Maximus, Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Income taxes (Tables)

Income taxes (Tables)

12 Months Ended

Sep. 30, 2013

Components of income from continuing operations before income taxes

The Company's components of income from continuing operations before income taxes and the corresponding provision for income taxes is as follows (in thousands):

	Year ended September 30,

	2013		2012		2011
Income from continuing operations before income taxes:
United States	$	140,371	$	93,418	$	66,842
Foreign		48,688		38,333		59,054

Income from continuing operations before income taxes	$	189,059	$	131,751	$	125,896

	Year ended September 30,

	2013			2012			2011
Current provision:
Federal	$	43,460		$	36,348		$	20,090
State and local		11,257			9,006			4,484
Foreign		14,821			13,572			17,422

Total current provision		69,538			58,926			41,996

Deferred tax expense (benefit):
Federal	$	2,741		$	(1,272	)	$	1,572
State and local		851			(471	)		397
Foreign		(1,196	)		(1,531	)		(211	)

Total deferred tax expense (benefit)		2,396			(3,274	)		1,758

Income tax expense	$	71,934		$	55,652		$	43,754

Provision for income taxes

The provision for income taxes differs from that which would have resulted from the use of the federal statutory income tax rate as follows (in thousands):

	Year ended September 30,

	2013			2012			2011
Federal income tax provision at statutory rate of 35%	$	66,171		$	46,113		$	44,063
State income taxes, net of federal benefit		8,183			5,558			3,175
Foreign taxation		(3,499	)		(1,950	)		(3,644	)
Permanent items		708			2,808			314
True up to prior year		—			2,715			—
Valuation allowances on net operating loss carryforwards		—			305			(16	)
Other		371			103			(138	)

Income tax expense	$	71,934		$	55,652		$	43,754

Significant items comprising the Company's deferred tax assets and liabilities

The significant items comprising the Company's deferred tax assets and liabilities as of September 30, 2013 and 2012 are as follows (in thousands):

	As of September 30,

	2013			2012
Deferred tax assets—current:
Costs deductible in future periods	$	21,186		$	11,126
Deferred revenue		10,930			14,543
Net operating loss carryforwards		—			811
Other		544			—

Total deferred tax assets—current		32,660			26,480

Deferred tax liabilities—current:
Accounts receivable—unbilled		6,217			3,932
Other		—			341

Total deferred tax liabilities—current:		6,217			4,273

Net deferred tax asset—current	$	26,443		$	22,207

Deferred tax assets—non-current:
Net operating loss carryforwards	$	4,080		$	5,728
Valuation allowance on net operating loss carryforwards		(968	)		(1,313	)

Net operating loss carryforwards net of valuation reserve		3,112			4,415
Deferred revenue		10,340			6,737
Stock compensation		4,601			4,176
Costs deductible in future periods		1,528			1,021
Other		5,360			3,055

Total deferred tax assets—non-current		24,941			19,404

Deferred tax liabilities—non-current
Amortization of goodwill and intangible assets		19,383			14,218
Capitalized software		9,045			4,701
Property and equipment		8,687			8,535
Deferred contract costs		2,059			452
Other		947			513

Total deferred tax liability—non-current	$	40,121		$	28,419

Net deferred tax liability—non-current	$	15,180		$	9,015

Components of noncurrent deferred tax assets (liabilities)

Due to deferred tax assets and liabilities in different tax jurisdictions, the net long-term assets and liabilities are reflected on the accompanying consolidated balance sheet as follows (in thousands):

	As of September 30,

	2013		2012
Long-term assets	$	1,179	$	1,369
Long-term liabilities		16,359		10,384

Net deferred tax liability—non-current	$	15,180	$	9,015

Schedule of reconciliation of the beginning and ending amount of gross unrecognized tax benefits

The reconciliation of the beginning and ending amount of gross unrecognized tax benefits was as follows (in thousands):

	Year Ended September 30

	2013			2012			2011
Balance at beginning of year	$	1,059		$	1,172		$	1,553
Lapse of statute of limitation		(230	)		(113	)		(381	)
Reductions for tax positions of prior years		(17	)		—			—

Balance at end of year	$	812		$	1,059		$	1,172

- Definition

Tabular disclosure of tax positions taken in the tax returns filed or to be filed for which it is more likely than not that the tax position will not be sustained upon examination by taxing authorities (i.e., uncertain tax positions) and other types of income tax contingencies, including: (1) the policy on classification of interest and penalties; (2) a tabular reconciliation of the total amounts of unrecognized tax benefits at the beginning and end of the period; the total amount(s) of: (3) unrecognized tax benefits that, if recognized, would affect the effective tax rate, and (4) interest and penalties recognized in each of the income statement and balance sheet; (5) for positions for which it is reasonably possible that the total amounts unrecognized will significantly change within 12 months of the reporting date the: (i) nature of the uncertainty, (ii) nature of the event that could occur that would cause the change, and (iii) an estimate of the range of the reasonably possible change or a statement that an estimate of the range cannot be made; and (6) a description of tax years that remain subject to examination by major tax jurisdictions.

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