XML 29 R15.htm IDEA: XBRL DOCUMENT
v3.8.0.1

Income Taxes | 12 Months Ended
--- | ---
Sep. 30, 2017
Income Tax Disclosure [Abstract] |
Income Taxes | 9. INCOME TAXES: The components of our provision (benefit) from income taxes consisted of the following for the fiscal years ended September 30,
|  | 2015 |  |  | 2016 |  |  | 2017 |
|  | (Amounts in thousands) |
Current provision: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 209 |  |  | $ | 496 |  |  | $ | 2,321 |
State |  |  | 87 |  |  |  | 73 |  |  |  | (366 | )
Total current provision |  | $ | 296 |  |  | $ | 569 |  |  | $ | 1,955 |
Deferred provision (benefit): |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | (22,056 | ) |  |  | 11,691 |  |  |  | 10,190 |
State |  |  | (5,654 | ) |  |  | (52 | ) |  |  | 2,116 |
Total deferred provision (benefit) |  |  | (27,710 | ) |  |  | 11,639 |  |  |  | 12,306 |
Total income tax provision (benefit) |  | $ | (27,414 | ) |  | $ | 12,208 |  |  | $ | 14,261 |
During the fourth quarter of fiscal 2017, the Company recorded a net tax benefit of $1.8 million primarily pertaining to a worthless stock deduction. The tax benefit of this deduction was primarily based on the write-off of the Company’s investment in its British Virgin Islands subsidiary for US tax purposes. Below is a reconciliation of the statutory federal income tax rate to our effective tax rate for the fiscal years ended September 30,
|  | 2015 |  |  | 2016 |  |  | 2017 |
Federal tax provision (benefit) |  |  | 35.0 | % |  |  | 35.0 | % |  |  | 35.0 | %
State taxes, net of federal effect |  |  | 3.2 | % |  |  | 3.6 | % |  |  | 4.4 | %
Worthless stock deduction |  |  | — |  |  |  | — |  |  |  | (4.8 | )%
Stock based compensation |  |  | 0.4 | % |  |  | (0.5 | )% |  |  | 0.2 | %
Valuation allowance |  |  | (171.5 | )% |  |  | (3.2 | )% |  |  | (0.1 | )%
Foreign rate differential |  |  | 0.3 | % |  |  | 0.5 | % |  |  | 2.4 | %
Other |  |  | 1.3 | % |  |  | (0.3 | )% |  |  | 0.6 | %
Effective tax rate |  |  | (131.3 | )% |  |  | 35.1 | % |  |  | 37.7 | %
Deferred income taxes reflect the impact of temporary differences between the amount of assets and liabilities recognized for financial reporting purposes and such amounts recognized for income tax purposes. The tax effects of these temporary differences representing the components of deferred tax assets as of September 30,
|  | 2016 |  |  | 2017 |
|  | (Amounts in thousands) |
Deferred tax assets: |  |  |  |  |  |  |  |
Inventories |  | $ | 1,095 |  |  | $ | 1,028 |
Accrued expenses |  |  | 919 |  |  |  | 521 |
Depreciation and amortization |  |  | 1,497 |  |  |  | — |
Stock based compensation |  |  | 3,566 |  |  |  | 4,121 |
Tax loss carryforwards |  |  | 13,879 |  |  |  | 3,901 |
Other |  |  | 573 |  |  |  | 593 |
Valuation allowance |  |  | (454 | ) |  |  | (246 | )
Total Long-term deferred tax assets |  |  | 21,075 |  |  |  | 9,918 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Depreciation and amortization |  |  | — |  |  |  | (1,149 | )
Total long-term deferred tax liabilities |  | $ | — |  |  | $ | (1,149 | )
Net deferred tax assets |  | $ | 21,075 |  |  | $ | 8,769 |
Pursuant to ASC 740, we must consider all positive and negative evidence regarding the realization of deferred tax assets. ASC 740 provides for four possible sources of taxable income to realize deferred tax assets: 1) taxable income in prior carryback years, 2) reversals of existing deferred tax liabilities, 3) tax planning strategies and 4) projected future taxable income. As of September 30, 2017, we have no available taxable income in prior carryback years, limited reversals of existing deferred tax liabilities or prudent and feasible tax planning strategies. Therefore, the recoverability of our deferred tax assets is dependent upon generating future taxable income. Since the fourth quarter of fiscal 2008, the Company had maintained a full valuation allowance against its deferred tax assets, having determined it was more likely than not that the deferred tax assets would not be realized. The determination of releasing valuation allowances against deferred tax assets is made, in part, pursuant to our assessment as to whether it is more likely than not that we will generate sufficient future taxable income against which benefits of the