INCOME TAXES
The following table provides details of income taxes:
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(Dollar amounts in thousands) |
Three months ended December 31, |
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Six months ended December 31, |
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2013 |
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2012 |
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2013 |
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2012 |
Income before income taxes |
$ |
176,745 |
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$ |
144,874 |
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$ |
316,609 |
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$ |
321,416 |
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Provision for income taxes |
$ |
37,499 |
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$ |
38,244 |
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$ |
66,166 |
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$ |
79,419 |
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Effective tax rate |
21.2 |
% |
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26.4 |
% |
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20.9 |
% |
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24.7 |
% |
The Company’s estimated annual effective tax rate for the fiscal year ending June 30, 2014 is approximately 21.4%.
There is no material difference between the tax expense as a percentage of income during the three months ended December 31, 2013 and the estimated annual effective tax rate.
Tax expense was lower as a percentage of income before taxes during the three months ended December 31, 2013 compared to the three months ended December 31, 2012 primarily due to the impact of the following items:
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Tax expense was decreased by $4.7 million during the three months ended December 31, 2013 due to an increase in the proportion of the Company's earnings generated in jurisdictions with tax rates lower than the U.S. statutory tax rate;
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Tax expense was decreased by $1.7 million during the three months ended December 31, 2013 related to the U.S. federal research credit. The research credit was not available during the three months ended December 31, 2012, because the credit expired on December 31, 2011. On January 2, 2013, the American Taxpayer Relief Act of 2012 reinstated the research credit and extended the credit through December 31, 2013; and
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Tax expense was decreased by $2.6 million during the three months ended December 31, 2013 related to a non-taxable increase in the value of the assets held within the Company's Executive Deferred Savings Plan.
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Tax expense was lower as a percentage of income before taxes during the six months ended December 31, 2013 compared to the six months ended December 31, 2012 primarily due to the impact of the following items:
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Tax expense was decreased by $7.4 million during the six months ended December 31, 2013 due to an increase in the proportion of the Company's earnings generated in jurisdictions with tax rates lower than the U.S. statutory tax rate;
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Tax expense was decreased by $3.1 million during the six months ended December 31, 2013 related to the U.S. federal research credit. The research credit was not available during the six months ended December 31, 2012, because the credit expired on December 31, 2011. On January 2, 2013, the American Taxpayer Relief Act of 2012 reinstated the research credit and extended the credit through December 31, 2013; and
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Tax expense was decreased by $3.6 million during the six months ended December 31, 2013 related to a non-taxable increase in the value of the assets held within the Company's Executive Deferred Savings Plan.
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In the normal course of business, the Company is subject to examination by tax authorities throughout the world. The Company is subject to U.S. federal income tax examination for all years beginning from the fiscal year ended June 30, 2010. The Company is subject to state income tax examinations for all years beginning from the fiscal year ended June 30, 2009. The Company is also subject to examinations in other major foreign jurisdictions, including Singapore, for all years beginning from the fiscal year ended June 30, 2009. It is possible that certain examinations may be concluded in the next twelve months. The Company believes it is possible that it may recognize up to $7.2 million of its existing unrecognized tax benefits within the next twelve months as a result of the lapse of statutes of limitations and the resolution of examinations with various tax authorities.
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