Note 11 - Income Taxes
|12 Months Ended|
Jun. 30, 2018
|Notes to Financial Statements|
|Income Tax Disclosure [Text Block]||
Income tax expense attributable to income from operations consists of the following for the fiscal years ended
June 30 (in thousands):
The following is a reconciliation of expected income tax expense (benefit) (computed by applying the federal statutory income tax rate to income before taxes) to actual income tax expense (benefit) (in thousands):
The deferred income tax asset and liability balances at
June 30 (in thousands) include:
The deferred tax balances are classified in the Consolidated Balance Sheets as follows at
June 30 (in thousands):
Commencing with fiscal
2018the Company is prospectively reporting its deferred tax assets and liabilities as non-current in conformance with ASU
17“Balance Sheet Classification of Deferred Tax Assets. For fiscal
2017, current deferred tax assets and liabilities and non-current deferred tax assets and liabilities have been presented net in the Consolidated Balance Sheets.
We evaluate our deferred taxes to determine if the “more likely than
not”standard of evidence has
notbeen met thereby supporting the need for a valuation allowance. A valuation allowance must be established for deferred tax assets when it is less than
50%likely that assets will be realized. At
2017,such an allowance was in place against the Belgian foreign tax assets, and at
June 30, 2018this valuation allowance was approximately
The Company’s deferred income tax assets at
June 30, 2018with respect to the net operating losses expire as follows (in thousands):
Deferred U.S. federal income taxes were previously
notprovided for unremitted foreign earnings of our foreign subsidiaries because we expected those earnings to be permanently reinvested. As part of the Tax Act the Company must report The Deemed Repatriation Transition Tax (the “Transition Tax”) on previously untaxed accumulated earnings and profits (“E&P”) of certain of our foreign subsidiaries. To determine the amount of the Transition Tax, we must determine, in addition to other factors, the amount of post-
1986E&P of the relevant subsidiaries, as well as the amount of non-U.S. income taxes paid on such earnings. We are able to make a reasonable estimate and recorded a provisional Transition Tax obligation of
December 22, 2017H.R.
1,originally known as the Tax Cuts and Jobs Act, (the “Tax Act”) was enacted. Among the significant changes to the U.S. Internal Revenue Code, the Tax Act lowers the U.S. federal corporate income tax rate (“Federal Tax Rate”) from
January 1, 2018,introduces a limitation on the deduction of certain interest expenses, introduces a deduction for certain business capital expenditures and introduces a system of taxing foreign-sourced income from multinational corporations. The Company will compute its income tax expense for the
June 30, 2018fiscal year using a blended Federal Tax Rate of
21%Federal Tax Rate will apply to fiscal years ending
June 30, 2019and each year thereafter.
The Company must re-measure its net deferred tax assets and liabilities using the Federal Tax Rate that will apply when these amounts are expected to reverse. As of
June 30, 2018,the Company can determine a reasonable estimate for the effects of tax reform. The re-measurement of the deferred tax assets and liabilities resulted in a discrete tax benefit
June 30, 2017which lowered the effective tax rate by
5.4%for the fiscal year.
Uncertain Tax Positions
We recognize interest and penalties related to income tax matters as a component of income tax expense. If the
$2.2million of unrecognized tax benefits and related interest and penalties as of
June 30, 2018were recognized, approximately
$1.7million would be recorded as a benefit to income tax expense. A reconciliation of the beginning and ending amount of unrecognized tax benefits including related interest and penalties as of
June 30, 2018and
2017is as follows (in thousands):
It is reasonably possible that various issues relating to approximately
$0.3million of the total gross unrecognized tax benefits as of
June 30, 2018will be resolved within the next
twelvemonths as exams are completed or statutes expire. If recognized, approximately
$0.1million of unrecognized tax benefits would reduce our tax expense in the period realized. However, actual results could differ from those currently anticipated.
The Company conducts business globally and, as a result, the Company or
oneor more of its subsidiaries files income tax returns in the U.S., various state, and foreign jurisdictions. In the normal course of business, the Company is subject to examination by the taxing authorities in such major jurisdictions as the U.S. Canada, Mexico, Belgium and Honduras. As of
June 30, 2018,the Company and certain subsidiaries are currently under audit from
2016in the U.S. While the amount of uncertain tax benefits with respect to the entities and years under audit
maychange within the next
twelvemonths, it is
notanticipated that any of the changes will be significant.
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.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef