XML 83 R14.htm IDEA: XBRL DOCUMENT
v2.4.0.8

Income Taxes | 12 Months Ended
--- | ---
Jun. 30, 2014
Income Taxes |
(8) | Income Taxes
Income tax expense consists of the following:
|  | Year ended June 30, |
(In thousands) |  | 2014 |  |  | 2013 |  |  | 2012 |
Current: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 97,442 |  |  | $ | 80,333 |  |  | $ | 67,492 |
State |  |  | 3,541 |  |  |  | 6,021 |  |  |  | 4,647 |
Total Current |  |  | 100,983 |  |  |  | 86,354 |  |  |  | 72,139 |
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | (666 | ) |  |  | 660 |  |  |  | (2,192 | )
State |  |  | 746 |  |  |  | (431 | ) |  |  | 2,326 |
Foreign |  |  | (2,865 | ) |  |  | (2,051 | ) |  |  | (1,735 | )
Change in valuation allowance |  |  | 3,442 |  |  |  | 1,605 |  |  |  | 1,851 |
Total Deferred |  |  | 657 |  |  |  | (217 | ) |  |  | 250 |
Total income tax expense |  | $ | 101,640 |  |  | $ | 86,137 |  |  | $ | 72,389 |
Income (loss) before income taxes consists of the following:
|  | Year ended June 30, |
(In thousands) |  | 2014 |  |  | 2013 |  |  | 2012 |
United States |  | $ | 292,081 |  |  | $ | 243,556 |  |  | $ | 189,702 |
Foreign |  |  | (14,216 | ) |  |  | (10,280 | ) |  |  | (5,162 | )
|  |  | 277,865 |  |  |  | 233,276 |  |  |  | 184,540 |
The differences between income taxes at the statutory federal income tax rate and income taxes reported in the consolidated statements of comprehensive income were as follows:
|  | Year ended June 30, |
|  | 2014 |  |  | 2013 |  |  | 2012 |
Federal income tax expense at the statutory rate |  |  | 35.0 | % |  |  | 35.0 | % |  |  | 35.0 | %
State income taxes, net of federal benefit |  |  | 1.6 |  |  |  | 1.7 |  |  |  | 2.7 |
Research and development credits, net of the federal tax on state credits |  |  | (0.2 | ) |  |  | (1.0 | ) |  |  | (1.3 | )
Uncertain tax positions, net of federal benefit on state positions |  |  | (0.1 | ) |  |  | 0.2 |  |  |  | 0.2 |
Incentive stock option and employee stock purchase plan expense |  |  | (0.3 | ) |  |  | (0.5 | ) |  |  | 1.0 |
Change in valuation allowance |  |  | 1.2 |  |  |  | 0.7 |  |  |  | 1.0 |
Basis difference, disposition of foreign subsidiary |  |  | (1.9 | ) |  |  | 0.0 |  |  |  | 0.0 |
Other, net |  |  | 1.3 |  |  |  | 0.8 |  |  |  | 0.6 |
|  |  | 36.6 | % |  |  | 36.9 | % |  |  | 39.2 | %
The significant components of the Company’s deferred tax assets and liabilities were comprised of the following at June 30, 2014 and 2013:
|  | Year ended June 30, |
(In thousands) |  | 2014 |  |  | 2013 |
Deferred tax assets: |  |  |  |  |  |  |  |
Net operating loss carryforwards |  | $ | 76,986 |  |  | $ | 8,336 |
Property, plant and equipment |  |  | 2,947 |  |  |  | 3,103 |
Accrued vacation |  |  | 1,551 |  |  |  | 1,269 |
Allowance for doubtful accounts |  |  | 3,285 |  |  |  | 2,771 |
Stock compensation expense |  |  | 25,952 |  |  |  | 21,135 |
Capital loss carryover |  |  | 0 |  |  |  | 1,424 |
Research and development credits |  |  | 11,207 |  |  |  | 5,367 |
Uncertain state tax positions |  |  | 555 |  |  |  | 1,247 |
Other, net |  |  | 312 |  |  |  | 643 |
Total gross deferred tax assets |  |  | 122,795 |  |  |  | 45,295 |
Less valuation allowance |  |  | (41,420 | ) |  |  | (8,218 | )
Total deferred tax assets |  |  | 81,375 |  |  |  | 37,077 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Intangible assets |  |  | 71,750 |  |  |  | 438 |
Total deferred tax liabilities |  |  | 71,750 |  |  |  | 438 |
Net deferred tax assets |  |  | 9,625 |  |  |  | 36,639 |
Current net deferred tax asset |  |  | 6,386 |  |  |  | 8,007 |
