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Income Taxes | 12 Months Ended
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Sep. 30, 2014
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES The components of income before income taxes are as follows (in thousands):
| Fiscal years ended September 30,
| 2014 |  | 2013 |  | 2012
United States | $ | (5,097 | ) |  | $ | (395 | ) |  | $ | 2,808 |
International | 5,894 |  |  | 8,633 |  |  | 8,089 |
Total income before income taxes | $ | 797 |  |  | $ | 8,238 |  |  | $ | 10,897 |
The components of the income tax (benefit) provision are as follows (in thousands):
| Fiscal years ended September 30,
| 2014 |  | 2013 |  | 2012
Current: |  |  |  |  |
Federal | $ | (309 | ) |  | $ | 1,418 |  |  | $ | 2,203 |
State | (58 | ) |  | 263 |  |  | 400 |
Foreign | 2,196 |  |  | 3,148 |  |  | 3,131 |
Deferred: |  |  |  |  |
U.S. | (2,623 | ) |  | (2,270 | ) |  | (2,229 | )
Foreign | (160 | ) |  | (126 | ) |  | (223 | )
Income tax (benefit) provision | $ | (954 | ) |  | $ | 2,433 |  |  | $ | 3,282 |
The net deferred tax asset consists of the following (in thousands):
| As of September 30,
| 2014 |  | 2013
Current deferred tax asset | $ | 3,221 |  |  | $ | 3,174 |
Non-current deferred tax asset | 7,383 |  |  | 6,151 |
Current deferred tax liability | — |  |  | (60 | )
Non-current deferred tax liability | (272 | ) |  | (415 | )
Net deferred tax asset | $ | 10,332 |  |  | $ | 8,850 |
Uncollectible accounts and other reserves | $ | 1,023 |  |  | $ | 1,138 |
Depreciation and amortization | 276 |  |  | 255 |
Inventories | 1,297 |  |  | 1,530 |
Compensation costs | 8,606 |  |  | 8,025 |
Tax carryforwards | 1,347 |  |  | 1,316 |
Valuation allowance | (572 | ) |  | (807 | )
Identifiable intangible assets | (1,645 | ) |  | (2,607 | )
Net deferred tax asset | $ | 10,332 |  |  | $ | 8,850 |
11. INCOME TAXES (CONTINUED) As of September 30, 2014, we have estimated carryforwards for tax purposes as follows: state research and development credits of tax credit of $0.8 million, non-U.S. net operating losses of $0.4 million, and non-U.S. tax credit carryforwards of $0.2 million. The majority of the state research and development tax credits and non-U.S. net operating losses have an unlimited carryforward period. The majority of our non-U.S. tax credit carryforwards will expire in 2027. Our valuation allowance for certain U.S. and foreign locations decreased to $0.6 million at September 30, 2014 from $0.8 million at September 30, 2013, resulting from our determination that it is more likely than not we will be able to utilize certain state research and development credits. The amount of the deferred tax assets realized could vary if there are differences in the timing or amount of future reversals of existing deferred tax liabilities or changes in the amounts of future taxable income. If our future taxable income projections are not realized, an additional valuation allowance may be required, and would be reflected as income tax expense at the time that any such change in future taxable income is determined. The reconciliation of the statutory federal income tax amount to our income tax (benefit) provision is as follows (in thousands):
| Fiscal years ended September 30,
| 2014 |  | 2013 |  | 2012
Statutory income tax amount | $ | 271 |  |  | $ | 2,801 |  |  | $ | 3,814 |
Increase (decrease) resulting from: |  |  |  |  |
State taxes, net of federal benefits | (281 | ) |  | (32 | ) |  | 77 |
Utilization of tax credits | (76 | ) |  | (601 | ) |  | (237 | )
Manufacturing deduction | (92 | ) |  | (65 | ) |  | 16 |
Discrete tax benefits | (1,470 | ) |  | (863 | ) |  | (1,680 | )
Foreign operations | 316 |  |  | 166 |  |  | 407 |
Adjustment of tax contingency reserves | 168 |  |  | 800 |  |  | 532 |
Meals and entertainment | 99 |  |  | 80 |  |  | 58 |
Employee stock purchase plan | 85 |  |  | 77 |  |  | 96 |
Other, net | 26 |  |  | 70 |  |  | 199 |
Income tax (benefit) provision | $ | (954 | ) |  | $ | 2,433 |  |  | $ | 3,282 |
