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 Nine Months
	Ended June 30,				Ended June 30,
	2014		2013		2014		2013
Computed expected tax expense	$	283	$	1,221	$	3,428	$	4,175
State income taxes		76		72		181		110
Stock option disqualifying dispositions
and other permanent differences		(156)		50		(161)		248
Total income tax expense	$	203	$	1,343	$	3,448	$	4,533

Included in the Company’s deferred tax liabilities at June 30, 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.