Long term net deferred tax asset |  |  | 3,239 |  |  |  | 28,632 |
Net deferred tax asset |  | $ | 9,625 |  |  | $ | 36,639 |
On February 28, 2104, the Company completed the acquisition of privately-held Crescendo Bioscience, Inc. See Note 12. The Company’s allocation of the purchase consideration included deferred tax assets and liabilities to reflect the difference between financial statement and tax basis of assets and liabilities. Due to the limitations of Internal Revenue Code Sections 382 and 383 related to ownership changes, a significant portion of Crescendo’s deferred tax assets related to net operating losses and research credits are estimated to expire un-utilized. A valuation allowance was established to reflect the estimated expiration of those deferred tax assets. In addition, ASC guidance requires that the impact of a tax position be recognized in the financial statements if that position is more likely than not of being sustained on audit, based on the technical merits of the position. In accordance with those guidelines, the Company established a liability for unrecognized tax benefits. The components of deferred tax assets, deferred tax liabilities, and the liability for unrecognized tax benefits that were included in the allocation of Crescendo’s purchase consideration are as follows:
(In thousands) |  |  |
Deferred tax assets: |  |  |  |
Net operating loss carryforwards |  | $ | 70,048 |
Research and development credits |  |  | 5,815 |
Other, net |  |  | 312 |
Total gross deferred tax assets |  |  | 76,175 |
Less valuation allowance |  |  | (29,760 | )
Total deferred tax assets |  |  | 46,415 |
Deferred tax liabilities: |  |  |  |
Intangible assets |  |  | 72,005 |
Stock compensation expense |  |  | 4,443 |
Total deferred tax liabilities |  |  | 76,448 |
Net deferred tax liability |  |  | 30,033 |
Liability for unrecognized tax benefits |  | $ | 14,180 |
Due to sustained positive operating performance and the availability of expected future taxable income, the Company concluded that it is more likely than not that the benefits of the majority of its deferred income tax assets will be realized. However, for certain deferred tax assets, a valuation allowance has been established. For the years ended June 30, 2014 and 2013, the Company’s valuation allowance increased by $33,202,000 and $1,605,000, respectively. The increase for the year ended June 30, 2014 consisted of $29,760,000 related to the acquisition of Crescendo and $3,442,000 primarily due to foreign net operating losses, for which the Company concluded it was more likely than not that the benefits of the losses will not be realized. The increase in the year ended June 30, 2013 was primarily due to foreign net operating losses, for which the Company concluded it was more likely than not that the benefits of the losses will not be realized. For the years ended June 30, 2014 and 2013, the Company realized $7,122,000 and $7,888,000, respectively, of excess tax benefits from stock-based compensation as a reduction of taxes payable. Excess tax benefits from stock based compensation are credited directly to additional paid-in-capital. The Company has adopted the with-and-without tax allocation approach for excess tax benefits, which results in the windfall tax benefits being utilized last after considering all other tax attributes available to the Company. At June 30, 2014, the Company had the following net operating loss and research credit carryforwards, with their respective expiration periods. Certain carryforwards are subject to the limitations of Section 382 and 383 of the Internal Revenue Code as indicated.
