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Income Taxes | 12 Months Ended
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Jun. 30, 2017
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES Income (loss) before income taxes consisted of the following for the years ended June 30:
(in thousands) | 2017 |  | 2016 |  | 2015
Income (loss) before income taxes: |  |  |  |  |
United States | $ | (23,055 | ) |  | $ | (228,667 | ) |  | $ | (323,299 | )
International | 104,930 |  |  | 30,096 |  |  | (64,316 | )
Total income (loss) before income taxes | $ | 81,875 |  |  | $ | (198,571 | ) |  | $ | (387,615 | )
Current income taxes: |  |  |  |  |
Federal | $ | (1,455 | ) |  | $ | (15,039 | ) |  | $ | (9,328 | )
State | 172 |  |  | 454 |  |  | 816 |
International | 24,911 |  |  | 31,570 |  |  | 40,433 |
Total current income taxes | 23,628 |  |  | 16,985 |  |  | 31,921 |
Deferred income taxes: |  |  |  |  |
Federal | $ | 298 |  |  | $ | 6,786 |  |  | $ | (38,943 | )
State | (867 | ) |  | 8,407 |  |  | (8,680 | )
International | 6,836 |  |  | (6,865 | ) |  | (952 | )
Total deferred income taxes: | 6,267 |  |  | 8,328 |  |  | (48,575 | )
Provision (benefit) for income taxes | $ | 29,895 |  |  | $ | 25,313 |  |  | $ | (16,654 | )
Effective tax rate | 36.5 | % |  | (12.7 | )% |  | 4.3 | %
The reconciliation of income taxes computed using the statutory U.S. income tax rate and the provision for income taxes was as follows for the years ended June 30:
(in thousands) | 2017 |  | 2016 |  | 2015
Income taxes at U.S. statutory rate | $ | 28,656 |  |  | $ | (69,500 | ) |  | $ | (135,665 | )
State income taxes, net of federal tax benefits | (306 | ) |  | 859 |  |  | (1,748 | )
U.S. income taxes provided on international income | 10,273 |  |  | 2,364 |  |  | 3,679 |
Combined tax effects of international income | (11,530 | ) |  | (25,469 | ) |  | (21,560 | )
Impact of goodwill impairment charges | — |  |  | 6,439 |  |  | 134,657 |
Impact of divestiture | — |  |  | 27,790 |  |  | — |
Change in valuation allowance and other uncertain tax positions | 5,163 |  |  | 84,530 |  |  | 1,530 |
Impact of domestic production activities deduction | — |  |  | (2,072 | ) |  | — |
Research and development credit | (1,895 | ) |  | (4,351 | ) |  | (3,087 | )
Change in permanent reinvestment assertion | — |  |  | 3,659 |  |  | 2,945 |
Other | (466 | ) |  | 1,064 |  |  | 2,595 |
Provision (benefit) for income taxes | $ | 29,895 |  |  | $ | 25,313 |  |  | $ | (16,654 | )
During 2017, we recorded a valuation allowance against the net deferred tax assets of our Australian subsidiary. The impact of the valuation allowance was approximately $1.3 million and is included in the tax reconciliation table under the caption "change in valuation allowance and other uncertain tax positions." During 2016, we recorded a valuation allowance against our net domestic deferred tax assets of $105.9 million, as discussed below. Of this amount, $81.2 million impacted the effective tax rate and is included in the income tax reconciliation table under the caption "change in valuation allowance and other uncertain tax positions," and $24.7 million was recorded in other comprehensive income. During 2016 and 2015, we recorded goodwill impairment charges related to our Infrastructure segment. There was no tax benefit for a portion of charges in 2016. There was no tax benefit for a majority of charges in 2015. The federal effect of these permanent differences is included in the income tax reconciliation table under the caption "impact of goodwill impairment charges." During 2016, we divested certain non-core businesses as described in Note 4. A portion of the loss from this divestiture was not deductible for tax purposes. The Federal effect of this permanent difference is included in the income tax reconciliation table under the caption "impact of divestiture." During 2016 we recorded on adjustment of $3.7 million related to a change in assertion of certain foreign subsidiaries' undistributed earnings primarily related to the transaction described in Note 4, which are no longer considered permanently reinvested. The effect of this charge is included in the income tax reconciliation table under the caption "change in permanent reinvestment assertion." During 2015, we recorded an adjustment of $2.9 million related to a change in assertion of certain foreign subsidiaries' undistributed earnings, which are no longer considered permanently reinvested. The effect of this charge is included in the income tax reconciliation table under the caption "change in permanent reinvestment assertion." The components of net deferred tax assets and (liabilities) were as follows at June 30:
