Note 3 - Income Taxes
|6 Months Ended|
Dec. 31, 2017
|Notes to Financial Statements|
|Income Tax Disclosure [Text Block]||
The Company reviews its expected annual effective income tax rates and makes changes on a quarterly basis as necessary based on certain factors such as changes in forecasted annual operating income; changes to actual or forecasted permanent book to tax differences; impacts from future tax audits with state, federal or foreign tax authorities; impacts from tax law changes; or change in judgment as to the realizability of deferred tax assets. The Company identifies items which are
notnormal and are non-recurring in nature and treats these as discrete events. The tax effect of discrete items is recorded in the quarter in which the discrete events occur. Due to the volatility of these factors, the Company's consolidated effective income tax rate can change significantly on a quarterly basis.
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 periodic examination in such domestic and foreign jurisdictions by tax authorities. The Company and certain subsidiaries are currently under audit in the
2016.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. It is reasonably possible that some of these audits
maybe completed during the next
twelvemonths. It is reasonable to expect that various issues relating to uncertain tax benefits will be resolved within the next
twelvemonths as exams are completed or as statutes expire and will impact the effective tax rate.
’s consolidated effective tax rate was
December 31, 2017and
December 31, 2016.The current period’s effective tax rate primarily includes tax expense on the taxable year’s net income, the tax benefit lost on the cancelation of stock options, and also includes tax and interest expense on uncertain tax positions, partially offset by tax benefit from the re-measurement of deferred tax assets and liabilities and the vesting of restricted stock units. The prior period’s effective tax rate primarily includes tax expense on the taxable year’s net income, and tax and interest expense on uncertain tax positions.
July 1, 2017the company adopted ASU
17,Balance Sheet Classification of Deferred Taxes, which requires the Company to present all deferred tax assets and liabilities as noncurrent. The Company has applied the new guidance prospectively and accordingly the prior balance sheets were
notretrospectively adjusted. The adoption did
nothave a material impact on the Company
’s consolidated results of operations, cash flows or financial position.
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.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.
Federal Tax Rate will apply to earnings reported for the full
2018fiscal year. Accordingly,
firstquarter income previously subject to tax at the
35%Federal Tax Rate will benefit from the
28%Federal Tax Rate. 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. The effect of the re-measurement is reflected entirely in the interim period that includes the enactment date and is allocated directly to income tax expense from continuing operations.
December 2017,the Securities and Exchange Commission staff issued Staff Accounting Bulletin
118,which addresses how a company recognizes provisional amounts when a company does
nothave the necessary information available, prepared or analyzed (including computations) in reasonable detail to complete its accounting for the effect of the changes in the Tax Act. The measurement period ends when a company has obtained, prepared and analyzed the information necessary to finalize its accounting, but cannot extend beyond
7,the Company can determine a reasonable estimate for certain effects of tax reform and is recording that estimate as a provisional amount. The provisional remeasurement of the deferred tax assets and liabilities resulted in a
$2.6million discrete tax benefit which lowered the effective tax rate by
14.6%in the quarter and
8.8%fiscal year to date. The provisional remeasurement amount is anticipated to change as data becomes available allowing more accurate scheduling of the deferred tax assets and liabilities primarily related to depreciable assets, inventory, employee compensation and commissions. Following is a reconciliation of income tax expense (benefit) computed by applying the federal statutory income tax rate to income before taxes to actual tax expense (benefit)
We are still in the process of evaluating the income tax effect of the Tax Act on the executive compensation limitations that will be effective for our fiscal year
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://www.xbrl.org/2003/role/presentationRef