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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] | 10. Income Taxes The components of income from continuing operations before income taxes are as follows (in thousands):
|  | 2017 |  |  | 2016 |  |  | 2015 |
U.S. Operations |  | $ | 16,257 |  |  | $ | 23,996 |  |  | $ | 33,161 |
Non-U.S. Operations |  |  | 45,675 |  |  |  | 44,529 |  |  |  | 42,956 |
Total |  | $ | 61,932 |  |  | $ | 68,525 |  |  | $ | 76,117 |
The Company utilizes the asset and liability method of accounting for income taxes. Deferred income taxes are determined based on the estimated future tax effects of differences between the financial and tax bases of assets and liabilities given the provisions of the enacted tax laws. The components of the provision for income taxes on continuing operations (in thousands) were as shown below:
|  | 2017 |  |  | 2016 |  |  | 2015 |
Current: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 2,229 |  |  | $ | 11,014 |  |  | $ | 9,195 |
State |  |  | 230 |  |  |  | 523 |  |  |  | 556 |
Non-U.S. |  |  | 13,017 |  |  |  | 11,514 |  |  |  | 11,372 |
Total Current |  |  | 15,476 |  |  |  | 23,051 |  |  |  | 21,123 |
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 2,141 |  |  | $ | (5,214 | ) |  | $ | 556 |
State |  |  | (290 | ) |  |  | (1,060 | ) |  |  | (495 | )
Non-U.S. |  |  | (1,972 | ) |  |  | (482 | ) |  |  | (310 | )
Total Deferred |  |  | (121 | ) |  |  | (6,756 | ) |  |  | (249 | )
Total |  | $ | 15,355 |  |  | $ | 16,295 |  |  | $ | 20,874 |
A reconciliation from the U.S. Federal income tax rate on continuing operations to the total tax provision is as follows (in thousands):
|  | 2017 |  |  | 2016 |  |  | 2015 |
Provision at statutory tax rate |  |  | 35.0 | % |  |  | 35.0 | % |  |  | 35.0 | %
State taxes |  |  | (0.1% | ) |  |  | (0.5% | ) |  |  | 0.1 | %
Impact of foreign operations |  |  | (8.0% | ) |  |  | (6.7% | ) |  |  | (5.0% | )
Federal tax credits |  |  | (1.3% | ) |  |  | (1.8% | ) |  |  | (1.2% | )
Life insurance proceeds |  |  | 0.0 | % |  |  | 0.0 | % |  |  | 0.0 | %
Contributions, net |  |  | 0.0 | % |  |  | (1.3% | ) |  |  | 0.0 | %
Other |  |  | (0.8% | ) |  |  | (0.9% | ) |  |  | (1.5% | )
Effective income tax provision |  |  | 24.8 | % |  |  | 23.8 | % |  |  | 27.4 | %
Changes in the effective tax rates from period to period may be significant as they depend on many factors including, but not limited to, size of the Company’s income or loss and any one -time activities occurring during the period. The Company's income tax provision from continuing operations for the fiscal year ended June 30, 2017 was impacted by the following items: (i) a benefit of $0.6 million related to the R&D tax credit and (ii) a benefit of $5.3 million due to the mix of income earned in jurisdictions with beneficial tax rates. The Company's income tax provision from continuing operations for the fiscal year ended June 30, 2016 was impacted by the following items: (i) a net benefit of $0.9 million related to a bargain-sale of idle property to a charitable organization, and (ii) a benefit of $0.7 million related to the R&D tax credit, and (iii) a benefit of $4.9 million due to the mix of income earned in jurisdictions with beneficial tax rates. The Company's income tax provision from continuing operations for the fiscal year ended June 30, 2015 was impacted by the following items: (i) a benefit of $0.5 million related to the R&D tax credit that expired during the fiscal year on December 31 , and (ii) a benefit of $4.0 million due to the mix of income earned in jurisdictions with beneficial tax rates. Significant components of the Company’s deferred income taxes are as follows (in thousands):
|  | 2017 |  |  | 2016 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Depreciation and amortization |  | $ | (55,041 | ) |  | $ | (27,437 | )
Total deferred tax liability |  | $ | (55,041 | ) |  | $ | (27,437 | )
Deferred tax assets: |  |  |  |  |  |  |  |
Accrued compensation |  | $ | 4,127 |  |  | $ | 3,707 |
Accrued expenses and reserves |  |  | 6,886 |  |  |  | 6,154 |
Pension |  |  | 26,309 |  |  |  | 29,730 |
Inventory |  |  | 2,677 |  |  |  | 2,548 |
Other |  |  | 939 |  |  |  | 1,432 |
Net operating loss and credit carry forwards |  |  | 6,773 |  |  |  | 5,948 |
Total deferred tax asset |  | $ | 47,711 |  |  | $ | 49,519 |
Less: Valuation allowance |  |  | (1,530 | ) |  |  | (649 | )
Net deferred tax asset (liability) |  | $ | (8,860 | ) |  | $ | 21,433 |
