XML 35 R20.htm IDEA: XBRL DOCUMENT
v3.5.0.2

Income Taxes | 12 Months Ended
--- | ---
Sep. 30, 2016
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The provision for income taxes was as follows during fiscal 2016, 2015 and 2014:
| Year ended September 30,
| 2016 |  | 2015 |  | 2014
| (In thousands)
Current: |  |  |  |  |
Federal | $ | 50,631 |  |  | $ | 23,646 |  |  | $ | 42,570 |
State | 2,900 |  |  | (5,381 | ) |  | 4,221 |
Foreign | 7,597 |  |  | 10,405 |  |  | 7,487 |
| 61,128 |  |  | 28,670 |  |  | 54,278 |
Deferred: |  |  |  |  |
Federal | (23,592 | ) |  | (5,004 | ) |  | (15,401 | )
State | (225 | ) |  | 1,422 |  |  | (1,093 | )
Foreign | (2,190 | ) |  | (2,352 | ) |  | 468 |
| (26,007 | ) |  | (5,934 | ) |  | (16,026 | )
Total provision | $ | 35,121 |  |  | $ | 22,736 |  |  | $ | 38,252 |
The foreign provision was based on foreign pre-tax earnings of $33.0 million, $45.2 million and $43.3 million in fiscal 2016, 2015 and 2014, respectively. Current foreign tax expense related to foreign tax withholdings was $6.5 million, $5.3 million and $7.7 million in fiscal 2016, 2015 and 2014, respectively. Foreign withholding tax and related foreign tax credits are included in current tax expense above. Deferred tax assets and liabilities at September 30, 2016 and 2015 were as follows:
| September 30,
| 2016 |  | 2015
| (In thousands)
Deferred tax assets: |  |  |
Net operating loss carryforward | $ | 16,122 |  |  | $ | 17,650 |
Foreign tax credit carryforward | 14,590 |  |  | — |
Research credit carryforward | 6,132 |  |  | 5,759 |
Accrued bonus | 13,807 |  |  | 5,400 |
Investments | 619 |  |  | 1,042 |
Accrued compensation | 1,328 |  |  | 1,834 |
Share-based compensation | 27,203 |  |  | 23,741 |
Deferred revenue | 1,467 |  |  | 979 |
Accrued lease costs | 3,406 |  |  | 5,009 |
Property and equipment | 3,348 |  |  | 3,249 |
Other | 7,728 |  |  | 5,613 |
| 95,750 |  |  | 70,276 |
Less valuation allowance | (15,145 | ) |  | (13,882 | )
Total deferred tax assets | 80,605 |  |  | 56,394 |
Deferred tax liabilities: |  |  |
Intangible assets | (28,056 | ) |  | (30,286 | )
Prepaid expense | (3,959 | ) |  | (3,877 | )
Other | (992 | ) |  | (993 | )
Total deferred tax liabilities | (33,007 | ) |  | (35,156 | )
Deferred tax assets, net | $ | 47,598 |  |  | $ | 21,238 |
Based upon the level of historical taxable income and projections for future taxable income over the periods that the deferred tax assets will reverse, management believes it is more likely than not that we will realize the benefits of the deferred tax assets, net of the existing valuation allowance at September 30, 2016. As of September 30, 2016, we had available U.S. federal, state and foreign net operating loss (“NOL”) carryforwards of approximately $20.2 million, $0.3 million, and $34.7 million, respectively. The U.S. NOLs were acquired in connection with our acquisitions of Braun in fiscal 2005, Adeptra in fiscal 2012, and Infoglide in fiscal 2013. The U.S. federal NOL carryforward will expire at various dates beginning in fiscal 2020, if not utilized. The state NOL carryforward will begin to expire at various dates beginning in fiscal 2021, if not utilized. The Luxembourg NOL carryforward does not have an expiration date. The $34.7 million of foreign NOL includes $25.5 million related to China. Due to a limited ability to utilize the China NOLs a full valuation allowance has been recorded on the China NOLs, resulting in no tax benefit. 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. In fiscal 2016 we generated excess foreign tax credits associated with dividends received from two of our foreign subsidiaries. The associated deferred tax asset of $14.6 million can be carried forward for up to 10 years. Management believes it is more likely than not that we will realize the benefit of this deferred tax asset and therefore no valuation allowance has been recorded to offset the future benefit of these credits. We also have available excess California state research credit of approximately $6.1 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 $6.1 million. A reconciliation of the provision for income taxes, with the amount computed by applying the U.S. federal statutory income tax rate (35% in fiscal 2016, 2015 and 2014) to income before provision for income taxes for fiscal 2016, 2015 and 2014 is shown below:
| Year Ended September 30,
| 2016 |  | 2015 |  | 2014
| (In thousands)
