INCOME TAXES

12 Months Ended

Sep. 30, 2023

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES:

The income tax provision (benefit) consisted of the following:

	2023		2022		2021
Current:
Federal	$	13,967	$	13,481	$	(3,741)
State	4,381		4,676		3,579
Foreign	5,052		10,414		2,379
	23,400		28,571		2,217
Deferred:
Federal	(14,466)		(24,239)		5,829
State	(1,887)		(3,895)		169
Foreign	(5,273)		(4,828)		(1,840)
	(21,626)		(32,962)		4,158
Total	$	1,774	$	(4,391)	$	6,375

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

	2023		2022		2021
Federal statutory tax rate	21.0	%	21.0	%	21.0	%
Effect of state income taxes, net of federal deduction	3.8	%	0.2	%	37.5	%
Foreign statutory taxes compared to federal statutory rate	(0.7)	%	1.6	%	(18.6)	%
Share-based compensation	3.6	%	(1.1)	%	24.5	%
Termination of SERP	—	%	—	%	28.6	%
Tax credits	(7.0)	%	1.2	%	(26.6)	%
Sale of SERP-related investments	—	%	—	%	23.8	%
Goodwill write-down	—	%	(11.2)	%	—	%
Tax rate differential on net operating loss carryback	—	%	—	%	(21.4)	%
Nontaxable income	(7.5)	%	0.8	%	(9.9)	%
Utilization of foreign losses with valuation allowance	(5.6)	%	—	%	—	%
Other *	(3.3)	%	(8.3)	%	10.1	%
Effective tax rate	4.3	%	4.2	%	69.0	%

* In Fiscal 2022, "Other" primarily consists of foreign net operating losses that had a full valuation allowance.

The Company's consolidated income taxes for the year ended September 30, 2023 were an expense of $1,774, compared to a benefit of $4,391 for fiscal 2022, and an expense of $6,375 for fiscal 2021. The difference between the Company's consolidated income taxes for fiscal 2023 compared to fiscal 2022 partially resulted from fiscal 2023 having consolidated income before income taxes compared to fiscal 2022 having a consolidated loss before income taxes. The fiscal 2023 tax rate was negatively impacted by share-based compensation. Additionally, the fiscal 2023 tax rate benefited from research and development and foreign tax credits and the utilization of foreign tax net operating losses with a valuation allowance. The fiscal 2022 consolidated loss reflected a goodwill write-down recorded in the fourth quarter of fiscal 2022 that was primarily non-deductible. The fiscal 2022 effective tax rate also benefited from research and development and foreign tax credits. The fiscal 2022 effective tax rate was negatively impacted by foreign net operating losses requiring a full valuation allowance.

The difference between the Company's consolidated income taxes for fiscal 2022 compared to fiscal 2021 partially resulted from fiscal 2022 having a consolidated loss before income taxes compared to fiscal 2021 having consolidated income before income taxes. The fiscal 2022 consolidated loss reflected a goodwill write-down recorded in the fourth quarter of fiscal 2022 that was primarily non-deductible. The Company’s fiscal 2021 effective tax rate benefited from research and development and foreign tax credits as well as the reduction of uncertain tax positions due to the expiration of the statute of limitations in certain jurisdictions, the completion of a state tax audit, and the tax benefit of the NOL carryback. The fiscal 2021 effective tax rate was negatively affected by the termination of the Company’s SERP, which resulted in certain expenses that are nondeductible for tax purposes.

The Company's foreign subsidiaries had income before income taxes for the year ended September 30, 2023 of approximately $43,090, loss before income taxes for the year ended September 30, 2022 of approximately $47,653 and income before income taxes for the year ended September 30, 2021 of approximately $6,685. Deferred income taxes have not been provided on undistributed earnings of foreign subsidiaries since they have either been previously taxed, or are now exempt from tax, under the U.S. Tax Cuts and Jobs Act, or such earnings are considered to be reinvested indefinitely in foreign operations. At September 30, 2023, undistributed earnings of foreign subsidiaries for which deferred income taxes have not been provided approximated $368,306. 

The components of deferred tax assets and liabilities at September 30, 2023 and 2022 are as follows:

	2023		2022
Deferred tax assets:
Pension and postretirement benefits	$	5,544	$	9,051
Accruals and reserves not currently deductible	11,158		10,909
Income tax credit carryforward	4,970		5,796
Operating and capital loss carryforwards	59,956		54,875
Stock options	8,007		7,103
Research and development capitalization	11,028		—
Other	3,016		50
Total deferred tax assets	103,679		87,784
Valuation allowances	(22,506)		(27,552)
Net deferred tax assets	81,173		60,232
Deferred tax liabilities:
Depreciation	(23,547)		(27,317)
Unrealized gains and losses	(2,969)		(2,793)
Goodwill and intangible assets	(97,415)		(98,715)
Revenue recognized over time	(21,226)		(10,847)
Other	(5,002)		(9,539)
Total deferred tax liabilities	(150,159)		(149,211)
Net deferred tax liability	$	(68,986)	$	(88,979)

At September 30, 2023, the Company had foreign net operating loss carryforwards of $292,206. The majority of the Company's foreign net operating losses have no expiration period. Certain of these carryforwards are subject to limitations on use due to tax rules affecting acquired tax attributes, loss sharing between group members, and business continuation. Therefore, the Company has established tax-effected valuation allowances against these tax benefits in the amount of $22,506 at September 30, 2023. The Company has recorded deferred tax assets of $2,756 for state net operating loss carryforwards, which will be available to offset future income tax liabilities.

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

	2023		2022		2021
Balance, beginning of year	$	4,123	$	2,807	$	10,483
Increases for tax positions of prior years	100		1,393		—
Decreases for tax positions of prior years	—		(200)		(288)
Increases based on tax positions related to the current year	769		551		628
Decreases due to lapse of statute of limitation	(1,213)		(428)		(8,016)
Balance, end of year	$	3,779	$	4,123	$	2,807

The Company had unrecognized tax benefits of $3,779 at September 30, 2023, which would impact the annual effective tax rate.  It is reasonably possible that the amount of unrecognized tax benefits could decrease by approximately $2,648 in the next 12 months primarily due to the completion of audits and the expiration of the statute of limitation related to specific tax positions.

The Company classifies interest and penalties on tax uncertainties as a component of the provision for income taxes.  Total penalties and interest accrued were $730 and $876 at September 30, 2023 and 2022, 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, 2023, the tax years that remain subject to examination by major jurisdiction generally are:

United States - Federal	2020 and forward
United States - State	2019 and forward
Canada	2019 and forward
Germany	2019 and forward
United Kingdom	2022 and forward
Australia	2018 and forward
Singapore	2019 and forward