NOTE 10 – INCOME TAXES
The following table provides details of income taxes:
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Three months ended
September 30, |
(Dollar amounts in thousands) |
2016 |
|
2015 |
Income before income taxes |
$ |
222,220 |
|
|
$ |
134,299 |
|
Provision for income taxes |
$ |
44,119 |
|
|
$ |
29,402 |
|
Effective tax rate |
19.9 |
% |
|
21.9 |
% |
Tax expense was lower as a percentage of income before taxes during the three months ended September 30, 2016 compared to the three months ended September 30, 2015 primarily due to the impact of the following items:
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• |
Tax expense decreased by $5.7 million during the three months ended September 30, 2016 related to the recognition of excess tax benefits in the provision for income taxes as a result of early adoption of the accounting standard update on accounting for share-based payments. See Note 1, “Description of Business and Basis of Presentation” for additional details;
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• |
Tax expense decreased by $2.6 million during the three months ended September 30, 2016 when the Protecting Americans from Tax Hikes (PATH) Act of 2015 permanently reinstated the research credit on December 18, 2015 retroactively to January 1, 2015. Tax expense was not reduced by the research credit during the three months ended September 30, 2015 as the research credit had expired on December 31, 2014;
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• |
Tax expense decreased by $5.7 million during the three months ended September 30, 2016 related to a non-taxable increase in the value of the assets held within the Company's Executive Deferred Savings Plan; partially offset by
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• |
Tax expense decreased by $8.2 million during the three months ended September 30, 2015 related to a decrease in the Company’s unrecognized tax benefits from the expiration of the statute of limitations.
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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 United States federal income tax examination for all years beginning from the fiscal year ended June 30, 2014. The Company is subject to state income tax examinations for all years beginning from the fiscal year ended June 30, 2012. 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, 2012. It is possible that certain examinations may be concluded in the next twelve months. The Company believes that it may recognize up to $3.9 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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