XML 30 R16.htm IDEA: XBRL DOCUMENT
v3.10.0.1

INCOME TAXES | 12 Months Ended
--- | ---
Jun. 30, 2018
INCOME TAXES |
INCOME TAXES | 9. INCOME TAXES The following is a geographical breakdown of income before the provision for income taxes (in thousands):
|  | 2016 |  | 2017 |  | 2018 |
Pre-tax income (loss): |  |  |  |  |  |  |  |  |  |
United States |  | $ | (34,732 | ) | $ | (39,686 | ) | $ | (40,335 | )
Foreign |  |  | 70,227 |  |  | 65,437 |  |  | 77,189 |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Total pre-tax income |  | $ | 35,495 |  | $ | 25,751 |  | $ | 36,854 |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Our provision (benefit) for income taxes consists of the following (in thousands):
|  | 2016 |  | 2017 |  | 2018 |
Current: |  |  |  |  |  |  |  |  |  |
Federal |  | $ | (488 | ) | $ | 788 |  | $ | 8,518 |
State |  |  | 108 |  |  | 493 |  |  | 707 |
Foreign |  |  | 22,942 |  |  | 27,616 |  |  | 30,643 |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Total current provision |  |  | 22,562 |  |  | 28,897 |  |  | 39,868 |
Deferred: |  |  |  |  |  |  |  |  |  |
Federal |  | $ | (11,865 | ) | $ | (16,314 | ) | $ | 35,957 |
State |  |  | 473 |  |  | (484 | ) |  | 338 |
Foreign |  |  | (1,832 | ) |  | (7,424 | ) |  | (10,182 | )
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Total deferred benefit |  |  | (13,224 | ) |  | (24,222 | ) |  | 26,113 |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Total provision |  | $ | 9,338 |  | $ | 4,675 |  | $ | 65,981 |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
As of June 30, 2017 and 2018, our liability for uncertain tax positions was $6.0 million and $4.4 million, respectively. The $4.4 million represents the amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate. We recognize potential interest and penalties related to income tax matters in income tax expense. As of June 30, 2018, we had accrued $0.1 million for interest and penalties. Our uncertain tax positions are related to tax years that remain subject to examination by the relevant tax authorities. These include fiscal years after 2014 for federal purposes, fiscal years after 2013 for state purposes and fiscal years after 2006 for various foreign jurisdictions. Facts and circumstances could arise that could cause us to reduce the liability for unrecognized tax benefits, including, but not limited to, settlement of income tax positions or expiration of statutes of limitation. Since the ultimate resolution of uncertain tax positions depends on many factors and assumptions, we are not able to estimate the range of potential changes in the liability for unrecognized tax benefits or the timing of such changes. A summary of activity of unrecognized tax benefits for fiscal 2017 and 2018 is as follows (in thousands).
Balance as July 1, 2016 |  | $ | 9,754 |
Additions on tax positions for the current year |  |  | 594 |
Additions on tax positions from prior years |  |  | 1,445 |
Reduction in tax positions from prior year |  |  | (598 | )
​ | ​ | ​ | ​ | ​
Balance at June 30, 2017 |  | $ | 11,195 |
Additions on tax positions for the current year |  |  | 294 |
Additions on tax positions from prior years |  |  | 14 |
Reduction in tax positions from prior year |  |  | (1,005 | )
​ | ​ | ​ | ​ | ​
Balance at June 30, 2018 |  | $ | 10,498 |
​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​
Recent Tax Legislation On December 22, 2017, comprehensive tax reform legislation known as the Tax Act was enacted into law, which significantly changes existing U.S. tax law and includes numerous provisions that affect our business, such as imposing a one-time transition tax on deemed repatriation of foreign income, reducing the U.S. federal statutory tax rate, adopting a territorial system, and modifying policies, credits and deductions for businesses. The Tax Act required us to incur a one-time transition tax on deferred foreign income not previously subject to U.S. income tax at a rate of 15.5% for foreign cash and certain other net current assets, and 8% on the remaining income. The Tax Act also reduced the U.S. federal statutory tax rate from 35% to 21% effective January 1, 2018. For fiscal year 2018, our blended U.S. federal statutory tax rate is 28.1%. This is the result of using the tax rate of 35% for the first and second quarter of fiscal year 2018 and the reduced tax rate of 21% for the third and fourth quarter of fiscal year 2018. The Tax Act includes a provision to tax global intangible low-taxed income ("GILTI") of foreign subsidiaries and a base erosion anti-abuse tax ("BEAT") measure that taxes certain payments between a U.S. corporation and its foreign subsidiaries. The GILTI and BEAT provisions of the Tax Act will be effective for us beginning July 1, 2018. The Tax Act was effective in the second quarter of fiscal year 2018. As of June 30, 2018, we have not completed our accounting for the estimated tax effects of the Tax Act. During fiscal year 2018, we recorded a provisional net charge of $55.3 million related to the Tax Act based on reasonable estimates for those