Annual report pursuant to Section 13 and 15(d)

INCOME TAXES

v2.4.0.8
INCOME TAXES
12 Months Ended
Sep. 30, 2013
INCOME TAXES [Abstract]  
INCOME TAXES
12.
INCOME TAXES:

The provision for income taxes consisted of the following:

   
2013
   
2012
   
2011
 
Current:
                 
Federal
  $ 15,703     $ 14,060     $ 15,306  
State
    3,423       2,483       3,004  
Foreign
    4,804       6,437       10,689  
      23,930       22,980       28,999  
Deferred
    2,734       5,737       9,557  
Total
  $ 26,664     $ 28,717     $ 38,556  
                         

The reconciliation of the federal statutory tax rate to the consolidated effective tax rate was as follows:

   
2013
   
2012
   
2011
 
Federal statutory tax rate
    35.0 %     35.0 %     35.0 %
Effect of state income taxes, net of federal deduction
    2.7       2.1       2.5  
Foreign taxes less than federal statutory rate
    (3.1 )       (0.6 )       (1.3 )  
Other
    (1.9 )       (2.3 )       (1.8 )  
Effective tax rate
    32.7 %     34.2 %     34.4 %
 
The Company's foreign subsidiaries had income before income taxes for the years ended September 30, 2013, 2012 and 2011 of approximately $23,662, $24,654 and $36,870, respectively.  At September 30, 2013, undistributed earnings of foreign subsidiaries for which deferred U.S. income taxes have not been provided approximated $225,084.  The Company has not determined the deferred tax liability associated with these undistributed earnings, as such determination is not practicable.

The components of deferred tax assets and liabilities at September 30, 2013 and 2012 are as follows:

   
2013
   
2012
 
Deferred tax assets:
           
Postretirement benefits
  $ 7,365     $ 11,244  
Environmental reserve
    1,903       2,217  
Pension costs
    19,415       30,145  
Deferred compensation
    66       281  
Stock options
    10,690       9,653  
Other
    24,261       24,370  
      63,700       77,910  
Deferred tax liabilities:
               
Depreciation
    (3,693 )     (4,220 )
Goodwill
    (67,012 )     (57,767 )
Other
    (1,630 )     (206 )
      (72,335 )     (62,193 )
                 
Net deferred tax asset
  $ (8,635 )   $ 15,717  

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

   
2013
   
2012
   
2011
 
Balance, beginning of year
  $ 4,501     $ 4,721     $ 5,215  
Increases for tax positions of prior years
    -       742       -  
Decreases for tax positions of prior years
    (124 )     (74 )     (96 )
Increases based on tax positions related to the current year
    708       137       202  
Decreases due to settlements with taxing authorities
    (250 )     (602 )     (38 )
Decreases due to lapse of statute of limitation
    (319 )     (423 )     (562 )
Balance, end of year
  $ 4,516     $ 4,501     $ 4,721  

The Company had unrecognized tax benefits of $4,516 and $4,501 at September 30, 2013 and 2012, 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 $72 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 2013, the Company included a net increase of $95 in interest and penalties as a component of the provision for income taxes. Total penalties and interest accrued were $2,401 and $2,306 at September 30, 2013 and 2012, 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, 2013, the tax years that remain subject to examination by major jurisdiction generally are:

United States - Federal
2010 and forward
United States - State
2009 and forward
Canada
2008 and forward
Europe
2005 and forward
United Kingdom
2010 and forward
Australia
2009 and forward
Asia
2008 and forward