
10.	Income Taxes

The components of the income tax provision (benefit) are as follows (in thousands):


	Year Ended September 30,
	2011			2010			2009

Current:
Federal	$	16		$	(3,883	)	$	16
State		1,356			616			13
Foreign		858			521			614

		2,230			(2,746	)		643

Deferred:
Federal		—			—			—
State		—			—			—
Foreign		(276	)		—			—

	$	1,954		$	(2,746	)	$	643

The components of income (loss) before income taxes and equity in earnings (losses) of joint ventures are as follows (in thousands):


	Year Ended September 30,
	2011		2010		2009

Domestic	$	111,053	$	44,956	$	(213,687	)
Foreign		16,523		11,108		(13,230	)

	$	127,576	$	56,064	$	(226,917	)

The differences between the income tax provision and income taxes computed using the applicable U.S. statutory federal tax rate is as follows (in thousands):


	Year Ended September 30,
	2011			2010			2009

Income tax provision (benefit) computed at federal statutory rate	$	45,736		$	19,622		$	(79,420	)
State income taxes, net of federal benefit		1,848			699			(1,308	)
Net operating loss carryback refund		—			(3,899	)		—
Impairments		—			—			25,130
Foreign income taxed at different rates		(1,546	)		(1,650	)		(1,233	)
Dividends		(219	)		1,006			1,362
Change in deferred tax asset valuation allowance		(42,608	)		(18,423	)		55,211
Reduction in uncertain tax positions		(3,719	)		(609	)		(712	)
Other		2,462			508			1,613

Income tax provision (benefit)	$	1,954		$	(2,746	)	$	643

The Company does not provide for U.S. income taxes applicable to undistributed earnings of its foreign subsidiaries since these earnings are indefinitely reinvested.

The significant components of the net deferred tax assets and liabilities are as follows (in thousands):


	Year Ended September 30,
	2011			2010

Accruals and reserves not currently deductible	$	10,357		$	9,739
Federal, state and foreign tax credits		22,673			18,178
Depreciation		527			7,946
Amortization		—			4,406
Other assets		3,304			7,463
Net operating loss carryforwards		119,167			139,464
Inventory reserves and valuation		11,650			12,284

Deferred tax assets		167,678			199,480

Intangible amortization		7,378			—
Other liabilities		—			540

Deferred tax liabilities		7,378			540

Valuation allowance		162,208			198,940

Net deferred tax liabilities	$	(1,908	)	$	—

Management has considered the weight of all available evidence in determining whether a valuation allowance remains to be required against its deferred tax assets at September 30, 2011. Given the significant losses incurred in fiscal 2009 and the overall cumulative loss history combined with uncertainties in the global economic environment, the Company has determined that it is more likely than not that the net deferred tax assets will not be realized. The amount of the deferred tax asset considered realizable is subject to change based on future events, including generating taxable income in future periods. The Company continues to assess the need for the valuation allowance at each balance sheet date based on all available evidence. If the Company continues to generate profits in most jurisdictions, it is reasonably possible that there will be a significant reduction in the valuation allowance in the next twelve months. Reduction of the valuation allowance, in whole or in part, would result in a non-cash income tax benefit during the period of reduction.

As of September 30, 2011, the Company had federal, state and foreign net operating loss carryforwards from continuing and discontinued operations of approximately $433.0 million and federal and state research and development tax credit carryforwards of approximately $22.7 million available to reduce future tax liabilities, which expire at various dates through 2031. Included in the net operating loss carryforwards are stock option deductions of approximately $19.5 million. The benefits of these tax deductions approximate $7.0 million of which approximately $4.0 million will be credited to additional paid-in capital upon being realized or recognized.

As a result of ownership changes in previous years, the Company performed a study and determined there was an annual limitation on the federal net operating losses under section 382 of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”). However, the Company’s utilization of those losses did not exceed the annual limitation amount. Since any unused annual limitation may be carried over to later years, there is no future limitation under section 382 of the Internal Revenue Code on the utilization of the federal net operating loss carryforwards as of September 30, 2011. The Company’s U.S. net operating losses expire at various dates through 2029.

A reconciliation of the beginning and ending amount of the consolidated liability for unrecognized income tax benefits during the fiscal years ended September 30, 2011, 2010 and 2009 is as follows (in thousands):


	Unrecognized			Interest and
	Tax Benefit			Penalties			Total

Balance at October 1, 2008	$	10,463		$	1,452		$	11,915
Additions for tax positions of prior years		43			483			526
Additions for tax positions related to current year		228			5			233
Reduction for tax positions related to acquired entities in prior years, offset to goodwill		(41	)		—			(41	)
Reductions for tax positions of prior years		(133	)		(169	)		(302	)
Reductions from lapses in statutes of limitations		(223	)		—			(223	)
Reductions from settlements with taxing authorities		(426	)		(102	)		(528	)
Foreign exchange rate adjustment		(117	)		—			(117	)

Balance at September 30, 2009		9,794			1,669			11,463
Additions for tax positions of prior years		3,287			506			3,793
Additions for tax positions related to current year		468			—			468
Reductions for tax positions of prior years		(40	)		(19	)		(59	)
Reductions from lapses in statutes of limitations		(413	)		—			(413	)
Reductions from settlements with taxing authorities		(193	)		(4	)		(197	)
Foreign exchange rate adjustment		(87	)		—			(87	)

Balance at September 30, 2010		12,816			2,152			14,968
Additions for tax positions of prior years		184			447			631
Additions for tax positions related to current year		242			—			242
Reductions from lapses in statutes of limitations		(961	)		—			(961	)
Reductions from settlements with taxing authorities		(3,392	)		(610	)		(4,002	)
Foreign exchange rate adjustment		122			—			122

Balance at September 30, 2011	$	9,011		$	1,989		$	11,000

As of September 30, 2011, 2010 and 2009, the Company had approximately $9.8 million, $12.5 million and $11.5 million, respectively, of unrecognized tax benefits, which if recognized, would affect the effective tax rate. As of September 30, 2011 and 2010, the additional $1.2 million and $2.5 million of unrecognized tax benefits would not impact the Company’s effective rate since they are offset by valuation allowances. The Company recognizes interest related to unrecognized benefits as a component of tax expense, of which $0.4 million, $0.4 million and $0.3 million was recognized for the years ended September 30, 2011, 2010 and 2009, respectively.

The Company is subject to U.S. federal income tax and various state, local and international income taxes in various jurisdictions. The amount of income taxes paid is subject to the Company’s interpretation of applicable tax laws in the jurisdictions in which it files. In the normal course of business, the Company is subject to examination by taxing authorities throughout the world. The Company settled an income tax audit during the year that resulted in a $4.0 million reduction in gross unrecognized tax benefits, including $2.8 million that impacted the effective tax rate. The Company has income tax audits in progress in various global jurisdictions in which it operates. In the Company’s U.S. and international jurisdictions, the years that may be examined vary, with the earliest tax year being 2006. Based on the outcome of these examinations, or the expiration of statutes of limitations for specific jurisdictions, it is reasonably possible that the related unrecognized tax benefits could change from those recorded in the Company’s statement of financial position. The Company currently anticipates that it is reasonably possible that the unrecognized tax benefit will be reduced by approximately $3.6 million during the next twelve months primarily as the result of statutes of limitations expiring.