10.

INCOME TAXES

Income tax expense on continuing operations for the periods presented differs from the “expected” federal income tax expense computed by applying the U.S. federal statutory rate of 34% to earnings before income taxes for the three months ended December 31, as a result of the following:

	For the Three Months				For the Six Months
	Ended March 31,				Ended March 31,
	2014		2013		2014		2013
Computed expected tax expense	$	1,894	$	1,499	$	3,145	$	2,954
State income taxes		52		56		105		111
Stock option disqualifying dispositions and other permanent differences		(24)		57		(5)		124
Total income tax expense	$	1,922	$	1,612	$	3,245	$	3,189

Included in the Company’s deferred tax liabilities at March 31, 2014 is approximately $17.2 million representing the tax effect of indefinite lived intangible assets from club acquisitions which are not deductible for tax purposes. These deferred tax liabilities will remain in the Company’s balance sheet until the related clubs are sold.