During fiscal 2014, we recorded net tax benefits of $1.4 million related to the re-measurement and reversal of certain income tax reserves as a result of a federal income tax audit of fiscal 2012, the reassessment of state research and development tax credits and the release of income tax reserves due to the expiration of statute of limitations from U.S. and foreign tax jurisdictions. These benefits are included within the discrete tax benefits in the above table. During fiscal 2013, we recorded net tax benefits of $0.8 million, related to the January 2, 2013 enactment of the American Taxpayers Relief Act of 2012 extending the research and development tax credit for the last three quarters of fiscal 2012 and the release of income tax reserves due to the expiration of the statute of limitations from various U.S. and foreign tax jurisdictions. These benefits are included within the discrete tax benefits in the above table. During fiscal 2012, we recorded net tax benefits of $1.5 million related to additional research and development tax credits identified for fiscal years ended September 30, 2009, 2010 and 2011, reversal of tax reserves for closure of various jurisdictions’ tax matters and tax rate reductions in foreign jurisdictions. These benefits are included within the discrete tax benefits in the above table. 11. INCOME TAXES (CONTINUED) A reconciliation of the beginning and ending amount of unrecognized tax benefits is (in thousands):
| Fiscal years ended September 30,
| 2014 |  | 2013 |  | 2012
Unrecognized tax benefits at beginning of fiscal year | $ | 3,332 |  |  | $ | 2,720 |  |  | $ | 2,061 |
Increases related to: |  |  |  |  |
Prior year income tax positions | 181 |  |  | 162 |  |  | 631 |
Current year income tax positions | 148 |  |  | 733 |  |  | 441 |
Decreases related to: |  |  |  |  |
Prior year income tax positions | (1,105 | ) |  | — |  |  | (94 | )
Settlements | (95 | ) |  | — |  |  | — |
Expiration of statute of limitations | (160 | ) |  | (283 | ) |  | (319 | )
Unrecognized tax benefits at end of fiscal year | $ | 2,301 |  |  | $ | 3,332 |  |  | $ | 2,720 |
The total amount of unrecognized tax benefits at September 30, 2014 that, if recognized, would affect our effective tax rate is $2.3 million. We expect that it is reasonably possible that the total amounts of unrecognized tax benefits will decrease approximately $0.6 million over the next 12 months due to the expiration of various statutes of limitations. We recognize interest and penalties related to income tax matters in income tax expense. During the fiscal year ended September 30, 2014, there were $0.1 million of benefits for interest and penalties related to income tax matters in income tax expense. During the fiscal years ended 2013 and 2012, there were insignificant amounts of interest and penalties related to income tax matters in income tax expense. We had accrued interest and penalties related to unrecognized tax benefits of $0.4 million at September 30, 2014 and $0.6 million at September 30, 2013. Our long-term income taxes payable on our consolidated balance sheets includes these accrued interest and penalties in addition to the unrecognized tax benefits in the table above. We operate in multiple tax jurisdictions both in the U.S. and outside of the U.S and face audits from various tax authorities regarding transfer pricing, tax credits, and other matters. Accordingly, we must determine the appropriate allocation of income to each of these jurisdictions. This determination requires us to make several estimates and assumptions. Tax audits associated with the allocation of this income, and other complex issues, may require an extended period of time to resolve and may result in adjustments to our income tax balances in those years that are material to our consolidated balance sheet and results of operations. With a few exceptions, we are longer subject to income tax examination for tax years prior to fiscal 2009. We are currently under audit by the state of Minnesota for fiscal years 2009 through 2012. In January 2015, German tax authorities will commence an audit of fiscal years 2009 through 2012. We do not anticipate significant changes to our unrecognized tax benefits as a result of these examinations. At September 30, 2014, we had approximately $26.4 million of accumulated undistributed foreign earnings, for which we have not accrued additional U.S. tax. Our policy is to reinvest earnings of our foreign subsidiaries indefinitely to fund current operations and provide for future international expansion opportunities, and only repatriate earnings to the extent that U.S. taxes have already been recorded. Although we have no current need or intention to repatriate historical earnings in the form of cash in the United States, if we change our assertion from indefinitely reinvesting undistributed foreign earnings, we would have to accrue applicable taxes. The amount of any taxes and the application of any tax credits would be determined based on the income tax laws at the time of such repatriation. Under current tax laws, we estimate the unrecognized deferred tax liability to be in the range of $0.5 million to $1.5 million.

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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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