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Income Taxes | 12 Months Ended
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Sep. 30, 2014
Income Taxes |
Income Taxes | 11. Income Taxes The components of the provision for income taxes of continuing operations are as follows:
|  | Year ended September 30, |
|  | 2014 |  | 2013 |  | 2012 |
|  | (in thousands) |
Current tax provision: |  |  |  |  |  |  |  |  |  |
U.S. Federal |  | $ | 14,328 |  | $ | 27,611 |  | $ | 28,124 |
State |  |  | 2,613 |  |  | 5,035 |  |  | 5,129 |
Foreign |  |  | 1,888 |  |  | 1,757 |  |  | 118 |
|  |  | 18,829 |  |  | 34,403 |  |  | 33,371 |
Deferred tax (benefit) expense: |  |  |  |  |  |  |  |  |  |
U.S. Federal |  |  | (2,886 | ) |  | (6,012 | ) |  | (1,454 | )
State |  |  | (526 | ) |  | (1,096 | ) |  | (265 | )
Foreign |  |  | 4,240 |  |  | 256 |  |  | — |
|  |  | 828 |  |  | (6,852 | ) |  | (1,719 | )
Total provision |  | $ | 19,657 |  | $ | 27,551 |  | $ | 31,652 |
Deferred taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company's deferred tax assets and liabilities are as follows:
|  | September 30, |
|  | 2014 |  | 2013 |
|  | (in thousands) |
Deferred tax assets: |  |  |  |  |  |  |
Net operating losses—Foreign |  | $ | 6,426 |  | $ | 4,572 |
Net operating losses—US |  |  | 1,674 |  |  | 2,107 |
Accrued vacation and bonus |  |  | 2,040 |  |  | 2,342 |
Inventory capitalization |  |  | 7,328 |  |  | 4,048 |
Inventory reserves |  |  | 105 |  |  | 565 |
Allowance for doubtful accounts |  |  | 291 |  |  | 252 |
Stock compensation expense |  |  | 10,259 |  |  | 8,036 |
Amortization of intangibles |  |  | 9,071 |  |  | 6,666 |
Pension liability |  |  | 790 |  |  | 852 |
Other |  |  | 273 |  |  | 352 |
Total deferred tax assets before valuation allowance |  |  | 38,257 |  |  | 29,792 |
Less: valuation allowance |  |  | (7,216 | ) |  | (5,424 | )
Net deferred tax assets |  |  | 31,041 |  |  | 24,368 |
Deferred tax liabilities: |  |  |  |  |  |  |
Amortization of goodwill |  |  | 16,022 |  |  | 7,339 |
Depreciation |  |  | 754 |  |  | 1,235 |
Total deferred tax liabilities |  | $ | 16,776 |  | $ | 8,574 |
Net deferred taxes |  | $ | 14,265 |  | $ | 15,794 |
The net current deferred tax asset of approximately $12,321,000, and $10,558,000 is recorded in prepaid and deferred taxes on the consolidated balance sheet as of September 30, 2014 and 2013, respectively. The net non-current deferred tax asset of approximately $6,160,000 and $5,236,000 is recorded in deferred taxes and other assets on the consolidated balance sheet as of September 30, 2014 and 2013, respectively. The net non-current deferred tax liability of approximately $4,217,000 is recorded in other liabilities on the consolidated balance sheet as of September 30, 2014. The reconciliation of the U.S. federal statutory rate to the effective rate for continuing operations is as follows:
|  | Year ended September 30, |
|  | 2014 |  | 2013 |  | 2012 |
U.S. statutory rate |  |  | 35.0 | % |  | 35.0 | % |  | 35.0 | %
Permanent items |  |  | 0.5 |  |  | 0.6 |  |  | — |
State taxes |  |  | 2.7 |  |  | 3.9 |  |  | 3.9 |
Net foreign rate differential |  |  | (2.5 | ) |  | (0.7 | ) |  | (0.8 | )
Change in valuation allowance |  |  | 3.6 |  |  | 1.3 |  |  | 1.5 |
Provision for income taxes |  |  | 39.3 | % |  | 40.1 | % |  | 39.6 | %
At September 30, 2014 and 2013, the Company had deferred tax assets related to available foreign net operating loss (NOL) carryforwards of approximately $6,426,000 and $4,572,000, respectively. All but approximately $547,000 of our NOLs maintain an indefinite carryforward life. The NOLs with limited carryforward periods will expire beginning in 2017 through 2034. Due to historic losses of those foreign entities, the Company does not believe that it is more likely than not that the related deferred tax assets will be realized and a full valuation allowance has been recorded. In addition, the Company also recorded a deferred tax asset of $1,674,000 related to NOL carryforwards related to its acquisition of Network International, Inc. in 2010. These NOL carryforwards expire in 2023. The Company will adjust these NOL carryforwards and the related valuation allowance as the related tax returns are filed. The Company has not recorded a provision for deferred U.S. tax expense on the undistributed earnings of foreign subsidiaries since the Company intends to indefinitely reinvest the earnings of these foreign subsidiaries outside the U.S. The amount of such undistributed foreign earnings was approximately $8.0 million as of September 30, 2014. As of September 30, 2014 and 2013, approximately $9.3 million and $10.5 million, respectively, of cash and cash equivalents was held overseas and not available to fund domestic operations without incurring taxes upon repatriation. The Company applies the authoritative guidance related to uncertainty in income taxes. The Company has concluded that there were no uncertain tax positions identified during its analysis. The Company's policy is to recognize interest and penalties in the period in which they occur in the income tax provision. The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction, various state and local jurisdictions and in foreign jurisdictions, primarily Canada and the U.K. Currently, the Company is subject to income tax examinations for fiscal 2011 and 2012. The Company anticipates no material tax liability to arise from this examination. The statute of limitations for years prior to fiscal 2011 is now closed. However, certain tax attribute carryforwards that were generated prior to fiscal 2011 may be adjusted upon examination by tax authorities if they are utilized.

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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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