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Income Taxes
3 Months Ended
Sep. 30, 2018
Income Tax Disclosure [Abstract]  
Income Taxes
Income Taxes
On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the “Tax Act”) was enacted by the U.S. government. The Tax Act has impacted the U.S. statutory Federal tax rate that the Company will use going forward, which has been reduced to 21% from 35%. The Tax Act also introduced a modified territorial tax system and a minimum tax on certain foreign earnings for tax years beginning after December 31, 2017.
The Tax Act also provided for a one-time deemed mandatory repatriation of post-1986 undistributed foreign subsidiary earnings and profits through December 31, 2017. During the three months ended September 30, 2018, the Company paid the additional U.S. Federal cash taxes of approximately $386 on the deemed mandatory repatriation. As of September 30, 2018, the Company has recorded all known and estimable impacts of the Tax Act that are effective for fiscal year 2019. In accordance with SEC Staff Accounting Bulletin 118, future adjustments to the provisional amounts will be recorded as discrete adjustments to income tax expense in the period in which those adjustments become estimable and or finalized.
The Company recorded an income tax provision of $3,129 and an income tax benefit of $8,381 on income from operations before income taxes of $10,608 and $9,572 for the three months ended September 30, 2018 and 2017, respectively.
The effective tax rate for the three months ended September 30, 2018 differed from the Federal statutory rate of 21% primarily due to Federal research and development credits, excess tax benefits related to stock-based compensation, a modified territorial tax system and a minimum tax on certain foreign earnings and state taxes. These provisions have been included in the income tax expense for the three months ended September 30, 2018. During the three months ended September 30, 2018, the Company recognized a discrete benefit of $1,649 related to excess tax benefits on stock-based compensation.
The effective tax rate for the three months ended September 30, 2017 differed from the Federal statutory rate of 35% primarily due to Federal research and development credits, domestic manufacturing deduction, excess tax benefits related to stock-based compensation, and state taxes. During the second quarter of fiscal 2018, the Federal statutory rate transitioned to a blended 28% as a result of the Tax Act. During the three months ended September 30, 2017, the Company recognized a discrete benefit of $7,873, related to excess tax benefits on stock-based compensation. The three months ended September 30, 2017 also included a discrete tax benefit of $4,075 derived from new information obtained about net operating loss carry-forwards of the entities acquired from Microsemi Corporation in May 2016.
On August 21, 2018, the Internal Revenue Service ("IRS") provided initial guidance on amendments made to the limitation on executive compensation by the Tax Act. During the three months ended September 30, 2018, the Company recorded an adjustment to its unrecognized tax positions of $1,711 as a result of this guidance. No other material changes to the Company’s unrecognized tax positions occurred during the three months ended September 30, 2018.