INCOME TAXES
The following table provides details of income taxes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollar amounts in thousands) |
Three months ended March 31, |
|
Nine months ended March 31, |
|
2013 |
|
2012 |
|
2013 |
|
2012 |
Income before income taxes |
$ |
192,115 |
|
|
$ |
274,033 |
|
|
$ |
513,531 |
|
|
$ |
668,202 |
|
Provision for income taxes |
$ |
25,733 |
|
|
$ |
68,687 |
|
|
$ |
105,152 |
|
|
$ |
160,064 |
|
Effective tax rate |
13.4 |
% |
|
25.1 |
% |
|
20.5 |
% |
|
24.0 |
% |
The Company’s estimated annual effective tax rate for the fiscal year ending June 30, 2013 is approximately 21.0%.
The difference between the actual effective tax rate of 13.4% during the quarter and the estimated annual effective tax rate of 21.0% is primarily due to a decrease in tax expense of $14.4 million as a result of the reinstatement of the U.S. federal research credit during the three months ended March 31, 2013. On January 2, 2013, the American Taxpayer Relief Act of 2012 was signed into law, which reinstated the research credit retroactive to January 1, 2012 and extended the credit through December 31, 2013, enabling the Company to recognize a retroactive tax credit for prior periods during the three months ended March 31, 2013.
Tax expense was lower as a percentage of income during the three months ended March 31, 2013 compared to the three months ended March 31, 2012 primarily due to the impact of the following items:
|
|
• |
Tax expense was decreased by $15.9 million during the three months ended March 31, 2013 due to the reinstatement of the federal research credit; and
|
|
|
• |
Tax expense was increased by $5.7 million during the three months ended March 31, 2012 related to shortfalls from employee stock activity.
|
Tax expense was lower as a percentage of income during the nine months ended March 31, 2013 compared to the nine months ended March 31, 2012 primarily due to the impact of the following items:
|
|
• |
Tax expense was decreased by $10.2 million during the nine months ended March 31, 2013 due to the reinstatement of the federal research credit;
|
|
|
• |
Tax expense was increased by $6.7 million during the nine months ended March 31, 2013 due to a decrease in the proportion of the Company's earnings generated in jurisdictions with tax rates lower than the U.S. statutory tax rate;
|
|
|
• |
Tax expense was increased by $10.9 million during the nine months ended March 31, 2012 related to shortfalls from employee stock activity;
|
|
|
• |
Tax expense was decreased by $3.7 million during the nine months ended March 31, 2013 related to a non-taxable increase in the value of the assets held within the Company's Executive Deferred Savings Plan. The Company incurred a tax benefit of $4.7 million due to a non-taxable increase in the value of the assets held within that plan during the nine months ended March 31, 2013 compared to a tax benefit of $1.0 million due to a non-taxable increase in the value of the assets held within the plan during the nine months ended March 31, 2012;
|
|
|
• |
Tax expense was increased by $7.7 million during the nine months ended March 31, 2012 due to a decrease in the domestic manufacturing deduction as a result of a change in the timing of when revenue is recognized for federal income tax purposes;
|
|
|
• |
Tax expense was decreased by $18.3 million during the nine months ended March 31, 2012 resulting from a decrease in the Company's unrecognized tax benefits due to the settlement of a U.S. federal income tax examination;
|
|
|
• |
Tax expense was decreased by $18.0 million during the nine months ended March 31, 2012 resulting from a decrease in reserves for uncertain tax positions taken in prior years; and
|
|
|
• |
Tax expense was increased by $23.6 million during the nine months ended March 31, 2012 related to a migration of a portion of the Company's manufacturing to Singapore.
|
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, 2007. 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, 2007. 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 $6.9 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.
|