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Income Taxes | 12 Months Ended
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Jun. 30, 2016
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes Income tax expense (benefit) consists of:
| Fiscal Year Ended June 30,
| 2016 |  | 2015 |  | 2014
| (in thousands)
Current: |  |  |  |  |
Federal | $ | 21,855 |  |  | $ | 24,658 |  |  | $ | 25,895 |
State | 1,652 |  |  | 1,639 |  |  | 2,439 |
Foreign | 6,100 |  |  | 4,927 |  |  | 3,826 |
Total current | 29,607 |  |  | 31,224 |  |  | 32,160 |
Deferred: |  |  |  |  |
Federal | 3,990 |  |  | 2,165 |  |  | 7,933 |
State | 365 |  |  | 198 |  |  | 725 |
Foreign | (1,571 | ) |  | 900 |  |  | 500 |
Total deferred | 2,784 |  |  | 3,263 |  |  | 9,158 |
Provision for income taxes | $ | 32,391 |  |  | $ | 34,487 |  |  | $ | 41,318 |
A reconciliation of the U.S. Federal income tax expense at a statutory rate of 35% to actual income tax expense, excluding any other taxes related to extraordinary gain is as follows:
| Fiscal Year Ended June 30,
| 2016 |  | 2015 |  | 2014
| (in thousands)
U.S. Federal income tax at statutory rate | $ | 33,603 |  |  | $ | 34,967 |  |  | $ | 43,088 |
Increase (decrease) in income taxes due to: |  |  |  |  |
State and local income taxes, net of Federal benefit | 1,578 |  |  | 1,318 |  |  | 1,974 |
Tax credits | (2,517 | ) |  | (1,435 | ) |  | (1,935 | )
Valuation allowance | 541 |  |  | 582 |  |  | 803 |
Effect of foreign operations, net | (1,150 | ) |  | (1,665 | ) |  | (1,627 | )
Stock compensation | (62 | ) |  | (419 | ) |  | (494 | )
Capitalized acquisition costs | 70 |  |  | 839 |  |  | — |
Other | 328 |  |  | 300 |  |  | (491 | )
Provision for income taxes | $ | 32,391 |  |  | $ | 34,487 |  |  | $ | 41,318 |
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities are presented below:
| June 30,
| 2016 |  | 2015
| (in thousands)
Deferred tax assets derived from: |  |  |
Allowance for accounts receivable | $ | 12,458 |  |  | $ | 9,925 |
Inventories | 4,799 |  |  | 5,235 |
Nondeductible accrued expenses | 3,842 |  |  | 5,838 |
Net operating loss carryforwards | 3,036 |  |  | 2,223 |
Tax credits | 3,316 |  |  | 2,136 |
Timing of amortization deduction from goodwill | 2,660 |  |  | 10,652 |
Deferred compensation | 6,733 |  |  | 6,014 |
Stock compensation | 6,014 |  |  | 5,730 |
Timing of amortization deduction from intangible assets | 1,600 |  |  | 83 |
Total deferred tax assets | 44,458 |  |  | 47,836 |
Valuation allowance | (3,029 | ) |  | (2,509 | )
Total deferred tax assets, net of allowance | 41,429 |  |  | 45,327 |
Deferred tax liabilities derived from: |  |  |
Timing of depreciation and other deductions from building and equipment | (6,827 | ) |  | (549 | )
Timing of amortization deduction from goodwill | (5,370 | ) |  | (4,908 | )
Timing of amortization deduction from intangible assets | (2,974 | ) |  | (4,680 | )
Total deferred tax liabilities | (15,171 | ) |  | (10,137 | )
Net deferred tax assets | $ | 26,258 |  |  | $ | 35,190 |
The components of pretax earnings are as follows:
| Fiscal Year Ended June 30,
| 2016 |  | 2015 |  | 2014
| (in thousands)
Domestic | $ | 76,062 |  |  | $ | 79,364 |  |  | $ | 104,685 |
Foreign | 19,948 |  |  | 20,542 |  |  | 18,422 |
Worldwide pretax earnings | $ | 96,010 |  |  | $ | 99,906 |  |  | $ | 123,107 |
As of June 30, 2016, there were (i) gross net operating loss carryforwards of approximately $1.4 million for state income tax purposes; (ii) foreign gross net operating loss carryforwards of approximately $9.0 million; (iii) state income tax credit carryforwards of approximately $1.3 million that will began to expire in 2018; and (iv) withholding tax credits of approximately $2.4 million; and (v) foreign tax credits of less than $0.1 million. The Company maintains a valuation allowance of $0.2 million for foreign net operating losses; a less than $0.1 million valuation allowance for state net operating losses, a $2.4 million valuation allowance