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Note 10 - Income Taxes | 12 Months Ended
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Jun. 30, 2017
Notes to Financial Statements |
Income Tax Disclosure [Text Block] | Note 10. Income Taxes: The provisions for income taxes consist of the following (in thousands):
|  | Year Ended June 30, |
|  | 2017 |  |  | 2016 |  |  | 2015 |
Earnings before income taxes consist of: |  |  |  |  |  |  |  |  |  |  |  |
Domestic |  | $ | 81,721 |  |  | $ | 120,154 |  |  | $ | 121,765 |
Foreign |  |  | 30,240 |  |  |  | 27,327 |  |  |  | 32,397 |
|  | $ | 111,961 |  |  | $ | 147,481 |  |  | $ | 154,162 |
Taxes on income consist of: |  |  |  |  |  |  |  |  |  |  |  |
Currently payable: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 28,462 |  |  | $ | 34,805 |  |  | $ | 28,220 |
State |  |  | 4,051 |  |  |  | 2,958 |  |  |  | 6,165 |
Foreign |  |  | 8,212 |  |  |  | 7,579 |  |  |  | 10,704 |
Net deferred: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | (901 | ) |  |  | 1,906 |  |  |  | 4,401 |
State |  |  | (968 | ) |  |  | (428 | ) |  |  | 292 |
Foreign |  |  | (2,981 | ) |  |  | (3,815 | ) |  |  | (3,355 | )
Total tax expense |  | $ | 35,875 |  |  | $ | 43,005 |  |  | $ | 46,427 |
The following is a reconciliation of the federal tax calculated at the statutory rate of 35% to the actual income taxes provided (in thousands):
|  | Year Ended June 30, |
|  | 2017 |  |  | 2016 |  |  | 2015 |
Income tax expense at federal statutory rate |  | $ | 39,186 |  |  | $ | 51,618 |  |  | $ | 53,957 |
State income taxes, net of federal benefit |  |  | 2,158 |  |  |  | 1,852 |  |  |  | 4,762 |
Qualified production activity deduction |  |  | (3,820 | ) |  |  | (3,932 | ) |  |  | (3,140 | )
Non-taxable gain on investment |  |  | - |  |  |  | - |  |  |  | (2,905 | )
Research and development tax credit |  |  | (1,519 | ) |  |  | (1,550 | ) |  |  | (912 | )
Contingent consideration adjustment |  |  | 4,541 |  |  |  | - |  |  |  | - |
Foreign tax rate differences |  |  | (5,143 | ) |  |  | (4,639 | ) |  |  | (4,059 | )
Other, net |  |  | 472 |  |  |  | (344 | ) |  |  | (1,276 | )
Income tax expense |  | $ | 35,875 |  |  | $ | 43,005 |  |  | $ | 46,427 |
The effective rate for the year ended June 30, 2017 increased by 2.8% compared to the prior year. The increase was primarily due to unfavorable discrete events in fiscal 2017 related to the revaluation of contingent consideration which is not a tax deductible expense. The Company recognized net expense related to discrete tax items of $3.8 million in fiscal 2017, including $4.5 million in expense related to the revaluation of contingent consideration which is not a tax deductible expense. In the year ended June 30, 2015, as a result of the recent acquisitions, the rate reflects an increase for state tax expense as well as a resulting provision to return true-up from fiscal 2014. The increase is offset by the non-taxable gain which was a result of purchasing the remaining interest in CyVek. In addition the Company’s R&D Europe subsidiary declared and paid a dividend of £46.6 million which resulted in a tax benefit of approximately $1.7 million. The effective rate for the year ended June 30, 2016 decreased by 0.9% compared to the prior year. The rate decrease was primarily driven by additional R&D credit benefit due to the retroactive reinstatement of the credit under the Protecting Americans from Tax Hikes Act of 2015, an increase in the foreign rate benefit due to the reduction in the UK income tax rate and a reduction in state tax related to the prior year. These decreases were partially offset by less of a foreign tax credit benefit than in the prior year and the non-recurrence of a non-taxable gain. Temporary differences comprising deferred taxes on the Consolidated Balance Sheets are as follows (in thousands):
|  | June 30 |
|  | 2017 |  |  | 2016 |
Inventory |  | $ | 9,415 |  |  | $ | 9,768 |
Net operating loss carryovers |  |  | 24,617 |  |  |  | 26,556 |
Tax credit carryovers |  |  | 6,386 |  |  |  | 3,197 |
Excess tax basis in equity investments |  |  | 4,381 |  |  |  | 4,544 |
Deferred compensation |  |  | 9,052 |  |  |  | 5,912 |
Net unrealized loss on available for sale investment |  |  | - |  |  |  | 329 |
Other |  |  | 9,937 |  |  |  | 7,421 |
Valuation allowance |  |  | (3,341 | ) |  |  | (7,201 | )
Net deferred tax assets |  |  | 60,447 |  |  |  | 50,526 |
Net unrealized gain on available-for-sale investments |  |  | (11,153 | ) |  |  | - |
