Annual report pursuant to Section 13 and 15(d)

INCOME TAXES

v2.3.0.15
INCOME TAXES
 12 Months Ended
Sep. 30, 2011
INCOME TAXES [Abstract]  
INCOME TAXES
12.
INCOME TAXES:

The provision for income taxes consisted of the following:

   
2011
    
2010
    
2009
  
Current:
                  
Federal
   $ 15,306     $ 20,898     $ 15,896  
State
     3,004       3,191       1,584  
Foreign
     10,689       9,325       5,963  
      28,999       33,414       23,443  
Deferred
     9,557       5,225       7,870  
Total
   $ 38,556     $ 38,639     $ 31,313  
                         

   
2011
    
2010
  
Deferred tax assets:
            
Postretirement benefits
   $ 10,743     $ 9,516  
Environmental reserve
     2,430       2,649  
Pension costs
     25,524       19,112  
Deferred compensation
     1,037       5,898  
Stock options
     9,447       7,436  
Other
     22,790       16,162  
      71,971       60,773  
Deferred tax liabilities:
                
Depreciation
     (3,503 )     (1,018 )
Goodwill
     (48,494 )     (41,281 )
Other
     (1,441 )     (2,203 )
      (53,438 )     (44,502 )
                 
Net deferred tax asset
   $ 18,533     $ 16,271  
 
The reconciliation of the federal statutory tax rate to the consolidated effective tax rate was as follows:

   
2011
    
2010
    
2009
  
Federal statutory tax rate
     35.0 %     35.0 %     35.0 %
Effect of state income taxes, net of federal deduction
     2.5       2.6       2.9  
Foreign taxes less than federal statutory rate
     (1.3 )      (0.7 )      (1.8 )  
Other
     (1.8 )      (1.9 )      (1.7 )  
Effective tax rate
     34.4 %     35.0 %     34.4 %

The Company's foreign subsidiaries had income before income taxes for the years ended September 30, 2011, 2010 and 2009 of approximately $36,870, $36,040 and $24,815, respectively.  At September 30, 2011, undistributed earnings of foreign subsidiaries for which deferred U.S. income taxes have not been provided approximated $176,300.

Changes in the total amount of gross unrecognized tax benefits (excluding penalties and interest) are as follows:

   
2011
    
2010
    
2009
  
Balance beginning of year
   $ 3,422     $ 3,575     $ 4,370  
Increases for tax positions of prior years
     -       437       120  
Decreases for tax positions of prior years
     (96 )     (506 )     (607 )
Increases based on tax positions related to the current year
     202       355       674  
Decreases due to settlements with taxing authorities
     (38 )     (57 )     (542 )
Decreases due to lapse of statute of limitation
     (562 )     (382 )     (440 )
Balance end of year
   $ 2,928     $ 3,422     $ 3,575  


The Company had unrecognized tax benefits of $2,928 and $3,422 at September 30, 2011 and 2010, respectively, all of which, if recorded, would impact the annual effective tax rate.  It is reasonably possible that the amount of unrecognized tax benefits could change by approximately $279 in the next 12 months primarily due to expiration of statutes related to specific tax positions.

The Company classifies interest and penalties on tax uncertainties as a component of the provision for income taxes. For fiscal 2011, the Company included a net decrease of $570 in interest and penalties as a component of the provision for income taxes. Total penalties and interest accrued were $1,842 and $2,412 at September 30, 2011 and 2010, respectively.  These accruals may potentially be applicable in the event of an unfavorable outcome of uncertain tax positions.
 
The Company is currently under examination in several tax jurisdictions and remains subject to examination until the statute of limitation expires for those tax jurisdictions.  As of September 30, 2011, the tax years that remain subject to examination by major jurisdiction generally are:

United States - Federal
2008 and forward
United States - State
2008 and forward
Canada
2007 and forward
Europe
2003 and forward
United Kingdom
2009 and forward
Australia
2007 and forward
Asia
2005 and forward