XML 33 R20.htm IDEA: XBRL DOCUMENT v3.19.1
Income Taxes
9 Months Ended
Mar. 31, 2019
Income Tax Disclosure [Abstract]  
Income Taxes
Income Taxes

The effective tax rate for the three months ended March 31, 2019 and 2018 was 23.4% and 24.5%, respectively. The decrease in the effective tax rate is primarily due to the reduction in the federal corporate statutory tax rate to 21% from our blended rate for fiscal 2018 of 28.1% as a result of the Act, partially offset by the loss of qualified production activities tax deductions as a result of the Act in the three months ended March 31, 2019, the release of reserves for uncertain tax positions and the benefit of a tax accounting method change filed with the Internal Revenue Service in the three months ended March 31, 2018.
The effective tax rate for the nine months ended March 31, 2019 and 2018 was 23.4% and 14.0%, respectively. The increase in the effective tax rate is primarily due to the one-time benefit recognized on the re-measurement of deferred tax balances, primarily as a result of ASC 606, using the lower tax rates enacted under the Act, the release of reserves for uncertain tax positions during the nine months ended March 31, 2018 and the loss of qualified production activities tax deductions as a result of the Act during the nine months ended March 31, 2019. This is partially offset by reduction in the federal corporate statutory tax rate to 21% from our blended rate for fiscal 2018 of 28.1% as a result of the Act.
The Act reduced the U.S. federal corporate income tax rate from 35% to 21%. In accordance with ASC 740, companies re-measured deferred tax balances using the new enacted tax rates. The Act required the Company to pay a one-time transition tax on earnings of the Company's foreign subsidiaries that were previously tax deferred for U.S. income taxes and creates new taxes on the Company's foreign sourced earnings.
At December 31, 2018, the Company has completed its accounting for all of the income tax effects of the Act. The adjustments were as follows:
The Act’s foreign tax credit provisions may limit the Company’s ability to utilize existing foreign tax credits in future periods, accordingly, we have estimated that approximately $19.2 million could expire unutilized. During fiscal 2018, the Company recorded $28.3 million related to foreign withholding taxes on future distributions of earnings and profits (“E&P”) that may not be utilizable as foreign tax credits.
During fiscal 2018, the Company recorded a benefit of $253.3 million (restated for ASC 606) to account for the effects of the rate change on deferred tax balances.

The one-time transition tax is based on the total post-1986 E&P that was previously deferred from U.S. income taxes. During fiscal 2018, the Company recorded an amount for the one-time transition tax liability of $22.9 million for the Company's foreign subsidiaries.

Since June 30, 2018, the Company made no significant adjustments to the amounts recorded during the measurement period.