XML 85 R17.htm IDEA: XBRL DOCUMENT
v3.19.3

Income Taxes | 12 Months Ended
--- | ---
Sep. 30, 2019
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The components of the income tax provision (benefit) were as follows (in thousands):
| Year Ended September 30,
| 2019 |  | 2018 |  | 2017
Current: |  |  |  |  |
Federal | $ | 1,350 |  |  | $ | 973 |  |  | $ | (7,782 | )
State | 186 |  |  | 201 |  |  | (101 | )
Foreign | 88 |  |  | 449 |  |  | 350 |
| 1,624 |  |  | 1,623 |  |  | (7,533 | )
Deferred: |  |  |  |  |  |  |  |
Federal | 366 |  |  | (1,834 | ) |  | 392 |
State | 457 |  |  | (247 | ) |  | (515 | )
Foreign | (3 | ) |  | (89 | ) |  | 223 |
| 820 |  |  | (2,170 | ) |  | 100 |
Total income tax provision (benefit) | $ | 2,444 |  |  | $ | (547 | ) |  | $ | (7,433 | )
Income (loss) before income taxes was as follows (in thousands):
| Year Ended September 30,
| 2019 |  | 2018 |  | 2017
U.S. | $ | 11,859 |  |  | $ | (2,103 | ) |  | $ | (19,932 | )
Other than U.S. | 475 |  |  | (5,596 | ) |  | 3,013 |
Income (loss) before income taxes | $ | 12,334 |  |  | $ | (7,699 | ) |  | $ | (16,919 | )
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,
| 2019 |  | 2018 |  | 2017
Statutory rate | 21 | % |  | 25 | % |  | 35 | %
State income taxes, net of federal benefit | 4 |  |  | (2 | ) |  | 2 |
Research and development credit | (7 | ) |  | 9 |  |  | 9 |
Foreign rate differential | 1 |  |  | 1 |  |  | 2 |
Foreign withholding | 1 |  |  | (3 | ) |  | — |
Foreign valuation allowance | (2 | ) |  | (20 | ) |  | 2 |
NOL carryback impact on deductions | — |  |  | — |  |  | (4 | )
Deferred tax rate differential | — |  |  | (4 | ) |  | — |
Other | 2 |  |  | 1 |  |  | (2 | )
Effective rate | 20 | % |  | 7 | % |  | 44 | %
On December 22, 2017, the new tax law lowered the corporate tax rate from 35% to 21% effective January 1, 2018. As a result, the U.S. federal statutory rate for Fiscal 2019 is 21%, compared to the blended statutory rate of 24.5% effective for Fiscal 2018. Our income tax provision (benefit) reflects an effective tax rate on pre-tax results of 20% in Fiscal 2019 compared to 7% and 44% in Fiscal 2018 and 2017, respectively. The effective rate for Fiscal 2019 approximated the U.S. federal statutory rate as favorable adjustments related to the utilization of net operating loss carryforwards in Canada that were fully reserved with a valuation allowance and the Research and Development Tax Credit (R&D Tax Credit) were largely offset by unfavorable adjustments primarily related to state income taxes and other permanent items. Due to the loss position in Fiscal 2018, the effective tax rate was negatively impacted by foreign losses reserved for with a valuation allowance as well as $0.5 million of tax expense related to the re-measurement of U.S. deferred tax assets as a result of tax reform. Likewise, due to the loss in Fiscal 2017, the effective tax rate was favorably impacted by the relative amounts of income/loss recognized in the various tax jurisdictions, the utilization of net operating loss carryforwards in Canada that have been fully reserved with a valuation allowance, the lower tax rate in the U.K., as well as $0.9 million of discrete items recognized during the year, primarily related to the R&D Tax Credit. We have not recorded deferred income taxes on $19.4 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 certain international jurisdictions, primarily the U.K. and Canada. We do not consider any state in which we do business to be a major tax jurisdiction. We remain open to examination in the other jurisdictions as follows: Canada 2012 – 2018, United Kingdom 2017 – 2018 and the United States 2013 – 2018. As of September 30, 2019, we did not have any state audits underway that would have a material impact on our financial position or results of operations. The net deferred income tax asset was comprised of the following (in thousands):
| September 30,
| 2019 |  | 2018
Gross assets | $ | 18,486 |  |  | $ | 22,480 |
