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Income Taxes
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Mar. 31, 2014
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| Income Taxes |
Note 10. Income Taxes
Income tax provisions for the Company’s interim periods are based on the effective income tax rate expected to be applicable for the full year. The Company's effective tax rate for the six months ended March 31, 2014 was 35.9%, compared to 35.0% for the first half of fiscal 2013. The difference between the Company's effective tax rate and the Federal statutory rate of 35.0% primarily reflected the impact of state taxes and estimated non-deductible transaction costs related to the pending acquisition of Schawk, Inc. (“SGK”) (see Note 12), offset by lower foreign income taxes.
The Company had unrecognized tax benefits (excluding penalties and interest) of $4,386 and $4,516 on March 31, 2014 and September 30, 2013, respectively, all of which, if recorded, would impact the 2014 annual effective tax rate.
The Company classifies interest and penalties on tax uncertainties as a component of the provision for income taxes. The Company included $178 in interest and penalties in the provision for income taxes for the first six months of fiscal 2014. Total penalties and interest accrued were $2,579 and $2,401 at March 31, 2014 and September 30, 2013, 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 limitations expires for those tax jurisdictions. As of March 31, 2014, the tax years that remain subject to examination by major jurisdiction generally are:
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