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Income Taxes | 9 Months Ended
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Jan. 31, 2018
Income Taxes [Abstract] |
Income Taxes |
11. | Income Taxes
The following table summarizes the effective tax rate for the three and nine months ended January 31, 2018 and 2017:
|  | Three Months Ended January 31, |  |  | Nine Months Ended January 31, |
|  | 2018 |  |  | 2017 |  |  | 2018 |  |  | 2017 |
Effective Tax Rate as Reported |  |  | (18.1 | )% |  |  | 3.2 | % |  |  | 4.0 | % |  |  | 49.5 | %
Estimated net impact in fiscal 2018 of non-recurring items from Tax Act |  |  | 42.9 | % |  |  | - |  |  |  | 17.4 | % |  |  | - |
Impact of unfavorable German court decision in fiscal 2017 |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (35.8 | )%
Impact of reduction in U.K. statutory rate on deferred tax balances in fiscal 2017 |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 4.4 | %
Effective Tax Rate excluding the impact of non-recurring items from the Tax Act in fiscal 2018 and the unfavorable German court decision and UK tax rate reduction in fiscal 2017 |  |  | 24.8 | % |  |  | 3.2 | % |  |  | 21.4 | % |  |  | 18.1 | %
On December 22, 2017, the U.S. government enacted the Tax Cuts and Jobs Act (the “Tax Act”). In December 2017, the SEC staff issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (“SAB 118”), which allows us to record provisional amounts related to the effect of the Tax Act during a measurement period not to extend beyond one year of the enactment date. Since the Tax Act was passed late in the fourth quarter of 2017, and ongoing guidance and accounting interpretation are expected over the next 12 months, we consider the accounting of the transition tax, deferred tax re-measurements and other items to be provisional due to the forthcoming guidance and our ongoing analysis of final data and tax positions. We expect to complete our analysis within the measurement period in accordance with SAB 118. The effective tax rates for the three and nine month periods were lower in fiscal 2018 than fiscal 2017 due to the estimated net tax benefit from non-recurring items in the Tax Act. As described in more detail below, estimated non-recurring items in the Tax Act reduced our income tax expense by $25 million ($0.43/share) or a reduction in our effective tax rate of 42.9 percentage points for the three months and 17.4 percentage points for the nine months ended January 31, 2018. Excluding the effect of those non-recurring items, the rate was 24.8% and 21.4% for the three month and nine month periods ended January 31, 2018, respectively. The rate excluding the benefit from the non-recurring items in the Tax Act was lower than the U.S. statutory rate for the year ended April 30, 2018 primarily due to lower foreign rates applicable to non-U.S. earnings. The nine month period also benefitted from the lower federal statutory blended tax rate of 30.4% in the Tax Act retroactive to the beginning of the fiscal year. The effective tax rate for the three and nine months ended January 31, 2017 was 3.2% and 49.5%, respectively. The rate for the nine months ended January 31, 2017 was increased by an unfavorable German court decision in September 2016 and decreased by a non-cash deferred tax benefit related to a decrease in the U.K. statutory tax rate from 18% to 17% beginning on April 1, 2020. Excluding the impact of the unfavorable German court decision and the benefit from a future U.K. statutory tax rate reduction, the rate for the nine month period was 18.1%. The rates for the three month and nine month periods excluding the German court decision and U.K. tax rate change were lower than the U.S. statutory rate of 35% primarily due to lower foreign tax rates applicable to non-U.S. earnings. The rates were also lower than the U.S. statutory rate as well as the fiscal 2018 rates excluding the effects of the non-recurring benefits from the Tax Act, due to non-recurring foreign tax benefits in the three month period ended January 31, 2018. The Tax Act On December 22, 2017, the U.S. government enacted comprehensive tax legislation. The Tax Act significantly revises the future ongoing U.S. corporate income tax system by, among other changes, lowering the U.S. federal corporate income tax rate to 21% with a potentially lower rate for certain foreign derived income, accelerating deductions for certain business assets, changing the U.S. system from a worldwide tax system to a modified territorial tax system, requiring companies to pay a one-time transition tax on unrepatriated post-1986 cumulative non-U.S. earnings of foreign subsidiaries (“E&P”), eliminating certain deductions such as the domestic production deduction, establishing limitations on the deductibility of certain expenses including interest and executive compensation, and creating new taxes on certain foreign earnings. The key impacts for the period were the re-measurement of U.S. deferred tax balances to the new U.S. corporate tax rate and the accrual for the one-time transition tax liability. While we have not yet completed our assessment of the effects of the Tax Act, we are able to determine reasonable estimates for the impacts of these key items and reported provisional amounts for these items. In accordance with SAB 118, we are providing additional disclosures related to these provisional amounts. Deferred tax balances – We remeasured our U.S. deferred tax assets and liabilities based on the federal rate at which they are expected to reverse in the future, generally 21% for reversals anticipated to occur after April 30, 2018. We are still analyzing certain aspects of the Tax Act and refining our calculations, including our estimates of expected reversals, which could affect the measurement of these balances and give rise to new deferred tax amounts. The provisional amount recorded related to the re-measurement of our net deferred tax liability was a benefit of $40 million. Foreign tax effects – In connection with the transition from a global to a modified territorial tax system, the Tax Act establishes a mandatory deemed repatriation tax. The tax is computed using our post-1986 E&P that was previously deferred from U.S. income taxes. The tax is based on the amount of foreign earnings held in cash equivalents and certain net assets, which are taxed at 15.5%, and those held in other assets, which are taxed at 8%. We recorded a provisional amount of $14.5 million. This resulted in a corresponding decrease in deferred tax assets due to the utilization of foreign tax credit carryforwards. The determination of the transition tax requires further guidance as to its applicability to non-calendar year end taxpayers and analysis regarding the amount and composition of our historical foreign earnings. In addition, we accrued a $0.5 million provisional state tax liability, pending further guidance and legislative action from various states regarding conformity with the Tax Act. The Tax Act reduces the Federal statutory tax rate from 35% to 21% effective January 1, 2018. As a result, our U.S. federal statutory tax rate for our fiscal year ended April 30, 2018 is a blended rate of 30.4%. The reduced rate did not have a significant impact on our effective tax rate for the three month or nine month periods ended January 31, 2018. We have not determined a reasonable estimate of the tax liability, if any, under the Tax Act for our remaining outside basis difference or evaluated how the Tax Act will affect our existing accounting position to indefinitely reinvest unremitted earnings. We will continue to evaluate our position for this matter as we finalize our Tax Act calculations. The Tax Act creates new taxes, effective for us on May 1, 2018, including a provision designed to tax global low taxed income (“GILTI”) and a provision establishing new minimum taxes, such as the base erosion anti-abuse tax (“BEAT”). We continue to evaluate the Tax Act, but due to the complexity and incomplete guidance of various provisions, we have not completed our accounting for the income tax effects of certain elements of the Tax Act, including the new GILTI and BEAT taxes. We have not yet determined whether such taxes should be recorded as a current-period expense when incurred or factored into the measurement of our deferred taxes. As a result, we have not included an estimate of any tax expense or benefit related to these items for the periods ended January 31, 2018.

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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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