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Income Taxes | 12 Months Ended
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Sep. 30, 2012
Income Taxes [Abstract] |
Income Taxes | H. Income Taxes The components of the income tax provision were as follows (in thousands):
| Year Ended September 30,
| 2012 | 2011 | 2010
Current: |  |  |
Federal | $ 18,156 | $ 5,470 | $ 18,126
State | 1,512 | 939 | 1,750
Foreign | 331 | 563 | 1,071
| 19,999 | 6,972 | 20,947
Deferred: |  |  |
Federal | (1,840) | (122) | (1,189)
State | 25 | (76) | 23
Foreign | 393 | (62) | 113
| (1,422) | (260) | (1,053)
Total income tax provision | $ 18,577 | $ 6,712 | $ 19,894
Income before income taxes and minority interest was as follows (in thousands):
| Year Ended September 30,
| 2012 | 2011 | 2010
U.S. | $ 53,885 | $ 19,850 | $ 53,467
Other than U.S. | (5,651) | (15,853) | (8,406)
Income from continuing operations before provision for income taxes | $ 48,234 | $ 3,997 | $ 45,061
A reconciliation of the statutory U.S. income tax rate and the effective income tax rate, as computed on earnings before income tax provision in each of the three years presented in the Consolidated Statements of Operations, was as follows:
| Year Ended September 30,
| 2012 | 2011 | 2010
Statutory rate | 35% | 35% | 35%
State income taxes, net of federal benefit | 2 | 14 | 3
International withholding tax | (1) | (9) | —
Other permanent tax items | — | 5 | —
Foreign rate differential | 1 | 33 | 1
Domestic production activities deduction | (3) | (16) | (2)
Foreign valuation allowance and other | 4 | 106 | 7
Effective rate | 38% | 168% | 44%
Our provision for income taxes reflects an effective tax rate on earnings before income taxes of 38% in fiscal year 2012 compared to 168% and 44% in fiscal years 2011 and 2010, respectively. The increase in the effective tax rate for fiscal year 2011 resulted from a valuation allowance against deferred tax assets in Canada. We have not recorded deferred income taxes on $16 million of undistributed earnings of our foreign subsidiaries because of management’s intent to indefinitely reinvest such earnings. Upon distribution of these earnings in the form of dividends or otherwise, we may be subject to U.S. income taxes and foreign withholding taxes. It is not practical, however, to estimate the amount of taxes that may be payable on the eventual remittance of these earnings. We are subject to income tax in the U.S., multiple state jurisdictions and a few international jurisdictions, primarily the U.K. and in Canada since December 15, 2009. For U.S. Federal income tax purposes, all years prior to 2009 are closed. We do not consider any state in which we do business to be a major tax jurisdiction. We remain open to examination in the U.K. for tax years 2008 to the present. The net deferred income tax asset (liability) was comprised of the following (in thousands):
| September 30,
| 2012 | 2011
Current deferred income taxes: |  |
Gross assets | $ 7,053 | $ 6,801
Gross liabilities | (2,455) | (3,221)
Net current deferred income tax asset | 4,598 | 3,580
Noncurrent deferred income taxes: |  |
Gross assets | 2,422 | 2,133
Gross liabilities | — | (114)
Net noncurrent deferred income tax asset | 2,422 | 2,019
Net deferred income tax asset | $ 7,020 | $ 5,599
At September 30, 2012 and 2011, the noncurrent deferred income tax asset was included in other assets on the Consolidated Balance Sheets. The tax effect of temporary differences between U.S. GAAP accounting and federal income tax accounting creating deferred income tax assets and liabilities were as follows (in thousands):
| September 30,
| 2012 | 2011
Deferred Tax Assets: |  |
Allowance for doubtful accounts | $ 367 | $ 89
Workers compensation | 360 | 39
Stock-based compensation | 729 | 354
Reserve for accrued employee benefits | 1,546 | 1,579
Warranty accrual | 1,336 | 935
Depreciation and amortization | 1,366 | 956
Deferred compensation | 1,013 | 1,343
Postretirement benefits liability | 373 | 460
Accrued legal | 114 | 182
Uniform capitalization and inventory | 3,683 | 4,667
Goodwill impairment | 1,285 | 1,360
Other | 14 | 41
Net operating loss | 4,787 | 3,144
Gross deferred tax asset | 16,973 | 15,149
Less: valuation allowance | 7,498 | 6,215
Deferred tax assets | 9,475 | 8,934
Deferred Tax Liabilities: |  |
Uncompleted contracts | (2,455) | (3,221)
Other | — | (5)
Capital lease | — | (109)
Deferred tax liabilities | (2,455) | (3,335)
Net deferred tax asset | $ 7,020 | $ 5,599
At September 30, 2012, we had $19.1 million of gross foreign operating loss carryforwards, which are subject to a 20-year carryforward period. As of September 30, 2012, we have recorded a net valuation allowance of $7.5 million against our Canadian deferred tax assets, which we expect cannot be realized through future reversals of existing taxable temporary differences and future taxable income. We believe that our deferred tax assets in other tax jurisdictions are more likely than not realizable through future reversals of existing taxable temporary differences and our estimate of future taxable income. W e previously adopted accounting guidance on the accounting for uncertainty in income taxes. Upon adoption of the guidance, we recorded a $0.3 million increase in our tax reserves, an offsetting decrease of $0.2 million to retained earnings for uncertain tax positions and an increase in deferred income tax assets of $0.1 million. As of the adoption date, we had total tax reserves of $1.2 million. This reserve includes an estimate of potential interest and penalties on estimated liabilities for uncertain tax positions, which were recorded as components of income tax expense, in the amount of $160,000 as of September 30, 2012. A reconciliation of the beginning and ending amount of the unrecognized tax liabilities follows (in thousands):
Balance as of September 30, 2011 | $ 763
Increases related to tax positions taken during a prior period | 43
Decreases related to settlements with taxing authorities | (32)
Decreases related to expirations of statute of limitations | (263)
Balance as of September 30, 2012 | $ 511
Our continuing policy is to recognize interest and penalties related to income tax matters as tax expense. The amount of interest and penalty expense recorded for the year ended September 30, 2012, was not material. There was no material change in the net amount of unrecognized tax benefits in the year ended September 30, 2012. Management believes that it is reasonably possible that within the next 12 months, the total unrecognized tax benefits will decrease by approximately 39% due to the expiration of certain statutes of limitations in various state and local jurisdictions. Management believes that an adequate provision has been made for any adjustments that may result from tax examinations. However, the outcome of tax audits cannot be predicted with certainty. If any issues addressed in our tax audits are resolved in a manner not consistent with management’s expectations, we could be required to adjust our provision for income tax in the period such resolution occurs. Although timing of the resolution and/or closure of audits is highly uncertain, we do not believe it is reasonably possible that our unrecognized tax benefits would materially change in the next 12 months.

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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 Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 136, 172 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. 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=6881521&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 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 43, 44, 45, 46, 47, 48, 49 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 6: 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 7: 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 8: 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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