Quarterly report pursuant to Section 13 or 15(d)

Income Taxes

v2.4.0.6
Income Taxes
6 Months Ended
Mar. 31, 2012
Income Taxes  
Income Taxes

8.              Income Taxes

 

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

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

March 31

 

March 31,

 

 

 

2012

 

2011

 

2012

 

2011

 

Federal statutory rates

 

35.0

%

35.0

%

35.0

%

35.0

%

Adjustments:

 

 

 

 

 

 

 

 

 

Permanent reinvestment of unremitted earnings

 

 

 

(15.5

)

 

State and local income taxes, net of federal benefit

 

2.4

 

3.3

 

2.5

 

3.3

 

Foreign income tax rate differential

 

(2.3

)

(1.4

)

(2.2

)

(1.2

)

Domestic manufacturer’s deduction

 

(2.5

)

(2.4

)

(2.5

)

(2.4

)

Unrecognized tax benefits

 

(0.7

)

(0.2

)

(0.9

)

0.4

 

Other, net

 

0.8

 

0.4

 

0.6

 

0.1

 

Effective income tax rate

 

32.7

%

34.7

%

17.0

%

35.2

%

 

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 began developing a plan to integrate Rotex into our existing international structure.  As a result, during the first quarter of fiscal 2012, we asserted the K-Tron historical earnings to be permanently reinvested.  Accordingly, a tax benefit of $10.4 was recognized, representing the full release of the deferred tax liability.  During the period ended March 31, 2012, we completed the plan of integrating Rotex into our existing international structure.  As of March 31, 2012, U.S. federal and state income taxes have not been provided on accumulated undistributed earnings of substantially all 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 for the current year

 

0.1

 

Additions for tax positions of prior years

 

0.1

 

Reductions in tax positions of prior years

 

(1.5

)

Settlements

 

(0.5

)

Balance at March 31, 2012

 

$

5.5

 

 

 

 

 

Other amounts accrued at March 31, 2012, for interest and penalties

 

$

1.6