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Income Taxes | 12 Months Ended
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Jun. 30, 2021
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes In the fourth quarter of the fiscal year ended June 30, 2021, following a review of its operations, liquidity and funding, tax implications of cash repatriation and investment opportunities, the Company determined that the ability to access the earnings of foreign earnings that were previously indefinitely reinvested could provide greater investment returns and meet other working capital needs if available to repatriate to the U.S. Accordingly, in the quarter ended June 30, 2021, the Company withdrew the permanent reinvestment assertion only with respect to all earnings generated by foreign operations. As a result of this change in the permanent reinvestment assertion, the Company considered recording a deferred tax liability related to federal, state and withholding tax and determined that no liability should be recorded. There is no certainty as to the timing of the distribution of such earnings to the U.S. in whole or in part. Income tax expense (benefit) consists of:
| Fiscal Year Ended June 30,
| 2021 |  | 2020 |  | 2019
| (in thousands)
Current: |  |  |  |  |
Federal | $ | 9,132 |  |  | $ | 13,892 |  |  | $ | 18,223 |
State | 1,261 |  |  | 3,244 |  |  | 4,459 |
Foreign | 874 |  |  | 1,188 |  |  | (2,342) |
Total current | 11,267 |  |  | 18,324 |  |  | 20,340 |
Deferred: |  |  |  |  |
Federal | 207 |  |  | (8,526) |  |  | (4,913) |
State | (1,297) |  |  | (2,667) |  |  | (945) |
Foreign | 1,969 |  |  | 320 |  |  | 4,296 |
Total deferred | 879 |  |  | (10,873) |  |  | (1,562) |
Provision for income taxes | $ | 12,146 |  |  | $ | 7,451 |  |  | $ | 18,778 |
A reconciliation is provided below of the U.S. Federal income tax expense for the fiscal years ended June 30, 2021, June 30, 2020 and June 30, 2019 with the applicable statutory rate of 21%.
| Fiscal Year Ended June 30,
| 2021 |  | 2020 |  | 2019
| (in thousands)
U.S. statutory rate | 21.0 | % |  | 21.0 | % |  | 21.0 | %
U.S. Federal income tax at statutory rate | $ | 12,082 |  |  | $ | (15,073) |  |  | $ | 17,564 |
Increase (decrease) in income taxes due to: |  |  |  |  |
State and local income taxes, net of Federal benefit | 996 |  |  | 1,316 |  |  | 2,864 |
Tax credits | (170) |  |  | (1,419) |  |  | (1,324) |
Valuation allowance | 3,472 |  |  | 1,699 |  |  | 57 |
Effect of varying statutory rates in foreign operations, net | 1,051 |  |  | 1,374 |  |  | 1,938 |
Stock compensation | 1,094 |  |  | 41 |  |  | 35 |
Capitalized acquisition costs | — |  |  | 59 |  |  | 69 |
Disallowed interest | 86 |  |  | 1,639 |  |  | 1,600 |
Earnings from foreign subsidiaries | 124 |  |  | 1,661 |  |  | 50 |
Net favorable recovery | — |  |  | (6,517) |  |  | (3,112) |
Losses on dispositions | (2,897) |  |  | — |  |  | — |
Global intangible low taxed income (GILTI) tax | (45) |  |  | (128) |  |  | 365 |
Non-deductible goodwill impairment | — |  |  | 20,180 |  |  | — |
Nontaxable income | (1,628) |  |  | — |  |  | (822) |
U.S. Tax Reform transition tax | — |  |  | — |  |  | (827) |
Notional interest deduction on net equity | (568) |  |  | — |  |  | — |
Other jurisdictions impact of rate change on deferred taxes | — |  |  | — |  |  | (20) |
Other | (1,451) |  |  | 2,619 |  |  | 341 |
Provision for income taxes | $ | 12,146 |  |  | $ | 7,451 |  |  | $ | 18,778 |
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities are presented below:
| June 30,
| 2021 |  | 2020
| (in thousands)
Deferred tax assets derived from: |  |  |
Allowance for accounts receivable | $ | 5,557 |  |  | $ | 6,466 |
Inventories | 5,577 |  |  | 3,226 |
Nondeductible accrued expenses | 8,024 |  |  | 11,109 |
Net operating loss carryforwards | 892 |  |  | 3,083 |
Tax credits | 7,138 |  |  | 6,734 |
Timing of amortization deduction from goodwill | — |  |  | 12,516 |
Deferred compensation | 7,893 |  |  | 7,247 |
Stock compensation | 2,977 |  |  | 3,034 |
Capital loss carryforwards | 7,633 |  |  | — |
Timing of amortization deduction from intangible assets | 4,880 |  |  | 4,145 |
Total deferred tax assets | 50,571 |  |  | 57,560 |
Valuation allowance | (13,996) |  |  | (9,195) |
Total deferred tax assets, net of allowance | 36,575 |  |  | 48,365 |
Deferred tax liabilities derived from: |  |  |
Timing of depreciation and other deductions from building and equipment | (3,749) |  |  | (3,347) |
Timing of amortization deduction from goodwill | (582) |  |  | (7,390) |
Timing of amortization deduction from intangible assets | (14,345) |  |  | (16,882) |
Total deferred tax liabilities | (18,676) |  |  | (27,619) |
Net deferred tax assets | $ | 17,899 |  |  | $ | 20,746 |
The components of pretax earnings are as follows:
| Fiscal Year Ended June 30,
| 2021 |  | 2020 |  | 2019
| (in thousands)
Domestic | $ | 39,511 |  |  | $ | (83,517) |  |  | $ | 68,675 |
Foreign | 18,024 |  |  | 11,741 |  |  | 14,962 |
Worldwide pretax earnings | $ | 57,535 |  |  | $ | (71,776) |  |  | $ | 83,637 |
As of June 30, 2021, there were (i) gross net operating loss carryforwards of approximately $1.7 million for U.S. federal income tax purposes; (ii) gross state net operating loss carryforwards of approximately $7.3 million; (iii) foreign gross net operating loss carryforwards of approximately $1.6 million; (iv) state income tax credit carryforwards of approximately $2.1 million that began to expire in the 2020 tax year; (v) withholding tax credits of approximately $4.9 million; (vi) foreign tax credits of $0.2 million, and (vii) gross capital loss carryovers of $30.5 million. The Company maintains a valuation allowance of $0.6 million for U.S. federal income tax purposes, $7.6 million for capital loss carryforwards, $0.3 million for foreign net operating losses, a less than $0.2 million valuation allowance for state net operating losses, a $4.9 million valuation allowance for withholding tax credits, a $0.1 million valuation allowance for foreign tax credits, and $0.3 million valuation allowance for state income tax credits, where it was determined that, in accordance with ASC 740, it is more likely than not that they cannot be utilized. The Company adopted ASU 2016-09 during fiscal year 2018 which required the Company to recognize excess tax benefits and tax deficiencies as income tax expense or benefit for stock award settlements that were previously recognized as additional paid-in-capital. As a result of these changes, the Company recognized net tax expense of $1.1 million for the fiscal year ended June 30, 2021, and less than $0.1 million for the fiscal years ended June 30, 2020 and 2019. As of June 30, 2021, the Company had gross unrecognized tax benefits of $1.1 million, $0.9 million of which, if recognized, would affect the effective tax rate. This reflects a decrease of less than $0.1 million on a gross basis over the prior fiscal year. The Company does not expect that the total amounts of unrecognized tax benefits will significantly increase or decrease within the next twelve months. The Company recognizes interest and penalties related to unrecognized tax benefits within the income tax expense line in the accompanying Consolidated Income Statement. Accrued interest and penalties are included within the related tax liability line in the Consolidated Balance Sheet. The total amount of interest and penalties accrued, but excluded from the table below, were $1.1 million, $1.1 million and $1.0 million for the fiscal years ended June 30, 2021, 2020 and 2019, respectively. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
| June 30,
| 2021 |  | 2020 |  | 2019
| (in thousands)
Beginning Balance | $ | 1,156 |  |  | $ | 1,234 |  |  | $ | 1,703 |
Additions based on tax positions related to the current year | 68 |  |  | 137 |  |  | 69 |
Reduction for tax positions of prior years | (103) |  |  | (215) |  |  | (538) |
Ending Balance | $ | 1,121 |  |  | $ | 1,156 |  |  | $ | 1,234 |
A Supplemental Law in Brazil affirms that Brazilian state-provided benefits are not subject to income tax. The Company recorded, discrete to the June 30, 2021 quarter, an income tax benefit of $2.8 million related to the confirmation of the recovery of state-provided tax benefits. Discrete to the June 30, 2021 quarter, the Company recorded a tax ben efit of $2.1 million for tax exempt income related to nonrecurring cancellation of indebtedness in a subsidiary. The Company conducts business globally and, as a result, one or more of its subsidiaries files income tax returns in the United States federal, various state, local and foreign jurisdictions. In the normal course of business, the Company is subject to examination by taxing authorities in countries in which it operates. With certain exceptions, the Company is no longer subject to state and local, or non-United States income tax examinations by tax authorities for tax years before June 30, 2016.

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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/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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