Quarterly report pursuant to Section 13 or 15(d)

Income Taxes

v2.3.0.15
Income Taxes
3 Months Ended
Sep. 30, 2011
Income Tax Expense (Benefit) [Abstract]  
Income Taxes
INCOME TAXES
The following table provides details of income taxes:
(Dollar amounts in thousands)
Three months ended
September 30,
2011
 
2010
Income before income taxes
$
247,262

 
$
223,312

Provision for taxes
55,267

 
69,116

Effective tax rate
22.4
%
 
31.0
%

The Company’s estimated annual effective tax rate for the fiscal year ending June 30, 2012 is approximately 25.0%.
The difference between the actual effective tax rate of 22.4% during the quarter and the estimated annual effective tax rate of 25.0% is primarily due to the tax impact of the following items during the three months ended September 30, 2011:
Tax benefit of $18.3 million was recognized related to the settlement of a United States federal income tax examination for the fiscal years ended June 30, 2007 through June 30, 2009. During the three months ended September 30, 2011, the Company received acceptance from the Joint Committee of Taxation for the settlement of the U.S. federal income tax examination. As a result of the settlement, the Company reduced its unrecognized tax benefits by $22.0 million.
Tax benefit of $18.0 million was recognized related to a decrease in reserves for uncertain tax positions taken in prior years.
Tax expense of $23.6 million was recognized related to an inter-company licensing agreement in connection with the migration of a portion of the Company's manufacturing to Singapore.
Tax expense of $5.2 million was recognized related to a non-deductible decrease in the value of the assets held within the Company’s Executive Deferred Savings Plan.
Tax expense was lower as a percentage of income during the three months ended September 30, 2011 compared to the three months ended September 30, 2010 primarily due to:
A tax benefit of $18.3 million recognized during the three months ended September 30, 2011 resulting from a decrease in the Company's unrecognized tax benefits due to the settlement of a U.S. federal income tax examination;
A tax benefit of $18.0 million recognized during the three months ended September 30, 2011 resulting from a decrease in reserves for uncertain tax positions taken in prior years;
A decrease in tax expense of $6.9 million during the three months ended September 30, 2011 related to state income taxes; and
A decrease in tax expense of $7.7 million during the three months ended September 30, 2011 related to an increase in the proportion of the Company's earnings generated in jurisdictions with tax rates lower than the U.S. statutory tax rate; partially offset by
An increase in tax expense of $23.6 million during the three months ended September 30, 2011 related to a migration of a portion of the Company's manufacturing to Singapore.
In the normal course of business, the Company is subject to examination by taxing authorities throughout the world. The Company is subject to federal income tax examination for all years beginning from the year ended June 30, 2010.  The Company is subject to state income tax examinations for all years beginning from the fiscal year ended June 30, 2007. The Company is also subject to examinations in other major foreign jurisdictions, including Singapore, for all years beginning from the fiscal year ended June 30, 2007. It is possible that certain examinations may be concluded in the next twelve months. The Company believes it is possible that it may recognize up to $1.1 million of its existing unrecognized tax benefits within the next twelve months as a result of the lapse of statutes of limitations and the resolution of examinations with various tax authorities.