Note 11 - Income Taxes
|12 Months Ended|
Jun. 30, 2019
|Notes to Financial Statements|
|Income Tax Disclosure [Text Block]||
Income before income taxes was comprised of the following (in thousands):
The provision for income taxes consisted of the following (in thousands):
The Company’s effective income tax rate for fiscal
0.2%) in the prior year. The change in the effective tax rate for fiscal
2018was driven by changes in net discrete tax benefits of
$34.4million for fiscal year
The Company's discrete tax benefits in fiscal
2019primarily related to share-based compensation excess tax benefits of
$3.2million related to current year acquisitions, and
$2.0million for tax refunds relating to certain state apportionments. The current year was benefited from acquisition payments made to employees and
thirdparties, which were deductible for tax purposes.
2018,the Company recognized net discrete tax benefits of
$34.4million. The primary driver in fiscal
2018discrete tax benefits was a discrete net tax benefit of
$33.0million related to the Tax Act (as described further below). This net tax benefit consisted of
$36.5million due to the re-measurement of the Company’s deferred tax accounts to reflect the U.S. federal corporate tax rate reduction impact to our net deferred tax balances offset by expense for the federal transition tax of
$3.3million. Also impacting the Company’s fiscal
2018effective tax rate was a
$2.2million tax benefit related to stock option exercises offset by a net discrete tax expense of
$4.2million related to the revaluation of contingent consideration, which is
nota tax deductible expens
December 22, 2017,the Tax Cuts and Jobs Act (the “Tax Act”) was enacted, which reduced the U.S. federal corporate tax rate from
21%,required companies to pay a
one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred and created new taxes on certain foreign sourced earnings. The Tax Act added many new provisions including changes the deduction for executive compensation, a tax on global intangible low taxed income (“GILTI”), the base erosion anti abuse tax (“BEAT”) and a deduction for foreign derived intangible income (“FDII”). The SEC staff issued Staff Accounting Bulletin (“SAB
118”) later codified as ASU
Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin (SAB)
118,which provides a measurement period of up to
oneyear from the Tax Act’s enactment date to complete the accounting for the effects of the Tax Act.
The end of the measurement period allowed under ASU
December 31, 2018.However, the Company anticipates additional interpretations and clarifications to be issued by the U.S. Treasury Department, which
mayaffect future period tax calculations. The Company made the accounting policy election to treat taxes due on U.S. inclusions in taxable income related to GILTI as a current period expense when incurred.
The following is a reconciliation of the federal tax calculated at the statutory rate of to the actual income taxes provided (in thousands):
Deferred taxes on the Consolidated Balance Sheets consisted of the following temporary differences (in thousands):
A deferred tax valuation allowance is required when it is more likely than
notthat all or a portion of deferred tax assets will
notbe realized. The valuation allowance as of
June 30, 2019was
$7.0million, an increase of
$4.0million from the prior year. The change was driven by an increase in the valuation allowance for the Company’s net operating loss and credit carryforwards for fiscal
June 30, 2019,the
$7.0million valuation allowance relates to certain foreign and state tax net operating loss and state credit carryforwards that existed at the date the Company acquired Quad, Exosome, ACD, Novus, ProteinSimple and CyVek as well as immaterial amounts generated after the acquisitions. The Company believes it is more likely than
notthat these tax carryovers will
June 30, 2019,the Company has federal operating loss carryforwards of approximately
$98.2million and state operating loss carryforwards of
$137.4million from its acquisitions of Quad, Exosome, ACD, ProteinSimple and CyVek, which are
notlimited under IRC Section
June 30, 2019,the Company has foreign net operating loss carryforwards of
million. The net operating loss carryforwards expire between fiscal
2035.The Company has a deferred tax asset of
, net of the valuation allowance discussed above, related to the net operating loss carryovers. As of
June 30, 2019,the Company has federal and state tax credit carryforwards of
million, respectively. The federal tax credit carryforwards expire between
2038.The majority of the state credit carryforwards have
noexpiry date. The Company has a deferred tax asset of
million, net of the valuation allowance discussed above, related to the tax credit carryovers.
The Company has
notrecognized a deferred tax liability for unremitted foreign earnings of approximately
$160million from its foreign operations because its subsidiaries have invested or will invest the undistributed earnings indefinitely. The transition tax included as part of the Tax Act resulted in the previously untaxed foreign earnings being included in the federal and state fiscal
2018taxable income. The
one-time transition tax was based on certain foreign earnings for which earnings have been previously indefinitely reinvested as well as the amount of earnings held in cash and other specified assets.
Noadditional income taxes have been provided for cumulative unremitted foreign earnings as at this time our intention with respect to unremitted foreign earnings is to continue to indefinitely reinvest outside the U.S. those earnings needed for working capital or additional foreign investment. If there are policy changes, we would record applicable taxes at that time.
We continue to analyze our global working capital requirements and the potential tax liabilities that would be incurred if the non-U.S. subsidiaries distribute cash to the U.S. parent, which include local country withholding tax and potential U.S. state taxation. In addition, we anticipate that further guidance from the IRS and US Treasury related to the Tax Act could impact the amount of any related taxes. Therefore, it is
notpractical to estimate the amount of the deferred income tax liabilities related to investments in these foreign subsidiaries.
The following is a reconciliation of the beginning and ending balance of unrecognized tax benefits (in thousands):
The Company does
notbelieve it is reasonably possible that the total amounts of unrecognized tax benefits will significantly increase in the next
twelvemonths. The Company files income tax returns in the U.S federal and certain state tax jurisdictions, and several jurisdictions outside the U.S. The Company's federal returns are subject to tax assessment for
2016and subsequent years. State and foreign income tax returns are generally subject to examination for a period of
fiveyears after filing of the respective return. The state impact of any federal changes remains subject to examination by various states for a period of up to
oneyear after formal notification to the states.
No definition available.
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