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 non-recurring in nature and treats these as discrete events. The tax effect of such items is recorded in the quarter in which the related events occur. Due to the volatility of these factors, the Company's consolidated effective income tax rate can change significantly quarter over quarter.

 

The Company conducts business globally and, as a result, the Company and its subsidiaries files income tax returns in the U.S. and in 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 U.S. from through While the amount of uncertain tax impacts with respect to the entities and years under audit change within the next months, it is anticipated that any of the changes will be significant. It is reasonably possible that some of these audits be completed during the next months and that various issues relating to uncertain tax impacts will be resolved within the next months as exams are completed or as statutes expire and will impact the effective tax rate.

 

The Company’s consolidated effective tax rate was and for the and months ended and and for the and months ended The current period’s effective tax rate primarily includes tax expense on the taxable year’s net income, re-measurement of deferred tax assets and liabilities, and tax and interest expense on uncertain tax positions, partially offset by the reversal of and recognition of some uncertain tax positions. 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 partially offset by the reversal and recognition of some uncertain tax positions.

 

Effective the Company adopted ASU - 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 periods balance sheets were retrospectively adjusted. The adoption did have a material impact on the Company’s consolidated results of operations, cash flows or financial position.

 

On H.R. 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 to effective 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 fiscal year using a blended Federal Tax Rate of The Federal Tax Rate will apply to fiscal years ending and each year thereafter.

 

The Federal Tax Rate will apply to earnings reported for the full fiscal year. Accordingly, quarter income previously subject to tax at the Federal Tax Rate will benefit from the 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.

 

In the Securities and Exchange Commission staff issued Staff Accounting Bulletin Income Tax Accounting Implications of the Tax Cuts and Jobs Act” (“SAB ) which addresses how a company recognizes provisional amounts when a company does have 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 year.

 

As of the Company can determine a reasonable estimate for certain effects of tax reform and is recording that estimate as a provisional amount. The provisional re-measurement of the deferred tax assets and liabilities was adjusted downward from million at to million at by recording a discrete tax expense which increased the effective tax rate by in the quarter. For the fiscal year to date the provisional re-measurement has resulted in a discrete tax benefit of As permitted under SAB we will complete the required analyses and accounting during the year ending The provisional re-measurement 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)

 

		Three months ended March 31, 2018								Nine months ended March 31, 2018
Income before income taxes		$	3.8							$	32.9
Expected income tax expense		$	1.1				28.0	%		$	9.2				28.0	%
Provisional remeasurement of deferred taxes			0.2				5.4	%			(2.4	)			-7.2	%
State income taxes, net of federal income tax			0.0				0.9	%			0.8				2.4	%
Stock Compensation - Cancelations & exercises			0.0				0.3	%			0.6				1.8	%
Section 199 Qualified Production Activities deduction			(0.2	)			-4.5	%			(0.5	)			-1.4	%
Other, net			0.0				1.2	%			0.3				0.8	%
Total		$	1.2				31.2	%		$	8.0				24.4	%

 

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