tax effects. Due to the timing of the enactment and the complexity in applying the provisions of the Tax Act, the provisional net charge is subject to revisions as we continue to complete our analysis of the Tax Act, collect and prepare necessary data, and interpret any additional guidance issued by the U.S. Treasury Department, IRS, FASB, and other standard-setting and regulatory bodies. Adjustments may materially impact our provision for income taxes and effective tax rate in the period in which the adjustments are made. Our accounting for the estimated tax effects of the Tax Act will be completed during the measurement period, which is not expected to extend beyond one year from the enactment date. The impacts of our estimates are described further below. We recorded an estimated $35.5 million charge in fiscal year 2018 related to the transition tax, which was included in the provision for income taxes in our consolidated statements of operations and income taxes in our consolidated balance sheets. We have not yet completed our accounting for the transition tax as our analysis of deferred foreign income is not complete. To calculate the transition tax, we estimated our deferred foreign income for fiscal year 2018 because these tax returns are not complete or due. Fiscal year 2018 taxable income will be known once the respective tax returns are completed and filed. We recorded an estimated $6.6 million charge in fiscal year 2018 for the impact of changes in the tax rate, primarily on deferred tax assets and liabilities, which was included in provision for income taxes in our consolidated income statements and deferred income taxes in our consolidated balance sheets. We remeasured our deferred taxes to reflect the reduced rate that will apply when these deferred taxes are settled or realized in future periods. We recorded a charge of $13.2 million for foreign withholding taxes on the repatriation of foreign earnings. Included in the provision for income taxes in our consolidated income statements and income taxes in our consolidated balance sheets is $8.1 million current tax liability for dividends declared in the tax year ending June 30, 2018 and $5.3 million deferred tax liability for withholding taxes on unrepatriated foreign earnings. Prior to the Tax Act, we had not provided for U.S. tax or withholding tax on foreign earnings that were not subject to U.S. tax. Our intention prior to the Tax Act was to permanently reinvest those foreign earnings, thereby indefinitely postponing their remittance to the U.S. After the enactment of the Tax Act, we have reevaluated our intention concerning repatriation of foreign earnings. Our intent after the Tax Act is to repatriate foreign earnings through December 31, 2017 as these earnings are taxed in the U.S, under the transition tax. The Tax Act subjects a U.S. corporation to tax on its GILTI. Due to the complexity of the new GILTI tax rules, we are continuing to evaluate this provision of the Tax Act and the application of GAAP. Under GAAP, we can make an accounting policy election to either treat taxes due on the GILTI inclusion as a current period expense or factor such amounts into our measurement of deferred taxes. Due to the complexity in applying the new GILTI provisions, we have not yet completed the impact of GILTI on our corresponding deferred tax assets and liabilities. On August 1, 2018, the IRS published on its website proposed regulations relating to the transition tax imposed by the Tax Act. Once published in the Federal Register, the proposed regulations are subject to a 60-day comment period. Final regulations are expected to be issued after consideration of comments. We are currently evaluating the impact of the proposed regulations. Deferred income tax assets (liabilities) consisted of the following (in thousands):
|  | June 30, |
|  | 2017 |  | 2018 |
Deferred income tax assets: |  |  |  |  |  |  |
Tax credit carryforwards |  | $ | 19,005 |  | $ | 17,591 |
Net operating loss carryforwards |  |  | 37,689 |  |  | 10,473 |
Customer advances |  |  | 4,028 |  |  | 2,360 |
Allowance for doubtful accounts |  |  | 5,839 |  |  | 4,336 |
Inventory reserve |  |  | 15,933 |  |  | 11,735 |
Inventory capitalization |  |  | 3,977 |  |  | 3,043 |
Accrued liabilities |  |  | 11,511 |  |  | 9,174 |
Stock and deferred compensation |  |  | 24,211 |  |  | 15,779 |
Other assets |  |  | 3,001 |  |  | 3,641 |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Total deferred income tax assets |  |  | 125,194 |  |  | 78,132 |
Valuation allowance |  |  | (19,997 | ) |  | (27,007 | )
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Net deferred income tax assets |  |  | 105,197 |  |  | 51,125 |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Deferred income tax liabilities: |  |  |  |  |  |  |
Depreciation |  |  | (21,228 | ) |  | (6,322 | )
State income taxes |  |  | (655 | ) |  | (130 | )
Amortization of intangible assets |  |  | (48,966 | ) |  | (31,993 | )
Withholding tax on unrepatriated foreign earnings |  |  | — |  |  | (5,114 | )
State transition tax |  |  | — |  |  | (1,754 | )
