Income Taxes

12 Months Ended

Jun. 30, 2016

Income Tax Disclosure [Abstract]

Income Taxes

(12) Income Taxes

The components of income before the provision for income taxes are as follows:

	2016		2015		2014
Domestic operations	$	43,906	$	48,276	$	30,884
Foreign operations		9,948		5,589		13,790
	$	53,854	$	53,865	$	44,674

The components of the provision for income taxes are as follows:

	2016			2015			2014
Federal:
Current	$	15,129		$	18,393		$	12,720
Deferred		(204	)		(1,357	)		(2,728	)
State and local:
Current		755			1,526			1,547
Deferred		173			189			(113	)
Foreign:
Current		3,222			2,337			4,490
Deferred		13			(706	)		(242	)
	$	19,088		$	20,382		$	15,674

Income taxes payable, which is included in accrued expenses, was $2,119 and $0 at June 30, 2016 and 2015, respectively.

The tax effects of temporary differences that give rise to the deferred tax assets and liabilities at June 30, 2016 and 2015 are presented below:

	2016			2015
Deferred tax assets:
Accrued deferred compensation	$	4,122		$	3,025
Accrual for sales deductions not currently deductible		5,925			6,388
Additional inventoried costs for tax purposes		389			262
Allowance for doubtful accounts receivable		106			132
Depreciation and amortization		7,784			6,899
Debt issuance costs		9,462			-
Accrual for payments to former senior management and other personnel related costs		-			29
Contingent consideration		-			286
Foreign deferred tax assets		1,121			1,201
Domestic net operating loss carryforwards		109			132
Foreign net operating loss carryforwards		685			678
Total gross deferred tax assets		29,703			19,032
Valuation allowances		(794	)		(810	)
		28,909			18,222
Deferred tax liabilities:
Foreign deferred tax liabilities		(27	)		(66	)
Goodwill		(7,586	)		(6,117	)
Original issue discount – convertible senior notes		(9,115	)		-
Other		(26	)		(83	)
Total gross deferred tax liabilities		(16,754	)		(6,266	)
Net deferred tax assets	$	12,155		$	11,956

The following table shows the current and non-current deferred tax assets (liabilities) at June 30, 2016 and 2015:

	2016			2015
Current deferred tax assets, net	$	3,244		$	2,050
Non-current deferred tax assets, net		18,053			9,972
Current deferred tax liabilities		-			-
Non-current deferred tax liabilities		(9,142	)		(66	)
Net deferred tax assets	$	12,155		$	11,956

The net change in the total valuation allowance for the years ended June 30, 2016 and June 30, 2015 was a decrease of $16 and $205, respectively. A valuation allowance is provided when it is more likely than not that some portion, or all, of the deferred tax assets will not be realized. The Company has established valuation allowances primarily for net operating loss carryforwards in certain foreign countries. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets are not expected to be realized. The assessment of the amount of value assigned to the Company’s deferred tax assets under the applicable accounting rules is judgmental. Management is required to consider all available positive and negative evidence in evaluating the likelihood that the Company will be able to realize the benefit of its deferred tax assets in the future. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which net operating loss carryforwards are utilizable and temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, taxable income in carryback years if carryback is permitted and tax planning strategies in making this assessment. In order to fully realize the net deferred tax assets recognized at June 30, 2016, the Company will need to generate future taxable income of approximately $33,400.

Based upon the level of historical taxable income and projections for taxable income over the periods which the deferred tax assets are deductible, management believes it is more likely than not the Company will realize the benefits of these deductible differences. There can be no assurance, however, that the Company will generate any earnings or any specific level of continuing earnings in the future. The amount of the deferred tax asset considered realizable, however, could be reduced in the near term if estimates of future taxable income during the carryforward period are reduced.

Deferred taxes have not been provided for undistributed earnings of foreign subsidiaries amounting to approximately $106,597 at June 30, 2016 since substantially all of these earnings are expected to be indefinitely reinvested in foreign operations. A deferred tax liability will be recognized when the Company expects that it will recover these undistributed earnings in a taxable manner, such as through the receipt of dividends or sale of the investments The Company intends to indefinitely reinvest the remaining undistributed earnings and has no plan for further repatriation. Determination of the amount of unrecognized deferred U.S. income tax liabilities, net of unrecognized foreign tax credits, is not practical to calculate because of the complexity of this hypothetical calculation resulting in various methods available, each with different U.S. tax consequences.

A reconciliation of the statutory federal income tax rate and the effective tax rate for continuing operations for the fiscal years ended June 30, 2016, 2015 and 2014 follows:

	2016			2015			2014
Federal statutory tax rate		35.0	%		35.0	%		35.0	%
State and local taxes, net of federal income tax benefit		1.7			2.4			2.5
Decrease (increase) in valuation allowance		-			0.4			(0.1	)
Foreign tax rate differential		(0.4	)		(0.9	)		(1.1	)
Other		(0.9	)		0.9			(1.2	)
Effective tax rate		35.4	%		37.8	%		35.1	%

The Company operates in various tax jurisdictions, and although we believe that we have provided for income and other taxes in accordance with the relevant regulations, if the applicable regulations were ultimately interpreted differently by a taxing authority, we may be exposed to additional tax liabilities.

There are no material unrecognized tax benefits included in the consolidated balance sheet that would, if recognized, have a material effect on the Company’s effective tax rate. The Company is continuing its practice of recognizing interest and penalties related to income tax matters in income tax expense. The Company did not recognize interest and penalties during the years ended June 30, 2016 and June 30, 2015. The Company files U.S. federal, U.S. state, and foreign tax returns, and is generally no longer subject to tax examinations for fiscal years prior to 2012 (in the case of certain foreign tax returns, fiscal year 2011).