XML 37 R20.htm IDEA: XBRL DOCUMENT
v3.21.2

INCOME TAXES | 12 Months Ended
--- | ---
Jun. 30, 2021
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES The components of income (loss) from continuing operations before income taxes and equity in net loss (income) of equity-method investees were as follows:
| Fiscal Year Ended June 30,
| 2021 |  | 2020 |  | 2019
Domestic | $ | 60,215 |  |  | $ | (29,339) |  |  | $ | (120,969) |
Foreign | 48,578 |  |  | 63,167 |  |  | 64,965 |
Total | $ | 108,793 |  |  | $ | 33,828 |  |  | $ | (56,004) |
The provision (benefit) for income taxes consisted of the following:
| Fiscal Year Ended June 30,
| 2021 |  | 2020 |  | 2019
Current: |  |  |  |  |
Federal | $ | 2,243 |  |  | $ | (44,595) |  |  | $ | 3,639 |
State and local | 1,735 |  |  | 619 |  |  | 760 |
Foreign | 27,253 |  |  | 14,021 |  |  | 16,075 |
| 31,231 |  |  | (29,955) |  |  | 20,474 |
Deferred: |  |  |  |  |
Federal | 14,266 |  |  | 33,007 |  |  | (21,538) |
State and local | (10,064) |  |  | 3,414 |  |  | 1,188 |
Foreign | 5,660 |  |  | (261) |  |  | (3,356) |
| 9,862 |  |  | 36,160 |  |  | (23,706) |
Total | $ | 41,093 |  |  | $ | 6,205 |  |  | $ | (3,232) |
For the fiscal year ended June 30, 2021, the Company received net tax refunds of $32,998 including a $53,817 tax loss carryback claim under the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") which allowed for, among other provisions, a five-year carryback of net operating losses (“NOLs”) for 2018-2020 offset by taxes paid in other jurisdictions. Cash paid for income taxes, net of (refunds), during the fiscal years ended June 30, 2020 and 2019 amounted to $16,162 and $22,535, respectively. The reconciliation of the U.S. federal statutory rate to our effective rate on income before provision (benefit) for income taxes was as follows:
| Fiscal Year Ended June 30,
| 2021 |  | % |  | 2020 |  | % |  | 2019 |  | %
Expected United States federal income tax at statutory rate | $ | 22,847 |  |  | 21.0 | % |  | $ | 7,104 |  |  | 21.0 | % |  | $ | (11,761) |  |  | 21.0 | %
State income taxes, net of federal (benefit) provision | 1,150 |  |  | 1.1 | % |  | (668) |  |  | (1.9) | % |  | (8,922) |  |  | 15.9 | %
Foreign income at different rates | 4,756 |  |  | 4.4 | % |  | 382 |  |  | 1.1 | % |  | 763 |  |  | (1.4) | %
Impairment of intangible assets | 13,466 |  |  | 12.4 | % |  | — |  |  | — | % |  | — |  |  | — | %
Change in valuation allowance (a) | (5,921) |  |  | (5.4) | % |  | 4,499 |  |  | 13.3 | % |  | 8,938 |  |  | (16.0) | %
Change in reserves for uncertain tax positions | 1,971 |  |  | 1.8 | % |  | 7,925 |  |  | 23.4 | % |  | 841 |  |  | (1.5) | %
Change in foreign tax rate (b) | 1,840 |  |  | 1.7 | % |  | — |  |  | — | % |  | — |  |  | — | %
Loss on disposal of subsidiary | 1,073 |  |  | 1.0 | % |  | — |  |  | — | % |  | — |  |  | — | %
Tax Act’s transition tax (c) | — |  |  | — | % |  | — |  |  |  |  | 6,834 |  |  | (12.2) | %
U.S. tax (benefit) on foreign earnings | (50) |  |  | (0.1) | % |  | 7,449 |  |  | 22.0 | % |  | 3,872 |  |  | (6.9) | %
CARES Act (d) | (1,116) |  |  | (1.0) | % |  | (25,668) |  |  | (75.9) | % |  | — |  |  | — | %
Other | 1,077 |  |  | 1.0 | % |  | 5,182 |  |  | 15.3 | % |  | (3,797) |  |  | 6.9 | %
Provision (benefit) for income taxes | $ | 41,093 |  |  | 37.8 | % |  | $ | 6,205 |  |  | 18.3 | % |  | $ | (3,232) |  |  | 5.8 | %
