |
Less valuation allowance | (12,078 | ) |  | (8,712 | )
Total deferred tax assets | 51,924 |  |  | 48,776 |
Deferred tax liabilities: |  |  |
Intangible assets | (27,391 | ) |  | (29,912 | )
Prepaid expense | (3,966 | ) |  | (3,526 | )
Other | (993 | ) |  | (1,515 | )
Total deferred tax liabilities | (32,350 | ) |  | (34,953 | )
Deferred tax assets, net | $ | 19,574 |  |  | $ | 13,823 |
We believe, based upon the level of historical taxable income and projections for future taxable income over the periods deferred tax assets will reverse, that it is more likely than not we will realize the benefits of deferred tax assets, net of the existing valuation allowance, at September 30, 2014. The increase in our valuation allowance for fiscal 2014 was due to the addition of Luxembourg Net Operating Loss (“NOL”), UK Capital Allowances, as well as California Research & Development Credits. The remaining valuation allowance is associated with operations where we have an NOL carryforward where realization remains uncertain. As of September 30, 2014, we had available U.S. federal, state and foreign NOL carryforwards of approximately $29.0 million, $0.3 million, and $36.3 million, respectively. The NOLs were acquired in connection with our acquisitions of Braun in fiscal 2005, Adeptra and Entiera in fiscal 2012, Infoglide in fiscal 2013 and InfoCentricity in fiscal 2014. The change in NOL during fiscal 2014 was due to utilization of the UK NOL and the inclusion of the Luxembourg entity’s NOL. The U.S. federal NOL carryforward will expire at various dates beginning in fiscal 2024, if not utilized. The state NOL carryforward will begin to expire at various dates beginning in fiscal 2021, if not utilized. The UK and Luxembourg NOL carryforwards do not have an expiration date. Utilization of the U.S. federal and state NOL are subject to an annual limitation due to the "change in ownership" provisions of the Internal Revenue Code of 1986, as amended, and similar state provisions. We also have available excess California state research credit of approximately $5.0 million. The California state research credit does not have an expiration date; however, based on enacted law and expected future cash taxes, we have recorded a valuation allowance of $5.0 million. The reconciliation between the U.S. federal statutory income tax rate of 35% and our effective tax rate is shown below for fiscal 2014, 2013 and 2012:
| Year Ended September 30,
| 2014 |  | 2013 |  | 2012
| (In thousands)
Income tax provision at U.S. federal statutory rate | $ | 46,595 |  |  | $ | 46,194 |  |  | $ | 47,685 |
State income taxes, net of U.S. federal benefit | 2,832 |  |  | 2,689 |  |  | 3,663 |
Foreign Tax Rate Differential | (4,592 | ) |  | (2,855 | ) |  | (3,616 | )
Intercompany Interest | (1,246 | ) |  | — |  |  | — |
Research credits | (302 | ) |  | (2,412 | ) |  | (375 | )
Domestic production deduction | (3,141 | ) |  | (2,168 | ) |  | (3,054 | )
Federal and State Audit Settlements | (5,886 | ) |  | — |  |  | (1,203 | )
Foreign | (1,654 | ) |  | — |  |  | — |
Valuation Allowance | 3,888 |  |  | 2,310 |  |  | — |
Intercompany dividend | 150 |  |  | (32 | ) |  | 2,692 |
Other | 1,608 |  |  | (1,837 | ) |  | (1,553 | )
Recorded income tax provision | $ | 38,252 |  |  | $ | 41,889 |  |  | $ | 44,239 |
The decrease in our effective tax rate in fiscal 2014 compared to fiscal 2013 was due primarily to the favorable settlement of the fiscal 2010 - 2012 Federal IRS audits and secondly, due to a higher percentage of revenue in lower taxing jurisdictions. The 2013 effective tax rate was positively impacted by the reenactment of the U.S. Federal Research and Development Credit. In fiscal 2014 and 2013, the foreign taxes consist of tax rate differentials, local country permanent items, and prior years’ true ups. In general, it is the practice and intention of the Company to reinvest the earnings of its non-U.S. subsidiaries in those operations. As of September 30, 2014, the Company has not made a provision for U.S. or additional foreign withholding taxes on approximately $49.9 million of the excess of the amount for financial reporting over the tax basis of investments in foreign subsidiaries that are essentially permanent in duration. Generally, such amounts become subject to U.S. taxation upon the remittance of dividends and under certain other circumstances. It is not practicable to estimate the amount of deferred tax liability related to investments in these foreign subsidiaries. Unrecognized Tax Benefit for Uncertain Tax Positions We conduct business globally and, as a result, file income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. In the normal course of business, we are subject to examination by taxing authorities. With a few exceptions, we are no longer subject to U.S. federal, state, local, or foreign income tax examinations for fiscal years prior to 2012. We are currently under audit by the California Franchise Tax Board for fiscal 2010 and 2011. We do not anticipate any adjustments related to those audits that will result in a material change to our consolidated financial statements. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
| Year Ended September 30,
| 2014 |  | 2013 |  | 2012
| (In thousands)
Gross unrecognized tax benefits at beginning of year | $ | 9,009 |  |  | $ | 7,501 |  |  | $ | 9,539 |
Gross increases for tax positions in prior years | 2,468 |  |  | 508 |  |  | 64 |
Gross decreases for tax positions in prior years | (967 | ) |  | — |  |  | (2,035 | )
Gross increases based on tax positions related to the current year | 923 |  |  | 1,000 |  |  | 681 |
Decreases for settlements and payments | (6,879 | ) |  | — |  |  | (748 | )
Gross unrecognized tax benefits at end of year | $ | 4,554 |  |  | $ | 9,009 |  |  | $ | 7,501 |
We had $4.6 million of total unrecognized tax benefits as of September 30, 2014, including $3.9 million of tax benefits that, if recognized, would impact the effective tax rate. Although the timing and outcome of audit settlements are uncertain, it is reasonably possible that a $1.2 million reduction of the uncertain tax benefits will occur in the next 12 months. We recognize interest expense related to unrecognized tax benefits and penalties as part of the provision for income taxes in our consolidated statements of income and comprehensive income. We recognize interest earned related to income tax matters as interest income in our consolidated statements of income and comprehensive income. As of September 30, 2014, we have accrued interest of $0.5 million related to the unrecognized tax benefits.

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- 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. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319 + Details
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