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Income Taxes | 6 Months Ended
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Mar. 31, 2015
Income Tax Disclosure [Abstract] |
Income Taxes | K. INCOME TAXES The calculation of the effective tax rate is as follows (in thousands):
| Three months ended March 31, |  |  | Six months ended March 31, |
| 2015 |  |  | 2014 |  |  | 2015 |  |  | 2014 |
Income from continuing operations before income taxes | $ | 2,696 |  |  | $ | 11,031 |  |  | $ | 1,466 |  |  | $ | 22,235 |
Income tax provision |  | 6,379 |  |  |  | 4,055 |  |  |  | 5,388 |  |  |  | 7,992 |
Income (loss) from continuing operations | $ | (3,683 | ) |  | $ | 6,976 |  |  | $ | (3,922 | ) |  | $ | 14,243 |
Effective tax rate |  | 237 | % |  |  | 37 | % |  |  | 368 | % |  |  | 36 | %
A reconciliation of the significant differences between the statutory U. S. income tax rate and the effective income tax rate, as computed on earnings (loss) before income tax provision for the six months ended March 31, 2015 and 2014, is as follows:
| Six months ended March 31, |
| 2015 |  |  | 2014 |
Statutory rate |  | 35 | % |  |  | 35 | %
Canadian valuation allowance |  | 661 |  |  |  | — |
Research and Development Credit |  | (327 | ) |  |  | — |
State rate |  | 2 |  |  |  | 2 |
Domestic production activities deduction |  | (2 | ) |  |  | (2 | )
Other |  | (1 | ) |  |  | 1 |
Effective rate |  | 368 | % |  |  | 36 | %
We recorded a provision for income taxes from continuing operations of $6.4 million in the second quarter of Fiscal 2015, compared to the provision of $4.1 million recorded in the second quarter of Fiscal 2014. The effective tax rate for the second quarter of Fiscal 2015 was 236.6% compared to an effective tax rate of 36.8% for the second quarter of Fiscal 2014, primarily due to certain discrete items recorded in the second quarter of Fiscal 2015. These discrete items include a valuation allowance recorded against our Canadian deferred tax assets in the amount of $9.0 million, as discussed below, partially offset by the release of a FIN 48 reserve related to the Federal Research and Development Tax Credit (R&D Credit) in the amount of $4.1 million upon closing an Internal Revenue Service (IRS) audit. The effective tax rate for the quarter ended March 31, 2014 approximated the combined U.S. federal and state statutory rates as the majority of our income was attributable to the U.S. We recorded a provision for income taxes from continuing operations of $5.4 million in the six months ended March 31, 2015, compared to the provision of $8.0 million recorded in the six months ended March 31, 2014. The effective tax rate for the six months ended March 31, 2015 was 367.5% compared to an effective tax rate of 35.9% for the six months ended March 31, 2014 primarily due to a valuation allowance against our Canadian deferred tax assets partially offset by the release of a FIN 48 reserve related to the R&D Credit upon closing an IRS audit as well as the December 19, 2014 retroactive reinstatement of the R&D Credit from January 1, 2014 through December 31, 2014. The effective tax rate for the six months ended March 31, 2014 approximated the combined U.S. federal and state statutory rate as the majority of our income was attributable to the U.S. At March 31, 2015, we had $32 million of gross foreign net operating loss carryforwards, the benefits of which are recorded as deferred tax assets and are subject to a 20-year carryforward period, the first of which will expire in 2031. During our quarterly assessment of deferred taxes, in the second quarter of Fiscal 2015, we established a valuation allowance in the amount of $9.0 million against Canadian net deferred tax assets. In assessing the realizability of net deferred tax assets, we consider whether it is more-likely-than-not that some portion or all of the net deferred tax assets may not be realized. The ultimate realization of net deferred tax assets is dependent on the generation of future taxable income during the periods in which those temporary differences become deductible. In light of the historical Canadian losses, and recent changes in projected losses in the near term, we are required under the more-likely-than-not accounting standard to record a valuation allowance against the Canadian net deferred assets because we may not be able to realize the benefits of the net operating loss carryforwards and other deductible differences. We believe that our deferred tax assets in other tax jurisdictions, with the exception of those related to certain foreign withholding taxes and the net operating losses of our Dutch entities, are more-likely-than-not realizable through future reversals of existing taxable temporary differences and our estimate of future taxable income. Estimates may change as new events occur, estimates of future taxable income during the carryforward period are reduced or increased, additional information becomes available or operating environments change, which may result in a full or partial reversal of the valuation allowance.

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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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