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Income Taxes

9 Months Ended

Jun. 30, 2018

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

Income Taxes

On December 22, 2017, HR-1, formerly referred to as the Tax Cuts and Jobs Act (“Act”), was enacted, which made significant revisions to federal income tax laws, including lowering the corporate income tax rate to 21% from 35% effective January 1, 2018, overhauling the taxation of income earned outside the United States and eliminating or limiting certain deductions.

Our deferred tax assets and liabilities are recorded at the enacted tax rates in effect when we expect to recognize the related tax expenses or benefits. The average of these rates varies slightly from year to year but historically has been approximately 39%. With the legislation changing rates taking place in the quarter ended December 31, 2017, we remeasured our deferred tax items at an average rate of approximately 25% and recorded a provisional income tax benefit of $42.6 million, which is subject to change, as we continue to analyze certain aspects of the Act and refine our calculations. We do not expect changes to this amount to be material.

The Act also imposes a one-time transition tax on the undistributed, previously-untaxed, post-1986 foreign “earnings and profits” (as defined by the IRS) of certain U.S.-owned corporations. Determination of our transition tax liability requires us to calculate foreign earnings and profits going back to 1992 and then to assess our historical overall foreign loss position and the applicability of certain foreign tax credits. During the quarter ended March 31, 2018, we recorded a provisional estimated transition tax of $7.5 million, excluding any state income tax impact, on approximately $96.8 million of undistributed accumulated earnings and profits of foreign subsidiaries. The transition tax is payable over eight years beginning in fiscal year 2019. The undistributed accumulated earnings and profits are now considered previously taxed income and will no longer be subject to U.S. federal income taxes upon repatriation of the earnings in the form of dividends. The undistributed accumulated earnings and profits are considered permanently reinvested and, accordingly, no provision for deferred taxes on financial statement and tax differences, local withholdings or foreign exchange gains or losses have been provided. However, we could be subject to additional local withholding taxes upon repatriation of these earnings in the form of a dividend. We are continuing to gather and evaluate information related to the state income tax impact of the Act, including the state income tax impact of the transition tax. In addition to these state income tax related matters, the final transition tax calculation is also dependent on our balance sheet at September 30, 2018, and therefore is subject to change. We do not expect changes to this amount to be material.

In addition to the adoption items discussed above, the results of our operations include federal income tax expense on our current period earnings at a full-year blended rate of 24.5%, since the rate reduction in the Act is effective on January 1, 2018 The reconciliation between the U.S. federal statutory income tax rate and the effective tax rate is presented below.

	Three months ended						Nine months ended
	June 30,						June 30,
	2018			2017			2018			2017
U.S. federal statutory income tax rate	24.5	%		35.0	%		24.5	%		35.0	%
Adjustments to reconcile to the effective tax rate:
State tax apportionment change	—			—			—			1.7
State income taxes, net of federal benefit	4.8			3.9			4.5			3.9
Excess tax benefits related to stock compensation	(0.2	)		(0.2	)		(1.2	)		(4.6	)
Domestic production activities deduction	(1.7	)		(4.7	)		(1.6	)		(4.5	)
Tax credits	(1.1	)		(1.0	)		(1.0	)		(1.7	)
Other	1.9			2.7			0.2			2.3
	28.2	%		35.7	%		25.4	%		32.1	%
Transition tax	—			—			12.3			—
Remeasurement of deferred taxes for change in rates	—			—			(69.8	)		—
Effective income tax rate	28.2	%		35.7	%		(32.1	)%		32.1	%

At June 30, 2018 and September 30, 2017, the gross liabilities for unrecognized income tax benefits were $3.3 million and $3.0 million, respectively.

Schedule of Effective Income Tax Rate Reconciliation [Table Text Block]

The reconciliation between the U.S. federal statutory income tax rate and the effective tax rate is presented below.

	Three months ended						Nine months ended
	June 30,						June 30,
	2018			2017			2018			2017
U.S. federal statutory income tax rate	24.5	%		35.0	%		24.5	%		35.0	%
Adjustments to reconcile to the effective tax rate:
State tax apportionment change	—			—			—			1.7
State income taxes, net of federal benefit	4.8			3.9			4.5			3.9
Excess tax benefits related to stock compensation	(0.2	)		(0.2	)		(1.2	)		(4.6	)
Domestic production activities deduction	(1.7	)		(4.7	)		(1.6	)		(4.5	)
Tax credits	(1.1	)		(1.0	)		(1.0	)		(1.7	)
Other	1.9			2.7			0.2			2.3
	28.2	%		35.7	%		25.4	%		32.1	%
Transition tax	—			—			12.3			—
Remeasurement of deferred taxes for change in rates	—			—			(69.8	)		—
Effective income tax rate	28.2	%		35.7	%		(32.1	)%		32.1	%

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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
-URI http://asc.fasb.org/topic&trid=2144680

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Tabular disclosure of the reconciliation using percentage or dollar amounts of the reported amount of income tax expense attributable to continuing operations for the year to the amount of income tax expense that would result from applying domestic federal statutory tax rates to pretax income from continuing operations.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 12
-URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32687-109319

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