(in thousands) | 2017 |  | 2016
Deferred tax assets: |  |  |
Net operating loss (NOL) carryforwards | $ | 85,659 |  |  | $ | 77,198 |
Inventory valuation and reserves | 20,428 |  |  | 18,865 |
Pension benefits | 24,824 |  |  | 42,432 |
Other postretirement benefits | 5,959 |  |  | 7,111 |
Accrued employee benefits | 11,234 |  |  | 17,069 |
Other accrued liabilities | 8,609 |  |  | 9,229 |
Hedging activities | 5,409 |  |  | 5,507 |
Tax credits and other carryforwards | 41,039 |  |  | 30,733 |
Intangible assets | 14,947 |  |  | 21,575 |
Total | 218,108 |  |  | 229,719 |
Valuation allowance | (116,770 | ) |  | (122,699 | )
Total deferred tax assets | $ | 101,338 |  |  | $ | 107,020 |
Deferred tax liabilities: |  |  |
Tax depreciation in excess of book | $ | 83,258 |  |  | $ | 83,412 |
Other | 4,614 |  |  | 149 |
Total deferred tax liabilities | $ | 87,872 |  |  | $ | 83,561 |
Total net deferred tax assets | $ | 13,466 |  |  | $ | 23,459 |
Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not (greater than 50%) that a tax benefit will not be realized. In evaluating the need for a valuation allowance, we consider all potential sources of taxable income, including income available in carryback periods, future reversals of taxable temporary differences, projections of taxable income, and income from tax planning strategies, as well as all available positive and negative evidence. Positive evidence includes factors such as a history of profitable operations, and projections of future profitability within the carry forward period, including taxable income from tax planning strategies. Negative evidence includes items such as cumulative losses, projections of future losses, or carryforward periods that are not long enough to allow for the utilization of the deferred tax asset based on existing projections of income. Upon changes in facts and circumstances, we may conclude that deferred tax assets for which no valuation allowance is currently recorded may not be realized, resulting in a future charge to establish a valuation allowance. Existing valuation allowances are re-examined under the same standards of positive and negative evidence. If it is determined that it is more likely than not that a deferred tax asset will be realized, the appropriate amount of the valuation allowance, if any, is released. During 2017, we recorded a valuation allowance of $1.3 million against the net deferred tax assets of our Australian subsidiary. In 2016, we recorded a valuation allowance of $105.9 million against our net deferred tax assets in the U.S. Of this amount, $81.2 million was recorded in the provision for income taxes and $24.7 million was recorded in other comprehensive income. After weighing all available positive and negative evidence, as previously described, we determined that it was no longer more likely than not that we will realize the tax benefit of these deferred tax assets. This was driven by cumulative pre-tax domestic losses from charges related to asset impairment, restructuring and loss on divestiture, as well as an overall decrease in demand in U.S. operations. Included in deferred tax assets at June 30, 2017 is $41.0 million associated with tax credits and other carryforward items primarily in federal and state jurisdictions. Of that amount, $1.4 million expires through 2022, $31.1 million expires through 2027, $0.6 million expires through 2032, $7.7 million expires through 2037 and the remaining $0.2 million does not expire. Included in deferred tax assets at June 30, 2017 is $85.7 million associated with NOL carryforwards in federal, state and foreign jurisdictions. Of that amount, $9.5 million expires through 2022, $2.7 million expires through 2027, $2.5 million expires through 2032, $47.3 million expires through 2037, and the remaining $23.7 million does not expire. The realization of these tax benefits is primarily dependent on future taxable income in these jurisdictions. We do not recognize the windfall tax benefits related to the exercise of a stock option or the vesting of restricted stock units