Income Taxes (Tables)

12 Months Ended

Jun. 30, 2014

Income before taxes was taxed as indicated in the following jurisdictions:



	Fiscal Year Ended June 30,
(in thousands)	2014		2013		2012
U.S./Canada	$	136,486	$	109,131	$	124,860
International	124,890		124,674		112,331
Total income before taxes	$	261,376	$	233,805	$	237,191

Summary Of Components Of Income Tax Expense

The components of income tax expense were as follows:



	Fiscal Year Ended June 30,
(in thousands)	2014		2013			2012
Current:
Federal	$	41,085	$	33,032		$	46,991
State	4,863		2,896			4,153
Foreign	25,939		28,732			22,382
Total current income tax expense	71,887		64,660			73,526
Deferred:
Federal	3,045		(688		)	(2,650		)
State	371		(60		)	(235		)
Foreign	3,894		(1,954		)	(551		)
Total deferred income tax expense (benefit)	7,310		(2,702		)	(3,436		)
Total income tax expense	$	79,197	$	61,958		$	70,090

Summary Of Income Tax Reconciliation

The reconciliation of these differences is as follows:



	Fiscal Year Ended June 30,
	2014		2013		2012
Statutory rate	35.0	%	35.0	%	35.0	%
Increase (decrease) resulting from:
State taxes, net of federal tax benefit	1.2		1.4		1.6
Effect of tax rates in foreign jurisdictions	(13.4	)	(14.7	)	(11.4	)
Share-based and other compensation	0.6		0.5		1.4
Non-deferred foreign income	0.1		0.2		0.3
Domestic manufacturing deduction	(1.2	)	(1.0	)	(1.0	)
Valuation allowances	1.0		0.5		0.3
Net uncertain tax positions	3.2		0.3		1.4
Foreign withholding taxes	1.5		1.0		0.8
Non-deductible items	1.7		1.9		0.0
Other differences	0.6		1.4		1.1
Effective tax rate	30.3	%	26.5	%	29.5	%

Summary Of Deferred Tax Assets And Liabilities

The significant components of the Company’s deferred tax assets and liabilities were as follows:



	As of June 30,
(in thousands)	2014			2013
Deferred tax assets:
Share-based compensation	$	26,410		$	25,712
Net operating loss carryforwards	68,238			60,027
Accruals	12,895			11,571
Accounts receivable reserves	6,032			6,795
Capital losses	3,833			4,008
Intercompany profit eliminations	3,501			3,545
Deferred revenues and customer deposits	1,239			580
Inventory	2,440			2,760
Benefit related accruals	2,492			2,552
Accrued interest	1,684			—
Other	1,944			2,194
Total deferred tax assets	130,708			119,744

Deferred tax liabilities:
Intangible assets amortization	(28,130		)	(28,249		)
Capitalized software development costs	(7,512		)	(2,365		)
Depreciation	(1,148		)	(1,246		)
Other	(98		)	(549		)
Total deferred tax liabilities	(36,888		)	(32,409		)

Valuation allowance:
Capital losses	(3,833		)	(4,008		)
Other	(32,180		)	(20,673		)
Total valuation allowance	(36,013		)	(24,681		)
Net deferred tax assets	$	57,807		$	62,654

Summary Of Tax Effect On Operating Loss Carryforwards And Related Valuation Allowance

The tax affected net operating loss carryforwards and related valuation allowance are as follows:



	As of June 30,
(in thousands)	2014			2013
Net operating loss carryforwards:
U.S./Canada	$	2,417		$	2,861
International	65,821			57,166
Total net operating loss carryforwards	68,238			60,027
Net operating loss carryforward valuation allowance:
U.S./Canada	—			(42		)
International	(30,497		)	(17,692		)
Total net operating loss carryforward valuation allowance	(30,497		)	(17,734		)
Net operating loss carryforwards, net of valuation allowance	$	37,741		$	42,293

Summary Of Tax Effect On Operating Loss Carryforwards And Tax Credit Carryforwards

The Company’s net operating loss carryforwards and tax credit carryforwards as of June 30, 2014 expire as follows:



	Fiscal Year Ending June 30,
(in thousands)	2015			2016			Thereafter			No Expiration			Total
U.S./Canada:
Net operating loss carryforwards	$	0		$	0		$	2,417		$	0		$	2,417
Valuation allowances	0			0			—			0			—
Total U.S.	0			0			2,417			0			2,417
International:
Net operating loss carryforwards	7			217			9,315			56,282			65,821
Valuation allowances	(7		)	(213		)	(9,192		)	(21,085		)	(30,497		)
Total International	0			4			123			35,197			35,324
Net operating loss carryforwards, net of valuation allowances	$	0		$	4		$	2,540		$	35,197		$	37,741

Summary Of Unrecognized Tax Benefits

The significant components of the Company’s gross unrecognized tax benefits are as follows:



	As of June 30,
(in thousands)	2014			2013
Balance, beginning of year	$	33,071		$	32,079
Current year uncertain tax positions:
Gross increases	11,303			9,404
Prior year uncertain tax positions:
Gross increases	1,670			1,025
Gross decreases	—			(471		)
Settlements with tax authorities	—			(5,993		)
Expiration of statute of limitations	(2,827		)	(2,973		)
Balance, end of year	$	43,217		$	33,071

- Definition

Tabular disclosure of tax positions taken in the tax returns filed or to be filed for which it is more likely than not that the tax position will not be sustained upon examination by taxing authorities (i.e., uncertain tax positions) and other types of income tax contingencies, including: (1) the policy on classification of interest and penalties; (2) a tabular reconciliation of the total amounts of unrecognized tax benefits at the beginning and end of the period; the total amount(s) of: (3) unrecognized tax benefits that, if recognized, would affect the effective tax rate, and (4) interest and penalties recognized in each of the income statement and balance sheet; (5) for positions for which it is reasonably possible that the total amounts unrecognized will significantly change within 12 months of the reporting date the: (i) nature of the uncertainty, (ii) nature of the event that could occur that would cause the change, and (iii) an estimate of the range of the reasonably possible change or a statement that an estimate of the range cannot be made; and (6) a description of tax years that remain subject to examination by major tax jurisdictions.

+ References+ Details

MICROS SYSTEMS INC 10-K