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, 2014

Components of income from continuing operations before income taxes

The components of income before income taxes and the corresponding provision for income taxes are as follows (in thousands):

	Year ended September 30,
	2014		2013		2012
Income before income taxes:
United States	$	180,820	$	139,716	$	93,475
Foreign		46,549		49,306		38,031

Income before income taxes	$	227,369	$	189,022	$	131,506

	Year ended September 30,
	2014		2013			2012
Current provision:
Federal		55,656	$	43,199		$	36,371
State and local		12,003		11,257			9,006
Foreign		11,416		14,821			13,572

Total current provision		79,075		69,277			58,949

Deferred tax expense (benefit):
Federal		1,750		2,741			(1,272	)
State and local		181		851			(471	)
Foreign		967		(1,196	)		(1,531	)

Total deferred tax expense (benefit)		2,898		2,396			(3,274	)

Provision for income taxes	$	81,973	$	71,673		$	55,675

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,
	2014			2013			2012
Federal income tax provision at statutory rate of 35%	$	79,579		$	66,158		$	46,027
State income taxes, net of federal benefit		7,920			8,151			5,561
Foreign taxation		(3,909	)		(3,715	)		(1,844	)
Permanent items		1,286			708			2,808
Tax credits		(1,623	)		(217	)		(109	)
True up to prior year		—			—			2,715
Valuation allowances on net operating loss carryforwards		(962	)		—			305
Other		(318	)		588			212

Income tax expense	$	81,973		$	71,673		$	55,675

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

The significant items comprising our deferred tax assets and liabilities as of September 30, 2014 and 2013 are as follows (in thousands):

	As of September 30,
	2014		2013
Deferred tax assets—current:
Deferred revenue	$	19,815	$	10,930
Costs deductible in future periods		14,944		21,186
Net operating loss carryforwards		207		—
Other		—		544

Total deferred tax assets—current		34,966		32,660

Deferred tax liabilities—current:
Accounts receivable—unbilled		6,858		6,217
Net deferred tax asset—current	$	28,108	$	26,443


Deferred tax assets—non-current:
Net operating loss carryforwards	$	2,355	$	4,080
Valuation allowance on net operating loss carryforwards		—		(968	)

Net operating loss carryforwards net of valuation reserve		2,355		3,112
Deferred revenue		7,089		10,340
Stock compensation		4,100		4,601
Costs deductible in future periods		1,662		1,528
Other		7,828		5,360

Total deferred tax assets—non-current		23,034		24,941

Deferred tax liabilities—non-current
Amortization of goodwill and intangible assets		20,261		19,383
Capitalized software		12,057		9,045
Property and equipment		10,045		10,127
Deferred contract costs		1,762		2,059
Other		292		686

Total deferred tax liability—non-current	$	44,417	$	41,300

Net deferred tax liability—non-current	$	21,383	$	16,359

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,
	2014		2013			2012
Balance at beginning of year	$	812	$	1,059		$	1,172
Lapse of statute of limitation		—		(230	)		(113	)
Reductions for tax positions of prior years		—		(17	)		—

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

- 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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