NOTE 10 – INCOME TAXES
The following table provides details of income taxes:
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Three months ended
December 31, |
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Six months ended
December 31, |
(Dollar amounts in thousands) |
2016 |
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2015 |
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2016 |
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2015 |
Income before income taxes |
$ |
306,845 |
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$ |
185,475 |
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$ |
529,065 |
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$ |
319,774 |
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Provision for income taxes |
$ |
68,594 |
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$ |
33,268 |
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$ |
112,713 |
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$ |
62,670 |
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Effective tax rate |
22.4 |
% |
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17.9 |
% |
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21.3 |
% |
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19.6 |
% |
Tax expense was higher as a percentage of income before taxes during the three months ended December 31, 2016 compared to the three months ended December 31, 2015 primarily due to the impact of the following items:
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Tax expense increased by $6.3 million during the three months ended December 31, 2016 due to absence of the impact of reinstatement of the U.S. federal research credit during the three months ended December 31, 2015 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;
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Tax expense increased by $1.9 million during the three months ended December 31, 2016 due to the impact of a lower non-taxable increase in the value of the assets held within the Company’s Executive Deferred Savings Plan during the three months ended December 31 , 2016; and
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Tax expense increased by $1.9 million during the three months ended December 31, 2016 due to the impact of a decrease in the proportion of the Company’s earnings generated in jurisdictions with tax rates lower than the U.S. statutory rate during the three months ended December 31, 2016.
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Tax expense was higher as a percentage of income before taxes during the six months ended December 31, 2016 compared to the six months ended December 31, 2015 primarily due to the impact of the following items:
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Tax expense increased by $4.2 million during the six months ended December 31, 2016 due to absence of the impact of reinstatement of the U.S. federal research credit during the six months ended December 31, 2015 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;
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Tax expense increased by $3.2 million during the six months ended December 31, 2016 due to the impact of a decrease in the proportion of the Company’s earnings generated in jurisdictions with tax rates lower than the U.S. statutory rate during the six months ended December 31, 2016.
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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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