deferred tax assets may or may not be realized. Significant judgment is required in making estimates regarding our ability to generate income in future periods. In the fourth quarter of fiscal 2016, we reached the conclusion that it was appropriate to release the majority of our valuation allowance against our state net operating loss deferred tax assets due to our operating performance in fiscal 2016 being greater than projected at fiscal 2015 year end. We considered forecasts of future operating results and the utilization of net operating losses within the statutory mandated carryforward periods and determined it was more likely than not that the majority of our state net operating loss deferred tax assets would be realized. As a result of the release of a portion of our deferred tax asset valuation allowance, we recorded approximately $1.1 million reduction in our income tax provision. A portion of the valuation allowance was retained based on particular jurisdictions. Specifically, states with a shorter statutory carryforward periods and states where our economic presence, as defined by the jurisdiction’s tax laws, has been reduced. As of September 30, 2016, we had federal net operating loss (NOL) carryforwards for federal income tax purposes of $21.0 million that will begin to expire in 2031 which excludes benefits for share based payments of $14.6 million. As of September 30, 2017, we no longer had federal net operating loss (NOL) carryforwards for federal income tax purposes. State NOL carryforwards for state income tax purposes will expire at various dates through 2032. Significant judgment is also required in evaluating our uncertain tax positions. Although we believe our tax return positions are sustainable, we recognize tax benefits from uncertain tax positions in the financial statements only when it is more likely than not that the positions will not be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits and a consideration of the relevant taxing authority's administrative practices and precedents. To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences will impact the provision for income taxes in the period in which such determination is made. The provision for income taxes includes the impact of reserve provisions and changes to reserves that are considered appropriate, as well as the related net interest and penalties. In the fourth quarter of fiscal 2017, the Company released a reserve for an uncertain tax position based on administrative practice in the applicable jurisdiction in the amount of $264,000 of which approximately $177,000 impacted the effective tax rate. As of September 30, 2016 and 2017, we had approximately $254,000 and $0, respectively, of gross unrecognized tax benefits, of which approximately $154,000 and $0, respectively, if recognized, would impact the effective tax rate before considering a change in valuation allowance. The reconciliation of the total amount recorded for unrecognized tax benefits at the beginning and end of the fiscal years ended September 30, 2016 and 2017 is as follows:
|  | 2016 |  |  | 2017 |
|  | (Amounts in thousands) |
Unrecognized tax benefits at the beginning of the year |  | $ | 244 |  |  | $ | 254 |
Increases in tax positions for prior years |  | $ | 10 |  |  | $ | 10 |
Decreases in tax positions for prior years |  |  | - |  |  |  | (264 | )
Unrecognized tax benefits at the end of the year |  | $ | 254 |  |  | $ | - |
Consistent with our prior practices, we recognize interest and penalties related to uncertain tax positions as a component of income tax expense. As of September 30, 2016 and 2017, interest and penalties represented approximately $130,000 and $0, respectively, of the gross unrecognized tax benefits. We are subject to tax by both federal and state taxing authorities. Until the respective statutes of limitations expire, we are subject to income tax audits in the jurisdictions in which we operate. We are no longer subject to U.S. Federal tax assessments for fiscal years prior to 2013, and we are not subject to assessments prior to the 2012 fiscal year for the majority of the State jurisdictions.

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://www.xbrl.org/2003/role/presentationRef -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