The Company estimates the degree to which deferred tax assets, including net operating loss and credit carry forwards will result in a benefit based on expected profitability by tax jurisdiction and provides a valuation allowance for tax assets and loss carry forwards that it believes will more likely than not go unrealized. The valuation allowance at June 30, 2017 applies to state and foreign loss carry forwards, which management has concluded that it is more likely than not that these tax benefits will not be realized. The increase (decrease) in the valuation allowance from the prior year was less than $0.9 million. As of June 30, 2017, the Company had gross state net operating loss ("NOL") and credit carry forwards of approximately $56.6 million and $2.5 million, respectively, which may be available to offset future state income tax liabilities and expire at various dates from 2017 through 2036. In addition, the Company had foreign NOL carry forwards of approximately $2.4 million, $1.9 million of which carry forward indefinitely and $0.5 million that carry forward for 10 years. In March 2016, the FASB issued ASU 2016 - 09, Improvements to Employee Share-Based Payment Accounting. The new standard simplifies several aspects of the accounting for employee share-based payment transactions, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. Under this guidance, a company recognizes all excess tax benefits and tax deficiencies as income tax expense or benefit in the income statement. This change eliminates the notion of the additional paid-in capital pool and reduces the complexity in accounting for excess tax benefits and tax deficiencies. The Company has decided to adopt this ASU prior to the effective date as prescribed within the ASU. The primary impact of our adoption was the recognition of excess tax benefits related to equity compensation in our provision for income taxes rather than paid-in capital, which is a change required to be applied on a prospective basis in accordance with the new guidance. Accordingly, we recorded discrete income tax benefits in the consolidated statements of income of $0.6 million during the fiscal year ended June 30, 2017, for excess tax benefits related to equity compensation. A provision has not been made for U.S. or additional non-U.S. taxes on $229.3 million of undistributed earnings of international subsidiaries that could be subject to taxation if remitted to the U.S. It is not practicable to estimate the amount of tax that might be payable on the remaining undistributed earnings. Our intention is to reinvest these earnings permanently or to repatriate the earnings only when it is tax effective to do so. Accordingly, we believe that U.S. tax on any earnings that might be repatriated would be substantially offset by U.S. foreign tax credits. The total provision for income taxes included in the consolidated financial statements was as follows (in thousands):
|  | 2017 |  |  | 2016 |  |  | 2015 |
Continuing operations |  | $ | 15,355 |  |  | $ | 16,295 |  |  | $ | 20,874 |
Discontinued operations |  |  | (27 | ) |  |  | (55 | ) |  |  | (259 | )
Total Provision |  | $ | 15,328 |  |  | $ | 16,240 |  |  | $ | 20,615 |
The changes in the amount of gross unrecognized tax benefits during 2016, 2015 and 2014 were as follows (in thousands):
|  | 2017 |  |  | 2016 |  |  | 2015 |
Beginning Balance |  | $ | 2,978 |  |  | $ | 1,054 |  |  | $ | 1,033 |
Additions based on tax positions related to the current year |  |  | 12 |  |  |  | 2,125 |  |  |  | 17 |
Additions for tax positions of prior years |  |  | 1 |  |  |  | - |  |  |  | 4 |
Reductions for tax positions of prior years |  |  | - |  |  |  | (201 | ) |  |  | - |
Ending Balance |  | $ | 2,991 |  |  | $ | 2,978 |  |  | $ | 1,054 |
If the unrecognized tax benefits in the table above were recognized in a future period, $2.5 million of the unrecognized tax benefit would impact the Company’s effective tax rate. Within the next twelve months, the statute of limitations will close in various U.S., state and non-U.S. jurisdictions. As a result, it is reasonably expected that net unrecognized tax benefits from these various jurisdictions would be recognized within the next twelve months. The recognition of these tax benefits is not expected to have a material impact to the Company's financial statements. The Company does not reasonably expect any other significant changes in the next twelve months. The following tax years, in the major tax jurisdictions noted, are open for assessment or refund:
Country |  | Years Ending June 30, |
United States |  |  | 2014 | to | 2017 |
Canada |  |  | 2013 | to | 2017 |
Germany |  |  | 2012 | to | 2017 |
Ireland |  |  | 2017 | to | 2017 |
Portugal |  |  | 2014 | to | 2017 |
United Kingdom |  |  | 2013 | to | 2017 |
The Company’s policy is to include interest expense and penalties related to unrecognized tax benefits within the provision for income taxes on the consolidated statements of operations. At both June 30, 2017 and June 30, 2016, the company had less than $0.1 million for accrued interest expense on unrecognized tax benefits.

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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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