(In thousands) |  | Amount |  |  | Subject to sections 382, 383 |  |  | Expires beginning in year |  |  | through |
Carryforwards |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Federal net operating loss |  | $ | 164,504 |  |  |  | Yes |  |  |  | 2027 |  |  |  | 2033 |
Utah net operating loss |  |  | 229,900 |  |  |  | No |  |  |  | 2015 |  |  |  | 2024 |
California net operating loss |  |  | 155,834 |  |  |  | Yes |  |  |  | 2016 |  |  |  | 2033 |
Oklahoma net operating loss |  |  | 14,142 |  |  |  | Yes |  |  |  | 2023 |  |  |  | 2033 |
Foreign net operating losses (various jurisdictions) |  |  | 27,183 |  |  |  | No |  |  |  | Various |  |  |  | Various |
Federal research credit |  |  | 3,250 |  |  |  | Yes |  |  |  | 2025 |  |  |  | 2032 |
Utah research credit |  |  | 8,296 |  |  |  | No |  |  |  | 2021 |  |  |  | 2028 |
California research credit |  |  | 2,565 |  |  |  | Yes |  |  |  | n/a |  |  |  | n/a |
All of the Utah net operating loss carryforwards are ‘excess tax benefits’ as defined by ASC guidance and, if realized in future years, will be recognized as a credit to additional paid-in capital. Approximately $92,557,000 of the Utah net operating loss ‘excess tax benefits’ are attributable to periods prior to adoption of guidance limiting recognition of the deferred tax asset and are included in deferred tax assets (prior to any offset by valuation allowance.) The remaining $137,343,000 of Utah net operating loss ‘excess tax benefits’ are not included in deferred tax assets and will be recognized only upon realization of the tax benefit. The Company’s deferred tax asset for the Utah net operating loss ‘excess tax benefits’ attributable to periods prior to the adoption of the standard is approximately $3,008,000 and is offset by a full valuation allowance at June 30, 2014. If the ‘excess tax benefits’ are recognized as additional paid-in-capital in future years, the corresponding valuation allowance will be reversed. At June 30, 2014, the Company also has a valuation allowance of $3,786,000 offsetting its foreign net operating loss carryforwards. The Company incurred a taxable loss of $15,200,000 on the disposition of Psynova, a U.K. corporation, during the fiscal year. The Company’s tax basis in the stock of this subsidiary exceeded its accounting basis. According to ASC guidance, no deferred tax asset is recorded on outside basis differences in a foreign subsidiary when the tax basis exceeds the book basis. Due to the fact that a deferred tax asset had not been previously recorded, the loss on disposition reduces the Company’s effective tax rate and, accordingly, is reflected in the effective rate reconciliation. Consistent with the indefinite reversal criteria of ASC 740-30-25-17, the Company intends to invest undistributed earnings of its foreign subsidiaries indefinitely. However, due to the cumulative losses that have been incurred to date in its foreign operations, the amount of unrecorded deferred liability due to the indefinite reversal criteria at June 30, 2014 is $0. In July 2006, the FASB issued ASC Topic 740 Subtopic 10 Section 05, which clarifies the accounting for uncertainty in tax positions. ASC guidance requires that the impact of a tax position be recognized in the financial statements if that position is more likely than not of being sustained on audit, based on the technical merits of the position. The Company adopted the guidance on July 1, 2007 and recorded $0 cumulative effect. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
|  | Year ended June 30, |
(In thousands) |  | 2014 |  |  | 2013 |  |  | 2012 |
Unrecognized tax benefits at the beginning of year |  | $ | 10,918 |  |  | $ | 10,208 |  |  | $ | 9,648 |
Gross increases—current year tax positions |  |  | 1,785 |  |  |  | 710 |  |  |  | 560 |
Gross increases—prior year tax positions |  |  | 350 |  |  |  | — |  |  |  | — |
Gross increases—acquisitions |  |  | 14,180 |  |  |  |  |  |  |  |  |
Gross decreases—prior year tax positions |  |  | (2,995 | ) |  |  |  |  |  |  |  |
Unrecognized tax benefits at end of year |  | $ | 24,238 |  |  | $ | 10,918 |  |  | $ | 10,208 |
Interest and penalties in year-end balance |  | $ | 620 |  |  | $ | 270 |  |  | $ | — |
Interest and penalties related to uncertain tax positions are included as a component of income tax expense. The Company files U.S., foreign and state income tax returns in jurisdictions with various statutes of limitations. The years ended June 30, 2011 through June 30, 2014 remain subject to examination at June 30, 2014. The Company’s New York State income tax returns for the years ended June 30, 2011, 2012 and 2013 were under examination by the New York State Department of Taxation and Finance. The audit was settled during the year ended June 30, 2014. All amounts due resulting from the New York audit have been paid and are reflected in the current income tax provision. The Company’s New Jersey State income tax returns for the years ended June 30, 2007 through 2013 are currently under examination by the New Jersey State Department of Taxation and Finance. Annual tax provisions include amounts considered necessary to pay assessments that may result from examination of prior year tax returns; however, the amount ultimately paid upon resolution of issues may differ materially from the amount accrued. The Company’s U.S. federal tax return, U.K. income tax return and all other state tax returns are not currently under examination.

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 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 2: 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 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 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=6907707&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=6907707&loc=d3e32537-109319 Reference 6: 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=6907707&loc=d3e32559-109319 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration