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Income Taxes (Notes) | 9 Months Ended
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Mar. 31, 2018
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes We use the asset and liability approach for financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed annually for differences between the financial statement and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances based on our judgments and estimates are established when necessary to reduce deferred tax assets to the amount expected to be realized in future operating results. Company management believes that realization of deferred tax assets in excess of the valuation allowance is more likely than not. Our estimates are based on facts and circumstances in existence as well as interpretations of existing tax regulations and laws applied to the facts and circumstances. The Company provides for income taxes regardless of whether it has received a tax assessment. Taxes are provided when it is considered probable that additional taxes will be due in excess of amounts included in the tax return. The Company regularly reviews exposure to additional income taxes due, and as further information is known or events occur, adjustments may be recorded. Tax Cuts and Jobs Act The Tax Cuts and Jobs Act (the "Act") was enacted on December 22, 2017. The Act makes broad and complex changes to the U.S. tax code, which have affected our current results and will affect our future results. The following are significant changes in the tax code that are effective for the Company beginning January 1, 2018:
• | reducing the Company's U.S. federal corporate income tax rate from 35% to a blended rate of 28.06% for fiscal 2018 as stipulated by the Internal Revenue Code for companies using a June 30th fiscal year end and to 21% for fiscal years thereafter;
• | generally eliminating U.S. federal income tax on dividends from foreign subsidiaries;
• | requiring current inclusion in U.S. federal taxable income of certain earnings of controlled foreign corporations;
• | allowing full expensing of certain assets placed in service from September 27, 2017 and before January 1, 2023;
• | restricting further deductibility of executive performance compensation in excess of $1.0 million; and
• | disallowing certain entertainment expenses.
The following are significant changes in the tax code that are effective for the Company beginning July 1, 2018:
• | eliminating the deduction for domestic production activity;
• | limiting the annual deduction for business interest;
• | taxing global intangible low-tax income;
• | allowing a deduction for domestically earned foreign intangible income; and
• | establishing a new base erosion and anti-abuse tax on payments between U.S. taxpayers and foreign related parties.
As of March 31, 2018 we have not completed our accounting for the tax effects of the Act. However, in certain cases as described below, we have made a reasonable estimate of the effects on our existing deferred tax balances and the one-time transition tax. In other cases, we have not been able to make a reasonable estimate and continue to account for those items based on our existing accounting under ASC 740. One-time Transition Tax on Unrepatriated Earnings of Certain Foreign Subsidiaries The Act includes a one-time transition tax based on our total post-1986 foreign earnings and profits (E&P) for which we have previously deferred from U.S. income taxes. We have not completed in its entirety the calculations surrounding this tax, but based on our preliminary calculations, our foreign subsidiaries have overall negative E&P. Therefore, we do not anticipate incurring tax related to this provision of the Act since any return of assets would be a return of capital, not earnings. Due to the preliminary nature of our calculations, no additional income taxes have been provided for any remaining undistributed foreign earnings not subject to the transition tax and any outside basis difference inherent in these entities as these amounts continue to be indefinitely reinvested in foreign operations. Deferred Taxes Remeasurement We remeasured our domestic deferred tax assets and liabilities based on the rates at which we expect them to reverse in the future. Section 15 of the Internal Revenue Code stipulates that our fiscal year ending June 30, 2018 will have a blended U.S. federal corporate income tax rate of 28.06%, which is based on the applicable tax rates before and after the Act and the number of days in the tax year. Therefore, domestic deferred taxes reversing prior to July 1, 2018 will be taxed based on the blended rate and reversals occurring thereafter will be taxed at the new 21% tax rate. Our domestic subsidiaries had a net deferred tax liability position as of December 31, 2017, which resulted in an estimated $1.2 million remeasurement reduction of our domestic net deferred tax liabilities, which increased our benefit for income taxes in the period ended December 31, 2017. Movement in the deferred tax assets and liabilities of our domestic subsidiaries during the three months ended March 31, 2018 resulted in a downward adjustment to the originally estimated remeasurement reduction from $1.2 million to $1.0 million, which resulted in an income tax expense of $0.2 million during the three months ended March 31, 2018. This remeasurement adjustment was based on our best estimate of the timing of our deferred tax reversals. As a fiscal year taxpayer, the timing of the reversal of certain deferred tax assets and liabilities during this fiscal year and beyond is uncertain. Although we have made a reasonable estimate as of March 31, 2018, we will continue to analyze certain aspects of the Act and refine our calculations, which could potentially affect the measurement of our deferred tax balances. Effective Tax Rate As a result of the Act, we expect our effective income tax rate to be approximately 32.0% for the remainder of fiscal 2018. Our effective tax rate for the three and nine months ended March 31, 2018 was 14.2% and 38.1%, respectively, compared to 38.7% and 933.6%, respectively, in the same period last year. Since the Company recorded income tax benefits and net losses before income tax expense for each of the three months ended March 31, 2018 and 2017, discrete items have an inverse impact to the effective income tax rate. The rate for the three months ended March 31, 2018 was negatively impacted by a $0.7 million valuation allowance recorded on a deferred tax asset in connection with stock-based compensation and by the $0.2 million downward revision to the domestic deferred tax remeasurement adjustment discussed in the paragraph above. The rate for the nine months ended March 31, 2018 was negatively impacted by the $0.7 million valuation allowance discussed previously and a stock-based compensation tax adjustment of $0.6 million related to awards that vested during the first and second quarters of fiscal 2018 at lower share prices than their grant date share prices. These impacts were partially offset by the $1.0 million domestic deferred tax remeasurement adjustment discussed previously.

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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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