Income tax provision at U.S. federal statutory rate | $ | 50,599 |  |  | $ | 38,233 |  |  | $ | 46,595 |
State income taxes, net of U.S. federal benefit | 2,244 |  |  | 1,719 |  |  | 2,832 |
Foreign tax rate differential | (4,661 | ) |  | (5,279 | ) |  | (4,592 | )
Intercompany interest | (1,223 | ) |  | (1,260 | ) |  | (1,246 | )
Research credits | (4,398 | ) |  | (2,104 | ) |  | (302 | )
Domestic production deduction | (3,726 | ) |  | (1,607 | ) |  | (3,141 | )
Federal and state audit settlements | (248 | ) |  | (5,806 | ) |  | (5,886 | )
Foreign | (1,702 | ) |  | (3,109 | ) |  | (1,654 | )
Valuation allowance | 1,262 |  |  | 1,805 |  |  | 3,888 |
Foreign Tax Credit | (3,286 | ) |  | (1,296 | ) |  | 150 |
Other | 260 |  |  | 1,440 |  |  | 1,608 |
Recorded income tax provision | $ | 35,121 |  |  | $ | 22,736 |  |  | $ | 38,252 |
The increase in our effective tax rate in fiscal 2016 compared to fiscal 2015 was due primarily to the favorable settlement of the fiscal 2006-2009 state audits and the favorable settlement of the 2010 foreign transfer pricing assessment in fiscal 2015, partially offset by an increase in the foreign tax credit associated with the repatriation of income from the United Kingdom and Brazil and the Domestic Production Activities Deduction in fiscal 2016. The decrease in our effective tax rate in fiscal 2015 compared to fiscal 2014 was due primarily to the favorable settlement of the fiscal 2006-2009 state audits, the favorable settlement of the 2010 foreign transfer pricing assessment, as well as the December 2014 reenactment of the calendar 2014 U.S. Federal Research and Development Credit, which resulted in a catch up adjustment for the R&D credit during fiscal 2015. In fiscal 2016 and 2015, the foreign taxes consist of local country permanent items and prior years’ true ups. As of September 30, 2016, we have not made a provision for U.S. or additional foreign withholding taxes on approximately $45.3 million of the excess of the amount for financial reporting over the tax basis of investments in foreign subsidiaries. We intend to reinvest the earnings of its non-U.S. subsidiaries in those operations indefinitely, except where we are able to repatriate these earnings to the United States without material incremental tax provision. The determination and estimation of the future income tax consequences in all relevant taxing jurisdictions involves the application of highly complex tax laws in the countries involved, particularly in the United States, and is based on our tax profile in the year of earnings repatriation. Accordingly, 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 few exceptions, we are no longer subject to U.S. federal, state, local, or foreign income tax examinations for fiscal years prior to 2013. We concluded the audit by the California Franchise Tax Board for fiscal 2012 and 2013, and did not have any adjustments related to those audits that resulted in a material change to our consolidated financial statements. We are currently under audit by New York State and New York City for fiscal 2011, 2012 and 2013. 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,
| 2016 |  | 2015 |  | 2014
| (In thousands)
Gross unrecognized tax benefits at beginning of year | $ | 4,634 |  |  | $ | 4,554 |  |  | $ | 9,009 |
Gross increases for tax positions in prior years | 1,004 |  |  | 1,725 |  |  | 2,468 |
Gross decreases for tax positions in prior years | (117 | ) |  | (3 | ) |  | (967 | )
Gross increases based on tax positions related to the current year | 1,310 |  |  | 582 |  |  | 923 |
Decreases for settlements and payments | (32 | ) |  | (2,224 | ) |  | (6,879 | )
Gross unrecognized tax benefits at end of year | $ | 6,799 |  |  | $ | 4,634 |  |  | $ | 4,554 |
We had $6.8 million of total unrecognized tax benefits as of September 30, 2016, including $6.0 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 unlikely there will be a reduction of the uncertain tax benefits 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, 2016, we have accrued interest of $0.3 million related to the unrecognized tax benefits.

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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 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 2: 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 Reference 3: 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 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 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration