v3.19.2

Income Taxes | 12 Months Ended
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Jun. 30, 2019
Income Tax Disclosure [Abstract] |
Income Taxes | INCOME TAXES Earnings before income taxes shown below are based on the geographic location to which such earnings are attributable.
|  | Years Ended June 30,
|  | 2019 |  | 2018 |  | 2017
|  | (in millions)
Earnings before income taxes: |  |  |  |  |  |
U.S. |  | $ | 526.4 |  |  | $ | 450.0 |  |  | $ | 398.6 |
Foreign |  | 80.8 |  |  | 111.1 |  |  | 89.5 |
Total |  | $ | 607.3 |  |  | $ | 561.0 |  |  | $ | 488.1 |
The Provision for income taxes consists of the following components:
|  | Years Ended June 30,
|  | 2019 |  | 2018 |  | 2017
|  | (in millions)
Current: |  |  |  |  |  |
U.S. Domestic |  | $ | 88.8 |  |  | $ | 89.4 |  |  | $ | 138.2 |
Foreign |  | 24.7 |  |  | 43.4 |  |  | 24.8 |
State |  | 15.1 |  |  | 9.6 |  |  | 13.0 |
Total current |  | 128.7 |  |  | 142.4 |  |  | 176.0 |
Deferred: |  |  |  |  |  |
U.S. Domestic |  | 2.2 |  |  | (13.6 | ) |  | (7.9 | )
Foreign |  | (2.8 | ) |  | 4.9 |  |  | (4.2 | )
State |  | (2.9 | ) |  | (0.6 | ) |  | (2.5 | )
Total deferred |  | (3.5 | ) |  | (9.3 | ) |  | (14.7 | )
Total Provision for income taxes |  | $ | 125.2 |  |  | $ | 133.1 |  |  | $ | 161.4 |
|  | Years Ended June 30,
|  | 2019 |  | % |  | 2018 |  | % |  | 2017 |  | %
|  | (in millions)
Provision for income taxes at U.S. statutory rate |  | $ | 127.5 |  |  | 21.0 |  |  | $ | 157.4 |  |  | 28.1 |  |  | $ | 170.8 |  |  | 35.0 |
Increase (decrease) in Provision for income taxes from: |  |  |  |  |  |  |  |  |  |  |  |
State taxes, net of federal tax |  | 12.0 |  |  | 2.0 |  |  | 9.4 |  |  | 1.7 |  |  | 6.7 |  |  | 1.4 |
Foreign tax differential |  | 3.8 |  |  | 0.6 |  |  | (2.4 | ) |  | (0.4 | ) |  | (6.9 | ) |  | (1.4 | )
Valuation allowances |  | 0.4 |  |  | 0.1 |  |  | (5.0 | ) |  | (0.9 | ) |  | (0.6 | ) |  | (0.1 | )
Non-taxable investment gain |  | — |  |  | — |  |  | — |  |  | — |  |  | (3.3 | ) |  | (0.7 | )
Stock-based compensation - ETB |  | (19.3 | ) |  | (3.2 | ) |  | (40.9 | ) |  | (7.3 | ) |  | — |  |  | — |
Tax Act Items |  | (0.5 | ) |  | (0.1 | ) |  | 15.4 |  |  | 2.7 |  |  | — |  |  | — |
Other |  | 1.3 |  |  | 0.2 |  |  | (0.8 | ) |  | (0.1 | ) |  | (5.3 | ) |  | (1.1 | )
Total Provision for income taxes |  | $ | 125.2 |  |  | 20.6 |  |  | $ | 133.1 |  |  | 23.7 |  |  | $ | 161.4 |  |  | 33.1 |
The Provision for income taxes and effective tax rates for the fiscal year ended June 30, 2019 were $125.2 million and 20.6%, compared to $133.1 million and 23.7%, for the fiscal year ended June 30, 2018, respectively. The decrease in the effective tax rate for the fiscal year ended June 30, 2019 compared to the fiscal year ended June 30, 2018 is primarily due to a reduced statutory U.S. federal tax rate as well as a prior period net tax charge relating to the enactment of the Tax Act, partially offset by the recognition of lower ETB attributable to stock-based compensation compared to the ETB recognized in fiscal year ended June 30, 2018. In the fiscal year ending June 30, 2019, the Company’s federal corporate statutory income tax rate was 21.0% compared to a blended tax rate of 28.1% for the prior fiscal year. In addition, notwithstanding the reduction in the federal corporate statutory income tax rate for the fiscal year ended June 30, 2018, the Tax Act required the Company to accrue a transition tax on earnings of certain foreign subsidiaries at December 31, 2017, and which in turn led to the accrual of applicable foreign withholding taxes to repatriate such earnings subject to the transition tax. At June 30, 2018 the Company estimated the transition tax and applicable foreign withholding taxes to be approximately $30.8 million, partially offset by a benefit of approximately $15.3 million relating to the remeasurement of the Company’s net deferred tax liabilities. The SEC issued Staff Accounting Bulletin No. 118 (“SAB 118”) which provided the Company with up to one year to finalize accounting for the impacts of the Tax Act. Under SAB 118, the Company finalized the prior year estimate of the transition tax and applicable withholding taxes and recognized a tax benefit of approximately $0.5 million in the fiscal year ended June 30, 2019. In addition to the lower corporate tax rate, the Tax Act introduced two new federal tax provisions relating to foreign source earnings, (i) a minimum tax on global intangible low-tax income (“GILTI”) and (ii) a deduction for foreign-derived intangible income (“FDII”). Both provisions were effective beginning with the fiscal year ended June 30, 2019, and on a net basis generated a tax benefit of approximately $1.8 million. The Provision for income taxes and effective tax rates for the fiscal year ended June 30, 2018 were $133.1 million and 23.7%, compared to $161.4 million and 33.1%, for the fiscal year ended June 30, 2017, respectively. The effective tax for the fiscal year ended June 30, 2018 was impacted by the recognition of a $40.9 million of ETB attributable to stock-based compensation as well as a reduced U.S. federal tax rate, partially offset by $15.4 million of net tax charges relating to the December 22, 2017 enactment of the Tax Act. As of June 30, 2019, the Company had approximately $496.8 million of accumulated earnings and profits attributable to foreign subsidiaries. The Company considers $221.7 million of accumulated earnings attributable to foreign subsidiaries to be permanently reinvested outside the U.S. and has not determined the cost to repatriate such earnings since it is not practicable to calculate the amount of income taxes payable in the event all such foreign earnings are repatriated. The Company does not consider the remaining $275.1 million of accumulated earnings to be permanently reinvested outside the U.S. Under SAB 118, the Company has provisionally accrued approximately $11.6 million of foreign withholding taxes and $0.6 million of state income taxes attributable to such earnings. Deferred income taxes reflect the net tax effects of temporary differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when such differences are expected to reverse. Significant components of the Company’s deferred tax assets and liabilities at June 30, 2019 and 2018 were as follows:
|  | June 30,
|  | 2019 |  | 2018
|  | (in millions)
Classification: |  |  |  |
Long-term deferred tax assets (included in Other non-current assets) |  | 5.5 |  |  | 9.2 |
Long-term deferred tax liabilities |  | (86.7 | ) |  | (57.9 | )
Net deferred tax liabilities |  | $ | (81.3 | ) |  | $ | (48.8 | )
Components: |  |  |  |
Deferred tax assets: |  |  |  |
Accrued expenses not currently deductible |  | $ | 3.2 |  |  | $ | 3.5 |
Depreciation |  | — |  |  | 2.2 |
Compensation and benefits not currently deductible |  | 57.6 |  |  | 51.7 |
Net operating and capital losses |  | 11.1 |  |  | 12.1 |
Tax credits |  | 7.5 |  |  | 5.2 |
Other |  | 6.1 |  |  | 6.6 |
Total deferred tax assets |  | 85.6 |  |  | 81.3 |
Less: Valuation allowances |  | (3.3 | ) |  | (3.8 | )
Deferred tax assets, net |  | 82.2 |  |  | 77.6 |
Deferred tax liabilities: |  |  |  |
Goodwill and identifiable intangibles |  | 100.9 |  |  | 93.4 |
Depreciation |  | 10.1 |  |  | — |
Net deferred expenses |  | 33.6 |  |  | 15.5 |
Unremitted earnings |  | 12.2 |  |  | 11.1 |
Other |  | 6.8 |  |  | 6.2 |
Deferred tax liabilities |  | 163.5 |  |  | 126.3 |
Net deferred tax liabilities |  | $ | (81.3 | ) |  | $ | (48.8 | )
