Quarterly report pursuant to Section 13 or 15(d)

Income Taxes

v2.4.0.6
Income Taxes
3 Months Ended
Dec. 31, 2011
Income Taxes  
Income Taxes

8.               Income Taxes

 

The following is a reconciliation of the effective income tax rate with the U.S. federal statutory income tax rate:

 

 

 

Three Months Ended December 31,

 

 

 

2011

 

2010

 

Federal statutory rates

 

35.0

%

35.0

%

Adjustments resulting from the tax effect of:

 

 

 

 

 

Permanent reinvestment of unremitted earnings

 

(34.7

)

—

 

State and income taxes, net of federal benefit

 

2.7

 

3.4

 

Foreign income tax rate differential

 

(2.1

)

(0.9

)

Domestic manufacturer’s deduction

 

(2.5

)

(2.4

)

Unrecognized tax benefits

 

(3.6

)

0.4

 

Other, net

 

0.7

 

0.4

 

Effective income tax rate

 

(4.5

)%

35.9

%

 

In connection with the acquisition of K-Tron in April 2010, we recorded a deferred tax liability related to the historical earnings of its Swiss operations that would be subject to U.S. income taxes upon earnings repatriation.  With the acquisition of Rotex we identified the need to retain cash overseas to support the continued growth of the Process Equipment Group and we began developing a plan to integrate Rotex into our existing international structure.  As a result, during the three months ended December 31, 2011, we asserted the K-Tron historical earnings to be permanently reinvested.  Accordingly, a tax benefit of $10.4 was recognized during the period, representing the full release of the deferred tax liability.  As of December 31, 2011, U.S. federal and state income taxes have not been provided on accumulated undistributed earnings of substantially all of our foreign subsidiaries as these earnings are considered permanently reinvested.

 

The activity within our reserve for unrecognized tax benefits was:

 

Balance at September 30, 2011

 

$

7.3

 

Additions for tax positions of prior years

 

0.1

 

Reductions in tax positions of prior years

 

(1.0

)

Balance at December 31, 2011

 

$

6.4

 

 

 

 

 

Other amounts accrued at December 31, 2011, for interest and penalties

 

$

1.7