XML 25 R14.htm IDEA: XBRL DOCUMENT v3.4.0.3
Income Taxes
9 Months Ended
Mar. 31, 2016
Income Tax Disclosure [Abstract]  
Income Taxes
INCOME TAXES
We determine our global provision for corporate income taxes in accordance with FASB ASC 740, “Income Taxes.” We recognize our deferred tax assets and liabilities based upon the effect of temporary differences between the book and tax basis of recorded assets and liabilities. Further, we follow a methodology in which we identify, recognize, measure and disclose in our financial statements the effects of any uncertain tax return reporting positions that we have taken or expect to take. The methodology is based on the presumption that all relevant tax authorities possess full knowledge of those tax reporting positions, as well as all of the pertinent facts and circumstances. Our quarterly effective income tax rate reflects management’s estimates of our annual projected profitability in the various taxing jurisdictions in which we operate. Since the statutory tax rates differ in the jurisdictions in which we operate, changes in the distribution of profits and losses may have a significant impact on our effective income tax rate.
For the three months ended March 31, 2016 and 2015, we had effective income tax rates of 28.6% and 29.7%, respectively. For the nine months ended March 31, 2016 and 2015, we had effective income tax rates of 27.7% and 30.2%, respectively. The tax rates for these periods were lower than the expected statutory rate of 35% primarily as a result of the favorable effect of statutory tax rates applicable to income earned outside the United States on the projected annual effective tax rate. For the three and nine months ended March 31, 2016, we recognized income tax benefits of $5.5 million and $6.1 million, respectively, as a result of the expiration of statutes of limitation and settlements with tax authorities. These benefits were partially offset by $4.4 million of expenses related to foreign tax credits.
As of March 31, 2016, we had $29.6 million of gross unrecognized tax benefits, of which $18.7 million would impact the effective tax rate if recognized. As of June 30, 2015, we had $35.2 million of gross unrecognized tax benefits, of which $23.9 million would impact the effective tax rate if recognized. The reserves for unrecognized tax positions primarily relate to exposures for income tax matters such as changes in the jurisdiction in which income is taxable.
As of March 31, 2016, we anticipate that the liability for unrecognized tax benefits for uncertain tax positions could decrease by approximately $0.4 million over the next 12 months primarily as a result of the expiration of statutes of limitations and settlements with tax authorities.
We recognize interest and penalties related to income tax matters in income tax expense. As of March 31, 2016 and June 30, 2015, $3.4 million and $4.2 million, respectively, of gross interest and penalties were included in the liability for unrecognized tax benefits. For the nine months ended March 31, 2016 and 2015, benefit of $0.8 million and expenses of $0.7 million, respectively, were recorded for interest and penalties related to tax matters.
We are subject to U.S. federal income tax, as well as income tax in multiple state, local and foreign jurisdictions. All material U.S. federal, state and local income tax matters have been concluded with the respective taxing authority through 2005. Substantially all material foreign income tax matters have been concluded for all years through 2001.