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Income Taxes (Notes) | 3 Months Ended
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Sep. 30, 2018
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes 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 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.
The SEC staff issued SAB 118 which provides guidance on accounting for the tax effects of the Act. SAB 118 provides a measurement period that should not extend beyond one year from the Act’s enactment date for companies to complete the accounting under ASC 740. As of September 30, 2018, we have not completed our accounting for the tax effect of the Act. In accordance with SAB 118 and as discussed below, we have reflected the income tax effects of the those items where the accounting is complete; have recorded a provisional amount with regards for those items where the accounting is not complete but we have made a reasonable estimate; and have continued to account for items based on our existing accounting under ASC 740 in those areas where we have not been able to make a reasonable estimate. Accounting Complete 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. At June 30, 2018, we completed the remeasurement of our domestic deferred tax assets and liabilities which resulted in an income tax benefit of $0.5 million included in fiscal 2018. Accounting not Complete - Provisional Amount Recorded 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) which we have previously deferred from U.S. income taxes. We have not completed 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. Global Intangible Low-Tax Income (“GILTI”) The Act creates a new requirement that certain income earned by controlled foreign corporations must be included currently in the gross income of the U.S. shareholder. Because of the complexity of the new GILTI rules, we are continuing to evaluate this provision of the Act and the application of ASC 740. Under U.S. GAAP, we are allowed to make an accounting policy choice of either: 1) treating taxes due on future U.S. inclusions in taxable income related to GILTI as a current-period expense when incurred or 2) factoring such amounts into the measurement of our deferred taxes. Our preliminary analysis indicates that we will treat GILTI taxes as a current period expense when incurred. Currently we project the tax impact of GILTI for fiscal 2019 to be immaterial. Accounting not Complete - Using Existing Accounting Under ASC 740 Valuation Allowances on Foreign Tax Credit Carryforwards We are currently assessing and have not completed our analysis of how various aspects of the Act such as deemed repatriation of foreign income, base erosion and anti-abuse tax (“BEAT”), deduction for foreign-derived intangible income (“FDII”), and new categories of foreign tax credits affect our ability to utilize our existing foreign tax credit carryforwards before they expire. Currently, we have stated our foreign tax credits at the amount at which we are more likely than not to realize the tax benefit before consideration of the tax law changes under the Act. Our completed analysis may result in an increased valuation allowance against our current foreign tax credit carryforwards. Indefinite Reinvestment Assertion Currently we do not provide for outside basis differences under the indefinite reinvestment assertion of ASC 740-30. Our complete analysis of the Act may require us to provide for additional taxes to basis differences or withholding taxes on remitted foreign earnings. Effective Tax Rate Our effective tax rate for the three months ended September 30, 2018 was 16.4% compared to 44.5% in the same period last year. The effective tax rate for the three months ended September 30, 2018 was positively impacted by $0.3 million of excess tax benefits related to the vesting of stock-based compensation awards. The effective tax rate for the three months ended September 30, 2017 was negatively impacted by a higher mix of income in the U.S., which was taxed at a higher rate than the Company's foreign operations. In addition, the prior year effective tax rate was negatively affected by a $0.5 million tax shortfall on the vesting of stock-based compensation awards. We expect our effective income tax rate to be approximately 27.0% during fiscal 2019.

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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