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Income Taxes (Tables)

12 Months Ended

Jun. 30, 2020

Schedule of Provision for (Benefit from) Income Taxes

Our provision for (benefit from) income taxes consisted of the following:


	Fiscal Year Ended June 30,
	2020		2019		2018
	(in thousands)
Current:
Federal	$	43	$	56	$	(673)
State	84		123		20
Foreign	2,530		2,430		1,915
	2,657		2,609		1,262
Deferred:
Federal	(314)		(1,724)		(7,271)
State	336		(441)		687
Foreign	(851)		(2,982)		(2,881)
	(829)		(5,147)		(9,465)
	$	1,828	$	(2,538)	$	(8,203)

Schedule of Income (Loss) Before Income Taxes by Geographic Area

Income (loss) before income taxes by geographic area is as follows:


	Fiscal Year Ended June 30,
	2020		2019		2018
	(in thousands)
North America	$	(2,417)	$	9,403	$	(29)
United Kingdom	4,918		4,184		7,144
Continental Europe	1,292		2,194		6,062
Asia-Pacific and Middle East	(11,194)		(8,887)		(12,052)
	$	(7,401)	$	6,894	$	1,125

Schedule of Reconciliation of Federal Statutory Rate to Effective Income Tax Rate

A reconciliation of the federal statutory rate to the effective income tax rate is as follows:


	Fiscal Year Ended June 30,
	2020		2019		2018
Tax expense (benefit) at federal statutory rate	(21.0	%)	21.0	%	28.1	%
State taxes, net of federal benefit	(5.5	%)	(11.1	%)	5.5	%
Change in valuation allowance	32.8	%	3.7	%	(168.9	%)
Non-deductible executive compensation	28.3	%	48.4	%	90.3	%
Changes in uncertain tax positions	13.6	%	2.0	%	12.9	%
Foreign branch operations, net of foreign tax deductions	8.8	%	9.7	%	91.2	%
Non-deductible other expenses	5.2	%	6.1	%	39.2	%
Non-deductible acquisition costs	0.1	%	7.2	%	26.0	%


Changes in tax laws or rates ⁽¹⁾	(4.7	%)	(10.8	%)	(738.7	%)
Tax rate differential on foreign earnings	(7.3	%)	(4.5	%)	(50.7	%)
Research and development credit	(11.1	%)	(14.8	%)	(33.4	%)
Share-based payments	(15.3	%)	(94.0	%)	(33.4	%)
Other	0.8	%	0.3	%	2.6	%

	24.7	%	(36.8	%)	(729.3	%)

——————

(1)The impact on our effective tax rate due to changes in tax laws or rates includes the revaluation of deferred tax assets, deferred tax liabilities and the corresponding change in our valuation allowance.

Schedule of Deferred Tax Assets and Liabilities

We recognize deferred tax assets and liabilities based on the differences between their financial reporting and tax basis by applying tax rates that are expected to be in effect when the differences reverse. Significant components of our deferred income taxes are as follows:


	June 30,
	2020		2019
	(in thousands)
Deferred tax assets:
Net operating loss carryforwards	$	38,795	$	35,049
Research and development and other credits	7,815		7,183
Stock compensation	6,848		7,217
Lease Liabilities	6,261		—
Deferred revenue	4,577		6,103
Various accrued expenses	3,281		2,731
Accrued pension	2,834		2,742
Unrealized loss - interest swap	1,377		349
Acquired intangible assets	851		622
Property and equipment	445		536
Allowances and reserves	353		171
Other	466		207
Total deferred tax assets	$	73,903	$	62,910
Valuation allowance	(34,830)		(32,538)
Deferred tax assets, net of valuation allowance	39,073		30,372

Deferred tax liabilities:
Property and equipment, inclusive of capitalized software	(15,735)		(12,205)
Acquired intangible assets	(12,903)		(15,422)
Deductible goodwill acquired intangible assets	(7,384)		(7,010)
Capitalized Costs	(5,559)		(5,805)
Right of Use Assets	(5,659)		—


Other	(489)		(275)
Total deferred tax liabilities	(47,729)		(40,717)
Net deferred tax liabilities	$	(8,656)	$	(10,345)

Summary of Changes in Gross Amount of Unrecognized Tax Benefits

A summary of the changes in the gross amount of unrecognized tax benefits is shown below:


	(in thousands)





Balance at July 1, 2017	8,656
Additions related to current year tax positions	1,041
Reductions related to prior year tax positions	(85)
Reductions due to lapse of statute of limitations	(432)
Reductions due to audit closure	(122)
Change in tax rates	(368)
Foreign currency translation	11
Balance at July 1, 2018	8,701
Additions related to current year tax positions	1,257
Additions related to prior year tax positions	56
Reductions due to lapse of statute of limitations	(377)

Change in tax rates	319
Foreign currency translation	(43)
Balance at July 1, 2019	9,913
Additions related to current year tax positions	1,810
Reductions related to prior year tax positions	(19)
Reductions due to lapse of statute of limitations	(399)
Change in tax rates	49
Foreign currency translations	(44)
Balance at July 1, 2020	$	11,310