unless such deduction reduces income taxes payable. As of June 30, 2017, the gross amount of NOL carryforwards is $3.7 million, and $1.4 million would be recorded in equity when realized. Effective July 1, 2017, the Company will adopt new FASB guidance on equity-based award accounting. See Note 2. A valuation allowance of $116.8 million has been placed against deferred tax assets in the U.S., Brazil, Europe, Australia and Hong Kong, all of which would be allocated to income tax expense upon realization of the deferred tax assets. As the respective operations generate sufficient income, the valuation allowances will be partially or fully reversed at such time we believe it will be more likely than not that the deferred tax assets will be realized. In 2017, the valuation allowance related to these deferred tax assets decreased by $5.9 million, due primarily to the change in the mix of U.S. deferred tax assets and liabilities. As of June 30, 2017, unremitted earnings of our non-U.S. subsidiaries and affiliates of $2,023.4 million, the majority of which have not been previously taxed in the U.S., are considered permanently reinvested, and accordingly, no deferred tax liability has been recorded in connection therewith. It is not practical to estimate the income tax effect that might be incurred if cumulative prior year earnings not previously taxed in the U.S. were remitted to the U.S. A reconciliation of the beginning and ending amount of unrecognized tax benefits (excluding interest) is as follows as of June 30:
(in thousands) |  | 2017 |  | 2016 |  | 2015
Balance at beginning of year |  | $ | 3,106 |  |  | $ | 14,619 |  |  | $ | 20,366 |
Increases for tax positions of prior years |  | — |  |  | 1,197 |  |  | — |
Decreases for tax positions of prior years |  | — |  |  | — |  |  | (3,188 | )
Decreases related to settlement with taxing authority |  | (231 | ) |  | (11,942 | ) |  | (348 | )
Decreases related to lapse of statute of limitations |  | (184 | ) |  | (667 | ) |  | (398 | )
Foreign currency translation |  | (59 | ) |  | (101 | ) |  | (1,813 | )
Balance at end of year |  | $ | 2,632 |  |  | $ | 3,106 |  |  | $ | 14,619 |
The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate in 2017, 2016 and 2015 is $2.6 million, $3.1 million and $2.7 million, respectively. Our policy is to recognize interest and penalties related to income taxes as a component of the provision for income taxes in the consolidated statement of income. We recognized an increase in interest of $0.2 million in 2017, and reduction in interest of $0.2 million and $0.7 million in 2016 and 2015, respectively. As of June 30, 2017 and 2016 the amount of interest accrued was $0.5 million and $0.3 million, respectively. As of June 30, 2017 and 2016, the amount of penalty accrued was $0.1 million and $0.3 million, respectively. In 2016, decreases for tax positions primarily relate to one foreign tax position. We settled this position with the foreign authority. A corresponding deferred tax asset in the amount of $11.9 million was released for the position in the U.S. and in the prior year this amount was included in the components of net deferred tax liabilities and assets table under the caption "other." With few exceptions, we are no longer subject to income tax examinations by tax authorities for years prior to 2011. The Internal Revenue Service has audited all U.S. tax years prior to 2015. Various state and foreign jurisdiction tax authorities are in the process of examining our income tax returns for various tax years ranging from 2011 to 2015. We continue to execute our pan-European business model. As a result of this and other matters, we continuously review our uncertain tax positions and evaluate any potential issues that may lead to an increase or decrease in the total amount of unrecognized tax benefits recorded. We believe that it is reasonably possible that the amount of unrecognized tax benefits could decrease by approximately $0.4 million within the next twelve months.

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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://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32559-109319 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32718-109319 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32537-109319 + Details
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