The Company has estimated foreign net operating loss carryforwards of approximately $9.5 million as of June 30, 2019 of which $1.5 million expires in 2020 through 2028 and of which $8.0 million has an indefinite utilization period. In addition, the Company has estimated U.S. federal net operating loss carryforwards of approximately $18.6 million, which expire in 2019 through 2030. Valuation allowances are recognized to reduce deferred tax assets when it is more likely than not that the Company will not be able to utilize the deferred tax assets attributable to net operating and capital loss carryforwards of certain subsidiaries to offset future taxable earnings. The Company has recorded valuation allowances of $3.3 million and $3.8 million at June 30, 2019 and 2018, respectively. The determination as to whether a deferred tax asset will be recognized is made on a jurisdictional basis and is based on the evaluation of historical taxable income or loss, projected future taxable income, carryforward periods, scheduled reversals of deferred tax liabilities and tax planning strategies. Projected future taxable income is based on expected results and assumptions as to the jurisdiction in which the income will be earned. The assumptions used to project future taxable income require significant judgment and are consistent with the plans and estimates used to manage the underlying businesses. In the next twelve months, the Company does not expect a material change to its net reserve balance for unrecognized tax benefits. The following table summarizes the activity related to the Company’s gross unrecognized tax positions:
|  | Fiscal Year Ended June 30,
|  | 2019 |  | 2018 |  | 2017
|  | (in millions)
Beginning balance |  | $ | 22.8 |  |  | $ | 18.7 |  |  | $ | 18.2 |
Gross increase related to prior period tax positions |  | 17.3 |  |  | 3.5 |  |  | 0.6 |
Gross increase related to current period tax positions |  | 2.8 |  |  | 3.0 |  |  | 2.7 |
Gross decrease related to prior period tax positions |  | (2.6 | ) |  | (2.4 | ) |  | (2.8 | )
Ending balance |  | $ | 40.2 |  |  | $ | 22.8 |  |  | $ | 18.7 |
As of June 30, 2019, 2018 and 2017, the net reserve for unrecognized tax positions recorded by the Company that is included in the preceding table of gross unrecognized tax positions was $33.4 million, $19.4 million, and $13.4 million respectively, and if reversed in full, would favorably affect the effective tax rate by these amounts, respectively. The $2.6 million, $2.4 million and $2.8 million gross decreases in fiscal years 2019, 2018 and 2017, respectively, for prior period tax positions related to certain tax audit settlements and certain state, federal and foreign statute of limitation expirations. During the fiscal year ended June 30, 2019, the Company adjusted accrued interest by approximately $(0.1) million and recognized a total liability for interest on unrecognized tax positions of $3.6 million; in the fiscal year ended June 30, 2018, the Company adjusted accrued interest by approximately $0.5 million and recognized a total liability of $3.7 million for interest on unrecognized tax positions; in the fiscal year ended June 30, 2017 the Company adjusted accrued interest by approximately $(0.2) million and recognized a total liability of $3.2 million for interest on unrecognized tax positions. The Company is regularly subject to examination of its income tax returns by U.S. Federal, state and foreign income tax authorities. The tax years that are currently open and could be subject to income tax audits for U.S. federal and most state and local jurisdictions are fiscal years ending June 30, 2013 through June 30, 2019, and for Canadian operations that could be subject to audit in Canada, fiscal years ending June 30, 2014 through June 30, 2019. A change in the assessment of the outcomes of such matters could materially impact our Consolidated Financial Statements.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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