Gross liabilities and valuation allowance | (13,369 | ) |  | (16,543 | )
Net deferred income tax asset | $ | 5,117 |  |  | $ | 5,937 |
The tax effect of temporary differences between U.S. GAAP accounting and federal income tax accounting creating deferred income tax assets and liabilities was as follows (in thousands):
| September 30,
| 2019 |  | 2018
Deferred Tax Assets: |  |  |
Net operating loss | $ | 10,636 |  |  | $ | 13,444 |
Credit carryforwards | 2,895 |  |  | 3,987 |
Deferred compensation | 1,590 |  |  | 1,456 |
Uniform capitalization and inventory | 983 |  |  | 1,043 |
Stock-based compensation | 744 |  |  | 879 |
Reserve for accrued employee benefits | 752 |  |  | 791 |
Warranty accrual | 341 |  |  | 448 |
Accrued legal | 115 |  |  | 154 |
Postretirement benefits liability | 110 |  |  | 112 |
Goodwill | 44 |  |  | 54 |
Other | 276 |  |  | 112 |
Deferred tax assets | 18,486 |  |  | 22,480 |
Deferred Tax Liabilities: |  |  |  |  |
Depreciation and amortization | (5,138 | ) |  | (6,946 | )
Deferred tax liabilities | (5,138 | ) |  | (6,946 | )
Less: valuation allowance | (8,231 | ) |  | (9,597 | )
Net deferred tax asset | $ | 5,117 |  |  | $ | 5,937 |
As of September 30, 2019, we had tax credit carryforwards of $2.0 million not reserved with a valuation allowance that are available to reduce future U.S. federal tax liabilities. The majority of these tax credit carryforwards expire beginning in 2037. In addition, we had international net operating loss carryforwards of $2.9 million that were not reserved with a valuation allowance available to offset future taxable income in the respective jurisdictions, with less than 10% expiring in 2029 and the remainder having an indefinite carryforward period. We have established a valuation allowance in the amount of $8.2 million primarily related to the 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. A rollforward of the valuation allowance for the past three years is summarized below:
Balance at September 30, 2016 | $ | 8,439 |
Charged to cost and expenses | (260 | )
Charged to other accounts | 588 |
Balance at September 30, 2017 | $ | 8,767 |
Charged to cost and expenses | 1,575 |
Charged to other accounts | (745 | )
Balance at September 30, 2018 | $ | 9,597 |
Charged to cost and expenses | (209 | )
Charged to other accounts | (1,157 | )
Balance at September 30, 2019 | $ | 8,231 |
A reconciliation of the beginning and ending amount of the unrecognized tax benefits that if recognized would affect the effective tax rate follows (in thousands):
| Year Ended September 30,
| 2019 |  | 2018 |  | 2017
Balance at beginning of period | $ | 1,854 |  |  | $ | 1,219 |  |  | $ | 1,046 |
Increases related to tax positions taken during the current period | 240 |  |  | 180 |  |  | 179 |
Increases related to tax positions taken during a prior period | 609 |  |  | 455 |  |  | 338 |
Decreases related to expiration of statute of limitations | — |  |  | — |  |  | — |
Decreases related to settlement with taxing authorities | — |  |  | — |  |  | (344 | )
Balance at end of period | $ | 2,703 |  |  | $ | 1,854 |  |  | $ | 1,219 |
Our 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, 2019 was not material. Due to the expiration of certain federal statutes of limitations and voluntary filings, management believes that, within the next 12 months, it is reasonably possible that the unrecognized tax benefits will decrease by approximately $0.9 million and would positively impact our effective tax rate. We are unable to make reasonably reliable estimates regarding the timing of future cash outflows, if any, associated with the remaining unrecognized tax benefits. In November 2018, we received a refund of $6.6 million related to the U.S. federal carryback claim filed for the Fiscal 2017 net operating loss. Subsequently, we were notified that the IRS would conduct a review of the carryback claim. 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.

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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration