XML 42 R21.htm IDEA: XBRL DOCUMENT v3.24.2.u1
Income Taxes
 12 Months Ended
Jun. 30, 2024
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
As of the fiscal year ended June 30, 2024, the Company maintains the ability to access the earnings of foreign subsidiaries. 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 distributions of such earnings to the U.S. in whole or in part.

Income tax expense (benefit) consists of:
 Fiscal Year Ended June 30,
 202420232022
 (in thousands)
Current:
Federal$15,626 $25,034 $16,895 
State3,608 6,455 5,238 
Foreign5,578 4,507 3,896 
Total current24,812 35,996 26,029 
Deferred:
Federal(827)(2,991)3,429 
State(911)(541)129 
Foreign(293)1,294 338 
Total deferred(2,031)(2,238)3,896 
Provision for income taxes$22,781 $33,758 $29,925 

A reconciliation is provided below of the U.S. Federal income tax expense for the fiscal years ended June 30, 2024, June 30, 2023 and June 30, 2022 with the applicable statutory rate of 21%.
 Fiscal Year Ended June 30,
 202420232022
 (in thousands)
U.S. statutory rate21.0 %21.0 %21.0 %
U.S. Federal income tax at statutory rate$20,967 $25,588 $24,911 
Increase (decrease) in income taxes due to:
State and local income taxes, net of Federal benefit1,939 4,559 4,265 
Tax credits(1,794)(909)(796)
Valuation allowance1,131 1,087 (200)
Effect of varying statutory rates in foreign operations, net2,109 2,751 1,145 
Stock compensation(76)37 (121)
Disallowed interest— — — 
Earnings from foreign subsidiaries776 957 928 
Losses on dispositions(2,816)— — 
Global intangible low taxed income tax
(832)1,551 630 
Nontaxable income(927)(3,189)(2,050)
Nondeductible compensation(a)
1,412 1,240 1,166 
Notional interest deduction on net equity— (733)(780)
Other(a)
892 819 827 
Provision for income taxes$22,781 $33,758 $29,925 
(a) Certain amounts in the prior year have been reclassified to the current year presentation in presented table.

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities are presented below:
 June 30,
 20242023
 (in thousands)
Deferred tax assets derived from:
Allowance for accounts receivable$7,787 $5,811 
Inventories2,927 3,326 
Nondeductible accrued expenses7,538 7,561 
Net operating loss carryforwards243 596 
Tax credits8,771 8,430 
Deferred compensation7,706 7,173 
Stock compensation4,490 4,718 
Capital loss carryforwards12,306 7,348 
Timing of amortization deduction from intangible assets6,680 6,170 
Total deferred tax assets58,448 51,133 
Valuation allowance(19,594)(14,397)
Total deferred tax assets, net of allowance38,854 36,736 
Deferred tax liabilities derived from:
Timing of depreciation and other deductions from building and equipment(724)(1,533)
Timing of amortization deduction from goodwill(13,716)(10,886)
Timing of amortization deduction from intangible assets(4,512)(10,369)
Total deferred tax liabilities(18,952)(22,788)
Net deferred tax assets$19,902 $13,948 

The components of pretax earnings are as follows:
 Fiscal Year Ended June 30,
 202420232022
 (in thousands)
Domestic$78,653 $94,994 $93,586 
Foreign21,188 26,856 25,037 
Worldwide pretax earnings$99,841 $121,850 $118,623 

As of June 30, 2024, there were (i) gross net operating loss carryforwards of approximately $0.9 million for U.S. federal income tax purposes; (ii) gross state net operating loss carryforwards of approximately $1.5 million; (iii) state income tax credit carryforwards of approximately $3.3 million that began to expire in the 2023 tax year; (iv) withholding tax credits of approximately $5.0 million; (v) foreign tax credits of $1.2 million, and (vi) gross capital loss carryovers of $49.9 million. The Company maintains a valuation allowance of $0.1 million for U.S. federal net operating losses, $12.3 million for capital loss carryforwards, a less than $0.1 million valuation allowance for state net operating losses, a $5.0 million valuation allowance for withholding tax credits, a $1.2 million valuation allowance for foreign tax credits, and a $1.0 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 recognizes excess tax benefits and tax deficiencies as income tax expense or benefit for stock award settlements in accordance with ASU 2016-09. The Company recognized net tax expense of less than $0.1 million for the fiscal year ended June 30, 2024, net tax benefit of less than $0.1 million and $0.3 million for the fiscal years ended June 30, 2023 and 2022, respectively.

As of June 30, 2024, 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 amount 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 $1.3 million, $1.2 million and $1.2 million for the fiscal years ended June 30, 2024, 2023 and 2022, respectively. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
June 30,
202420232022
 (in thousands)
Beginning Balance$1,172 $1,065 $1,121 
Additions based on tax positions related to the current year89 123 139 
Reduction for tax positions of prior years(120)(16)(195)
Ending Balance$1,141 $1,172 $1,065 

During the June 30, 2024 fiscal year, the Company received a favorable ruling in Brazil regarding an exclusion from taxable income and as a result recognized a $1.5 million income tax recovery for prior years. A court ruling in Brazil in June 2023 confirmed that Brazilian state-provided tax benefits are not subject to income tax and the Company recognized a tax benefit of $2.2 million during the June 30, 2023 fiscal year.

Subsequent to the 2023 fiscal year-end, the IRS issued Notice 2023-55 which provides taxpayers with Brazilian subsidiaries temporary relief from the final foreign tax credit regulations. As a result, the company recognized a tax benefit of $1.5 million during the 2024 fiscal year for creditable foreign taxes for the 2023 fiscal year.

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, 2019.