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INCOME TAXES (Tables)

12 Months Ended

Jun. 30, 2023

Income Tax Disclosure [Abstract]

Provision for income taxes

The provision for income taxes is comprised of the following:

						Year Ended June 30
(In millions)						2023						2022						2021
Current:
Federal						$	141					$	219					$	197
Foreign						424						533						479
State and local						8						25						10
						573						777						686
Deferred:
Federal						(105)						(12)						(129)
Foreign						(77)						(136)						(100)
State and local						(4)						(1)						(1)
						(186)						(149)						(230)
						$	387					$	628					$	456

Reconciliation of the U.S. federal statutory income tax rate and actual effective tax rate on earnings before income taxes

A reconciliation of the U.S. federal statutory income tax rate to the Company’s actual effective tax rate on earnings before income taxes is as follows:

						Year Ended June 30
						2023						2022						2021
Provision for income taxes at statutory rate						21.0		%				21.0		%				21.0		%
Increase (decrease) due to:
State and local income taxes, net of federal tax benefit						0.3						0.7						0.5
Stock-based compensation arrangements – excess tax benefits, net						(0.8)						(2.7)						(3.0)
Previously held equity method investment gain - DECIEM(1)						—						—						(5.3)
GILTI - High-Tax Exception election (adjustment for prior years)						—						—						(1.4)
Taxation of foreign operations						8.6						1.4						1.8
Income tax reserve adjustments						(0.1)						0.3						(0.2)
Nondeductible goodwill impairment charges						—						—						0.1
Other, net						(1.3)						—						0.2
Effective tax rate(2)						27.7		%				20.7		%				13.7		%

(1)Included in Other income, net in the accompanying consolidated statements of earnings for the fiscal year ended June 30, 2021.

(2)For fiscal 2023, the reconciling items between the Company's U.S. federal statutory income tax rate and the Company's actual effective tax rate were materially impacted by the decrease in earnings before income taxes from fiscal 2022 to fiscal 2023.

Significant components of deferred income tax assets and liabilities

Significant components of the Company’s deferred income tax assets and liabilities were as follows:

						June 30
(In millions)						2023						2022
Deferred tax assets:
Compensation-related expenses						$	189					$	203
Inventory obsolescence and other inventory related reserves						75						59
Retirement benefit obligations						60						42
Various accruals not currently deductible						225						269
Net operating loss, credit and other carryforwards						225						192
Unrecognized state tax benefits and accrued interest						12						13
Lease liabilities						479						504
Research-related expenses						200						121
Other differences between tax and financial statement values						107						26
						1,572						1,429
Valuation allowance for deferred tax assets						(200)						(185)
Total deferred tax assets						1,372						1,244
Deferred tax liabilities:
Fixed assets and intangibles						(264)						(325)
ROU assets						(432)						(452)
Partnership interest in DECIEM						(404)						(431)
Other differences between tax and financial statement values						(32)						(33)
Total deferred tax liabilities						(1,132)						(1,241)
Total net deferred tax assets						$	240					$	3

Reconciliation of the beginning and ending amount of gross unrecognized tax benefits

A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows:

						June 30
(In millions)						2023						2022						2021
Beginning of the year balance of gross unrecognized tax benefits						$	61					$	62					$	70
Gross amounts of increases as a result of tax positions taken during a prior period						9						12						9
Gross amounts of decreases as a result of tax positions taken during a prior period						(5)						(6)						(10)
Gross amounts of increases as a result of tax positions taken during the current period						4						7						8
Amounts of decreases in unrecognized tax benefits relating to settlements with taxing authorities						(4)						(12)						(13)
Reductions to unrecognized tax benefits as a result of a lapse of the applicable statutes of limitations						(2)						(2)						(2)
End of year balance of gross unrecognized tax benefits						$	63					$	61					$	62

Tax years that remain subject to examination vary by the major tax jurisdictions

The tax years subject to examination vary depending on the tax jurisdiction. As of June 30, 2023, the following tax years remain subject to examination by the major tax jurisdictions indicated:

Major Jurisdiction						Open Fiscal Years
Belgium						2019 – 2023
Canada						2019 – 2023
China						2020 – 2023
France						2019 – 2023
Germany						2017 – 2023
Hong Kong						2017 – 2023
Italy						2019 – 2023
Japan						2020 – 2023
Korea						2021 - 2023
Spain						2018 – 2023
Switzerland						2020 – 2023
United Kingdom						2022 – 2023
United States						2022 – 2023
State of California						2018 – 2023
State and City of New York						2018 – 2023

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Tabular disclosure of the components of income tax expense attributable to continuing operations for each year presented including, but not limited to: current tax expense (benefit), deferred tax expense (benefit), investment tax credits, government grants, the benefits of operating loss carryforwards, tax expense that results from allocating certain tax benefits either directly to contributed capital or to reduce goodwill or other noncurrent intangible assets of an acquired entity, adjustments of a deferred tax liability or asset for enacted changes in tax laws or rates or a change in the tax status of the entity, and adjustments of the beginning-of-the-year balances of a valuation allowance because of a change in circumstances that causes a change in judgment about the realizability of the related deferred tax asset in future years.

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Tabular disclosure of the components of net deferred tax asset or liability recognized in an entity's statement of financial position, including the following: the total of all deferred tax liabilities, the total of all deferred tax assets, the total valuation allowance recognized for deferred tax assets.

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Tabular disclosure of the reconciliation using percentage or dollar amounts of the reported amount of income tax expense attributable to continuing operations for the year to the amount of income tax expense that would result from applying domestic federal statutory tax rates to pretax income from continuing operations.

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Tabular disclosure for 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 and other income tax contingencies. Includes, but is not limited to, interest and penalties, reconciliation of unrecognized tax benefits, unrecognized tax benefits that would affect the effective tax rate, tax years that remain subject to examination by tax jurisdictions, and information about positions for which it is reasonably possible that amounts unrecognized will significantly change within 12 months.

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Tabular disclosure of income tax examinations that an enterprise is currently subject to or that have been completed in the current period typically including a description of the examination, the jurisdiction conducting the examination, the tax year(s) under examination, the likelihood of an unfavorable settlement, the range of possible losses, the liability recorded, the increase or decrease in the liability from the prior period, and any penalties and interest that have been recorded.

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