Convertible debt |  |  | (17,019 | ) |  | (9,198 | )
Prepaid expenses |  |  | (2,983 | ) |  | (8,680 | )
Other liabilities |  |  | (130 | ) |  | (329 | )
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Total deferred income tax liabilities |  |  | (90,981 | ) |  | (63,520 | )
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Net deferred tax asset (liability) |  | $ | 14,216 |  | $ | (12,395 | )
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
The components of the net deferred income tax asset are classified in the consolidated balance sheets as follows (in thousands):
|  | 2017 |  | 2018 |
Long term deferred income tax asset, included in other assets |  |  | 34,897 |  |  | 2,607 |
Long term deferred income tax liability |  |  | (20,681 | ) |  | (15,002 | )
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Net deferred income tax asset (liability) |  | $ | 14,216 |  | $ | (12,395 | )
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
The components of current taxes receivable and payable and prepaid taxes are classified in the consolidated balance sheets as follows (in thousands):
|  | 2017 |  | 2018 |
Current taxes receivable and prepaid taxes, included in prepaid expenses and other current assets |  |  | 12,100 |  |  | 5,172 |
Current taxes payable, included in other accrued expenses and current liabilities |  |  | (6,454 | ) |  | (8,314 | )
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Net tax receivable (payable) |  | $ | 5,646 |  | $ | (3,142 | )
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
As of June 30, 2018, we had state and foreign net operating loss carryforwards of approximately $54.3 million and $29.2 million, respectively. As of June 30, 2018, we had federal and state research and development tax credit carryforwards of approximately $13.4 million and $5.4 million, respectively. As of June 30, 2018, we had foreign tax credit carryforwards of $4.9 million. Our credit carryforwards will begin to expire in the tax year ending June 30, 2026. We have established valuation allowances that relate to the net operating loss of certain subsidiaries, capital losses, foreign tax credits, and R&D credits. During the year ended June 30, 2018, we recorded a net aggregated increase of $7.0 million to these valuation allowances. We review the adequacy of individual valuation allowances and release such allowances when it is determined that it is more likely than not that the related benefits will be realized. We recognized all excess tax benefits and tax deficiencies as income tax expense or benefit in the current year. An income tax benefit of approximately $3.8 million and $3.7 million was recognized in fiscal 2017 and 2018, respectively. In addition, in fiscal 2017, we recognized $3.8 million of deferred tax assets and, accordingly, increased retained earnings by this same amount. The consolidated effective income tax rate differs from the federal statutory income tax rate due primarily to the following:
|  | June 30, |
|  | 2016 |  | 2017 |  | 2018 |
Provision for income taxes at federal statutory rate |  |  | 35.0 | % |  | 35.0 | % |  | 28.1 | %
Research and development tax credits |  |  | (1.8 | ) |  | (2.5 | ) |  | (1.4 | )
Foreign income subject to tax at other than federal statutory rate |  |  | (8.9 | ) |  | (20.0 | ) |  | (4.8 | )
Stock compensation excess tax benefit |  |  | — |  |  | (9.5 | ) |  | (8.8 | )
Change in valuation allowance |  |  | 5.8 |  |  | 10.4 |  |  | 19.6 |
Unrecognized tax benefit |  |  | (5.0 | ) |  | (1.4 | ) |  | (6.8 | )
Meals and entertainment |  |  | 0.9 |  |  | 1.8 |  |  | 1.5 |
Tax on foreign currency gains and losses |  |  | 2.3 |  |  | 9.1 |  |  | (0.1 | )
Transaction costs |  |  | 2.3 |  |  | 1.5 |  |  | 0.1 |
State tax expense |  |  | (0.3 | ) |  | (1.5 | ) |  | (1.3 | )
U.S. tax on foreign earnings |  |  | 4.5 |  |  | 0.4 |  |  | 2.5 |
Fringe benefits |  |  | 0.9 |  |  | 1.5 |  |  | 1.1 |
Non-taxable gain from sale of business |  |  | — |  |  | (3.6 | ) |  | — |
Non-taxable earnings from acquisitions |  |  | (7.9 | ) |  | (1.8 | ) |  | (1.1 | )
Mexico imputed income or expense |  |  | (0.4 | ) |  | (2.0 | ) |  | (3.5 | )
Remeasurement of U.S. net deferred tax assets from 35% to 21% |  |  | — |  |  | — |  |  | 16.0 |
Deemed repatriation of non-U.S. earnings |  |  | — |  |  | — |  |  | 102.2 |
Withholding tax on deemed repatriation foreign earnings |  |  | — |  |  | — |  |  | 35.8 |
Other |  |  | (1.1 | ) |  | 0.7 |  |  | (0.1 | )
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Effective income tax rate |  |  | 26.3 | % |  | 18.1 | % |  | 179.0 | %
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
The provision for income taxes consists of provisions for federal, state, and foreign income taxes. We operate in an international environment with significant operations in various locations outside the U.S. Accordingly, the consolidated income tax rate is a composite rate reflecting the earnings in the various locations and the applicable rates.

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration