Income Taxes

3 Months Ended

Sep. 30, 2011

Income Taxes [Abstract]

Income Taxes

Note 10. Income Taxes

The Company's year-to-date effective income tax rate at September 30, 2011 is 23.9% compared to an effective tax rate of 25.5% for the same period last fiscal year. The variation between the Company's effective tax rate and the U.S. statutory rate of 35.0% is primarily due to the consolidation of the Company's foreign operations, which are subject to income taxes at lower statutory rates. A change in the mix of pretax income from these various tax jurisdictions could have a material impact on our periodic effective tax rate.

U.S. GAAP clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.

As of September 30, 2011 and June 30, 2011, the gross unrecognized income tax benefit was $5.4 million and $5.0 million, respectively. The Company has classified the uncertain tax positions as non-current income tax liabilities, as the amounts are not expected to be paid within one year. If recognized, approximately $4.3 million of the gross unrecognized tax benefits at September 30, 2011 would impact the effective tax rate. The Company recognizes interest and penalties related to uncertain tax positions in the income tax provision on the Condensed Consolidated Statements of Earnings. Included in the $5.4 million and $5.0 million of gross unrecognized income tax benefit at September 30, 2011 and June 30, 2011, was $0.3 million and $0.2 million, respectively, of accrued interest and penalties. The Company expects a decrease of approximately $0.8 million of unrecognized tax benefits within the next twelve months.

Fiscal years 2008 to 2011 remain open to examination by the United States Internal Revenue Service, fiscal years 2007 to 2011 remain open to examination by certain state jurisdictions, and fiscal years 2005 to 2011 remain open to examination by certain foreign taxing jurisdictions. As of September 30, 2011, the Company's fiscal year 2009 federal income tax return is under examination by the United States Internal Revenue Service and the Company's fiscal years 2007, 2008, and 2009 California state income tax returns are under examination by the State of California's Franchise Tax Board.