NOTE

– INCOME TAXES

The Company's effective income tax rate is based on expected income, statutory rates and tax planning opportunities available in the various jurisdictions in which it operates. For interim financial reporting, the Company estimates the annual income tax rate based on projected taxable income for the full year and records a quarterly income tax provision or benefit in accordance with the anticipated annual rate. The Company refines the estimates of the year's taxable income as new information becomes available, including actual year-to-date financial results. This continual estimation process often results in a change to the expected effective income tax rate for the year. When this occurs, the Company adjusts the income tax provision during the quarter in which the change in estimate occurs so that the year-to-date provision reflects the expected income tax rate. Significant judgment is required in determining the effective tax rate and in evaluating tax positions. In the

second

quarter of fiscal

2019,

a deferred tax asset of

$4.8

million was created as a result of the impairment of goodwill in the Lighting reporting unit. In the

first

quarter of fiscal

2018,

a deferred tax asset of

$10.7

million was created as a result of the impairment of goodwill in the Lighting reporting unit.

The Tax Cuts and Jobs Act (the “Act”) was signed into law in

December 2017

and makes numerous changes to the Internal Revenue Code. Among other changes, the Act reduces the U.S. corporate income tax rate to

21%

effective

January 1, 2018.

Because the Act became effective mid-way through the Company’s fiscal

2018

tax year, the Company had a U.S. statutory income tax rate of

34%

in the

first

quarter of fiscal

2018,

before the new tax law was enacted, and will have a

21%

U.S statutory income tax rate for fiscal years

2019

and after.

	Three Months Ended						Six Months Ended
	December 31						December 31
	2018			2017			2018			2017
Reconciliation to effective tax rate:

Provision for income taxes at the anticipated annual tax rate		23.0	%		28.9	%		23.0	%		28.9	%
Enactment of tax law changes		--			111.2			--			(22.2	)
Uncertain tax positions		0.8			(4.8	)		0.8			0.5
Difference between deferred and current tax rate related to the impairment of goodwill		0.6			--			0.7			12.1
Tax impact related to share based compensation		--			0.3			(0.5	)		(0.4	)
Effective tax rate		24.4	%		135.6	%		24.0	%		18.9	%