for withholding tax credits, and a $0.3 million valuation allowance for the notional interest deduction, where it was determined that, in accordance with ASC 740, it is more likely than not that they cannot be utilized. The Company has provided for U.S. income taxes for the current earnings of its Canadian subsidiary. Earnings from all other geographies will continue to be considered retained indefinitely for reinvestment. The Company has not provided U.S. income taxes for undistributed earnings of foreign subsidiaries that are considered to be retained indefinitely for reinvestment. The distribution of these earnings would result in additional foreign withholding taxes and additional U.S. federal income taxes to the extent they are not offset by foreign tax credits. It has been the practice of the Company to reinvest those earnings in the business outside the United States. These undistributed earnings amounted to approximately $108 million at June 30, 2016. If these earnings were remitted to the U.S., they would be subject to income tax. The tax, after foreign tax credits, is estimated to be approximately $19.2 million. Financial results in Belgium for the year ended June 30, 2016 produced pre-tax loss of approximately $1.2 million. To the extent the Belgium business does not return to profitability as expected, this could affect the valuation of certain deferred tax assets. However, the Belgium business reported taxable income in the two prior years and positive cumulative earnings over the most recent three-year period. In the judgment of management, the conditions that gave rise to the fiscal 2016 losses are temporary and that it is more likely than not that the deferred tax asset will be realized. As of June 30, 2016, the Company had gross unrecognized tax benefits of $2.1 million, $1.3 million of which, if recognized, would affect the effective tax rate. This reflects an increase of $0.5 million on a net basis over the prior fiscal year. The Company does not expect that the total amounts of unrecognized tax benefits will significantly increase or decrease within the next twelve months. The Company recognizes interest and penalties related to unrecognized tax benefits within the income tax expense line in the accompanying Consolidated Income Statement. Accrued interest and penalties are included within the related tax liability line in the Consolidated Balance Sheet. The total amount of interest and penalties accrued, but excluded from the table below were $1.2 million the fiscal years ending June 30, 2016 and 2015, and $1.1 million for the fiscal year ended June 30, 2014, respectively. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
| June 30,
| 2016 |  | 2015 |  | 2014
| (in thousands)
Beginning Balance | $ | 1,301 |  |  | $ | 1,153 |  |  | $ | 1,034 |
Additions based on tax positions related to the current year | 326 |  |  | 262 |  |  | 204 |
Additions for tax positions of prior years | 658 |  |  | — |  |  | — |
Reduction for tax positions of prior years | (137 | ) |  | (114 | ) |  | (85 | )
Ending Balance | $ | 2,148 |  |  | $ | 1,301 |  |  | $ | 1,153 |
The Company conducts business globally and, as a result, one or more of its subsidiaries files income tax returns in the U.S. federal, various state, local and foreign jurisdictions. In the normal course of business, the Company is subject to examination by taxing authorities in countries in which it operates. With certain exceptions, the Company is no longer subject to state and local, or non-U.S. income tax examinations by tax authorities for tax years before June 30, 2011.

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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 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32559-109319 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32718-109319 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32537-109319 + Details
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