XML 30 R15.htm IDEA: XBRL DOCUMENT v3.7.0.1
Income Taxes
3 Months Ended
Jun. 30, 2017
Income Taxes [Abstract]  
Income Taxes
Note 8: Income Taxes

For the three months ended June 30, 2017 and 2016, the Company’s effective income tax rate was 13.4 percent and 25.2 percent, respectively.

The most significant factors impacting the effective tax rate for the three months ended June 30, 2017, as compared with the prior-year period, were a $3.5 million benefit for a development tax credit in Hungary, changes in the valuation allowance related to certain foreign jurisdictions, and changes in the mix of foreign and domestic earnings.  At June 30, 2017, valuation allowances against deferred tax assets in certain foreign jurisdictions totaled $46.4 million and valuation allowances against certain U.S. deferred tax assets totaled $5.6 million, as it is more likely than not these assets will not be realized based upon historical financial results.  The Company will continue to provide a valuation allowance against its net deferred tax assets in each of the applicable jurisdictions until the need for a valuation allowance is eliminated.  The need for a valuation allowance is eliminated when the Company determines it is more likely than not the deferred tax assets will be realized.  The Company may release the valuation allowance (approximately $3.0 million) in a foreign jurisdiction in late fiscal 2018 or in fiscal 2019.

Accounting policies for interim reporting require the Company to adjust its effective tax rate each quarter to be consistent with its estimated annual effective tax rate.  Under this methodology, the Company applies its estimated annual income tax rate to its year-to-date ordinary earnings to derive its income tax provision each quarter.  The Company records the tax impacts of certain significant, unusual or infrequently occurring items in the period in which they occur.  The Company excluded the impact of its operations in certain foreign locations from the overall effective tax rate methodology and recorded them discretely based upon year-to-date results because the Company anticipates net operating losses for the full fiscal year in these jurisdictions.  The Company estimates that reductions to unrecognized tax benefits for the remainder of fiscal 2018 will total $2.7 million due to lapses in statutes of limitations and audit settlements, which, if recognized, would have a $1.9 million impact on the effective tax rate.