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INCOME TAXES

12 Months Ended

Jun. 30, 2024

INCOME TAXES

INCOME TAXES

10.INCOME TAXES

The following is a geographical breakdown of income before the provision for income taxes (in thousands):

​

​	​	​	​	​	​	​	​	​	​
​		2022			2023			2024
Pre-tax income:	​	​	​	​	​	​	​	​	​
United States	​	$	51,295	​	$	7,114	​	$	41,330
Foreign	​		88,865	​	​	108,124	​	​	119,884
Total pre-tax income	​	$	140,160	​	$	115,238	​	$	161,214

​

Our provision (benefit) for income taxes consists of the following (in thousands):

​

​	​	​	​	​	​	​	​	​	​
​		2022			2023			2024
Current:	​	​	​	​	​	​	​	​	​
Federal	​	$	6,216	​	$	6,860	​	$	22,229
State	​		1,964	​	​	861	​	​	2,122
Foreign	​		13,113	​	​	19,717	​	​	22,842
Total current provision	​		21,293	​	​	27,438	​	​	47,193
Deferred:	​	​	​	​	​	​	​	​	​
Federal	​	$	3,915	​	$	(2,547)	​	$	(13,375)
State	​		133	​	​	(678)	​	​	(594)
Foreign	​		(528)	​	​	(753)	​	​	(164)
Total deferred provision (benefit)	​		3,520	​	​	(3,978)	​	​	(14,133)
Total provision	​	$	24,813	​	$	23,460	​	$	33,060

​

As of June 30, 2023 and 2024, our liability for uncertain tax positions was $12.0 million and $18.1 million, respectively. The amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate was $18.1 million as of June 30, 2024.

We recognize potential interest and penalties related to income tax matters in income tax expense. As of June 30, 2024, we have accrued $3.5 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 2018 for federal purposes, fiscal years after 2018 for state purposes and fiscal years after 2016 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 2023 and 2024 is as follows (in thousands).

​

​	​	​	​
Balance at June 30, 2022		$	13,577
Additions on tax positions for the current year	​		3,225
Additions on tax positions from prior years	​		2,582
Reduction in tax positions from prior year	​		(4,406)
Balance at June 30, 2023	​	$	14,978
Additions on tax positions for the current year	​		2,800
Additions on tax positions from prior years	​		1,002
Reduction in tax positions from prior year	​		(866)
Balance at June 30, 2024	​	$	17,914

​

Deferred income tax assets (liabilities) consisted of the following (in thousands):

​

​	​	​	​	​	​	​
​	​	June 30,
​		2023			2024
Deferred income tax assets:	​	​	​	​	​	​
Tax credit carryforwards	​	$	5,934	​	$	5,960
Net operating loss carryforwards	​		3,678	​	​	3,311
Customer advances	​		3,443	​	​	10,008
Allowance for doubtful accounts	​		2,994	​	​	3,615
Inventory reserve	​		11,026	​	​	11,754
Inventory capitalization	​		481	​	​	424
Accrued liabilities	​		2,956	​	​	2,877
Operating lease liabilities	​	​	8,043	​	​	7,732
Stock and deferred compensation	​		12,224	​	​	12,624
Other assets	​		1,164	​	​	721
Total deferred income tax assets	​		51,943	​	​	59,026
Valuation allowance	​		(8,433)	​	​	(9,365)
Net deferred income tax assets	​		43,510	​	​	49,661
Deferred income tax liabilities:	​	​	​	​	​	​
Depreciation	​		(5,860)	​	​	(5,543)
Amortization of intangible assets	​		(21,617)	​	​	(12,096)
Withholding tax on unrepatriated foreign earnings	​	​	(6,851)	​	​	(7,834)
Operating lease ROU assets	​	​	(7,931)	​	​	(7,223)
State transition tax	​	​	(1,754)	​	​	(1,754)
Other liabilities	​		(1,824)	​	​	(4,814)
Total deferred income tax liabilities	​		(45,837)	​	​	(39,264)
Net deferred income tax liability	​	$	(2,327)	​	$	10,397

​

The components of the net deferred income tax liability are classified in the consolidated balance sheets as follows (in thousands):

​

​	​	​	​	​	​	​
​	​	June 30,
​		2023			2024
Long term deferred income tax asset, included in other assets	​	$	4,244	​	$	13,684
Long term deferred income tax liability	​		(6,571)	​	​	(3,287)
Net deferred income tax liability	​	$	(2,327)	​	$	10,397

​

The components of current taxes receivable and payable and prepaid taxes are classified in the consolidated balance sheets as follows (in thousands):

​

​	​	​	​	​	​	​
​		June 30,
​	​	2023			2024
Current taxes receivable and prepaid taxes, included in prepaid expenses and other current assets	​	$	7,216	​	$	13,347
Current taxes payable, included in other accrued expenses and current liabilities	​		(13,692)	​	​	(17,320)
Net tax receivable (payable)	​	$	(6,476)	​	$	(3,973)

​

As of June 30, 2024, we had federal, state and foreign net operating losses carryforwards of approximately $0.8 million, $18.9 million and $7.4 million, respectively. Our net operating loss carryforwards will begin to expire in the tax year ending June 30, 2026. As of June 30, 2024, we had federal and state tax credit carryforwards of approximately $0.5 million and $7.7 million, respectively. Our credit carryforwards will begin to expire in the tax year ending June 30, 2031.

We have established valuation allowances that relate to the net operating losses of certain subsidiaries, capital losses, and tax credits. During the year ended June 30, 2024, we recorded a net aggregated increase of $0.9 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 $0.6 and $0.8 million was recognized in fiscal 2023 and 2024, respectively.

The consolidated effective income tax rate differs from the federal statutory income tax rate due primarily to the following:

​

​	​	​	​	​	​	​	​
​	​	June 30,
​		2022		2023		2024
Provision for income taxes at federal statutory rate	​	21.0	%	21.0	%	21	%
Research and development tax credits	​	(1.3)	​	(1.5)	​	(1.6)	​
Foreign income subject to tax at other than federal statutory rate	​	0.2	​	0.2	​	1.7	​
Stock compensation	​	(1.2)	​	(0.4)	​	(0.5)	​
Officers’ compensation	​	4.3	​	5.5	​	4.1	​
Change in valuation allowance	​	(4.0)	​	(0.5)	​	1.0	​
Unrecognized tax expense (benefit)	​	(1.4)	​	0.3	​	3.7	​
Tax on foreign currency gains and losses	​	—	​	(0.6)	​	0.1	​
State tax expense	​	1.0	​	0.3	​	0.6	​
U.S. tax on foreign earnings	​	0.9	​	1.4	​	(0.8)	​
Changes in prior year estimates	​	(0.6)	​	(1.1)	​	(2.4)	​
Global intangible low-taxed income, net of foreign tax credits	​	0.3	​	0.8	​	0.8	​
Foreign Derived Intangible Income Benefit	​	(1.3)	​	(1.8)	​	(4.3)	​
Non-taxable earnings from acquisitions	​	(0.6)	​	(2.1)	​	(0.8)	​
Patent box benefit	​	(0.3)	​	(1.9)	​	(3.2)	​
Withholding tax on foreign earnings	​	—	​	—	​	0.6	​
Other	​	0.7	​	0.8	​	0.5	​
Effective income tax rate	​	17.7	%	20.4	%	20.5	%

​

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.

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The entire disclosure for income tax.

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