Intangible asset amortization |  |  | (162,460 | ) |  |  | (107,200 | )
Depreciation |  |  | (5,628 | ) |  |  | (5,132 | )
Other |  |  | (1,802 | ) |  |  | (1,031 | )
Deferred tax liabilities |  |  | (181,043 | ) |  |  | (113,363 | )
Net deferred tax liabilities |  | $ | (120,596 | ) |  | $ | (62,837 | )
A deferred tax valuation allowance is required when it is more likely than not that all or a portion of deferred tax assets will not be realized. The valuation allowance as of June 30, 2017 was $3.3 million, a decrease of $3.9 million from the prior year. The decrease was driven by a decrease in the valuation allowance for the Company’s equity investments. The valuation allowance as of June 30, 2016 was $7.2 million , an increase of $4.7 million over prior year. This increase included a $5.0 million change related to an equity investment and was recorded through other comprehensive income and was partially offset by a decrease of $0.3 million primarily related to the expiration of state net operating loss carryforwards and research and development credits. As of June 30, 2017, approximately $2.7 million of the valuation allowance relates to certain foreign and state tax net operating loss and state credit carryforwards that existed at the date the Company acquired ACD, Novus, ProteinSimple and CyVek as well as immaterial amounts generated after the acquisitions. The remainder of the valuation allowance was for certain state tax credit carryovers generated or acquired in the current or prior fiscal years. Approximately $2.0 million of the valuation allowance as of June 30, 2016 was for certain foreign and state tax net operating loss and state credit carryforwards that existed at the date the Company acquired Novus, ProteinSimple, and CyVek or have been generated after the acquisitions. The remainder of the valuation allowance was for certain state tax credit carryovers generated or acquired in current or prior fiscal years. The Company believes it is more likely than not that these tax carryovers will not be realized. As of June 30, 2017, the Company has federal operating loss carryforwards of approximately $53.4 million and state operating loss carryforwards of $84.0 million from its acquisitions of ACD, ProteinSimple and CyVek, which are not limited under IRC Section 382. As of June 30, 2017, the Company has foreign net operating loss carryforwards of $4.1 million. The net operating loss carryforwards expire between fiscal 2018 and 2035. The Company has a deferred tax asset of $21.2 million, net of the valuation allowance discussed above, related to the net operating loss carryovers. As of June 30, 2017, the Company has federal and state tax credit carryforwards of $3.7 million and $2.7 million, respectively. The federal tax credit carryforwards expire between 2018 and 2035. A majority of the state credit carryforwards have no expiry date. The Company has a deferred tax asset of $5.7 million, net of the valuation allowance discussed above, related to the tax credit carryovers. The Company has not recognized a deferred tax liability for unremitted earnings of approximately $68.9 million from its foreign operations because its subsidiaries have invested or will invest the undistributed earnings indefinitely, or the earnings will be remitted in a tax-neutral transaction. Generally, such amounts become subject to United States taxation upon the remittance of dividends and under other circumstances. It is not practical to estimate the amount of the deferred income tax liabilities related to investments in these foreign subsidiaries. The Company's unrecognized tax benefits at June 30, 2017, 2016 and 2015, including accrued interest and penalties, were not material. The Company does not believe it is reasonably possible that the total amounts of unrecognized tax benefits will significantly increase in the next twelve months. The Company files income tax returns in the U.S federal and certain state tax jurisdictions, and several jurisdictions outside the U.S. The Company's federal returns are subject to tax assessment for 2014 and subsequent years. State and foreign income tax returns are generally subject to examination for a period of three to five years after filing of the respective return. The state impact of any federal changes remains subject to examination by various states for a period of up to one year after formal notification to the states.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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