(a) The Company estimates that it will utilize certain of its state tax loss carryovers in the year ended June 30, 2021. This positive evidence, in addition to other positive evidence, resulted in the Company releasing the valuation allowance on its state deferred assets of $9,774. Further, there was a release of a valuation allowance of $1,600 related to Danival; an increase in the valuation allowance of $5,051 related to the UK rate change; and a valuation allowance increase of $402 related to capital leases. (b) On July 22, 2020, the U.K. enacted into law a tax rate increase from 17% to 19%. On June 10, 2021, the U.K. enacted an increase in the corporate income tax rate to 25% effective April 1, 2023. The rate change impact is primarily for the re-measurement of deferred tax liabilities on indefinite lived intangible assets. (c) On December 22, 2017, the Tax Cuts and Jobs Act (the "Tax Act") included a provision to tax previously untaxed foreign earnings (“transition tax”). During fiscal year 2019, the Company recorded $6,834 of tax expense upon finalizing its analysis of the impact from the Tax Act. (d) The Company carried back NOLs generated in the June 30, 2019 tax year for five years, resulting in an income tax benefit of $18,949. The $18,949 income tax benefit represents the federal rate differential between 35% and 21%. In addition, there was an indirect tax benefit of $6,719 related to discontinued operations due to the CARES Act. Accordingly, the gross benefit recorded under the CARES Act in fiscal 2020 was $25,668 prior to the reserve under ASC 740-10. In fiscal 2021, the Company received the full refund with interest, with the net adjustment resulting in a benefit of $1,116. With the effective date of January 1, 2018, the Tax Act also introduced a provision to tax global intangible low-taxed income (“GILTI”) of foreign subsidiaries and a measure to tax certain intercompany payments under the base erosion anti-abuse tax “BEAT” regime. For the fiscal years ended June 30, 2021 and 2020, the Compa ny did not generate intercompany transactions that met the BEAT threshold but does have to include GILTI tax relating to the Company’s foreign subsidiaries. The Company elected to account for GILTI tax as a current period cost but did not record an expense during the fiscal year ended June 30, 2021 as tested losses exceeded tested income. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts for income tax purposes. Deferred tax assets and liabilities consisted of the following:
| June 30, 2021 |  | June 30, 2020
Noncurrent deferred tax assets (liabilities): |  |  |
Basis difference on inventory | $ | 6,213 |  |  | $ | 6,724 |
Reserves not currently deductible | 15,261 |  |  | 21,173 |
Basis difference on intangible assets | (70,482) |  |  | (76,746) |
Basis difference on property and equipment | (11,643) |  |  | (2,627) |
Other comprehensive income | 2,792 |  |  | 1,737 |
Net operating loss and tax credit carryforwards | 43,960 |  |  | 34,393 |
Stock-based compensation | 1,797 |  |  | 1,417 |
Unremitted earnings of foreign subsidiaries | (1,172) |  |  | (1,212) |
Lease liability | 14,165 |  |  | 14,096 |
Lease ROU assets | (12,971) |  |  | (12,807) |
Other | 7,048 |  |  | 4,006 |
Valuation allowances | (37,453) |  |  | (41,941) |
Noncurrent deferred tax liabilities, net(1) | $ | (42,485) |  |  | $ | (51,787) |
(1) Includes $154 and $62 of non-current deferred tax assets included within Other Assets on the June 30, 2021 and 2020 Consolidated Balance Sheets, respectively. At June 30, 2021 and 2020, the Company had U.S. federal NOL carryforwards of approximately $59,514 and $19,141, respectively, certain of which will not expire unt il 2036. Certain of these federal loss carryforwards are subject to Internal Revenue Code Section 382 which imposes limitations on utilization following certain changes in ownership of the entity generating the loss carryforward. The Company had foreign NOL carryforwards of approximately $15,441 and $12,587 at June 30, 2021 and 2020, respectively, the majority of which are indefinite lived. The Company historically considered the undistributed earnings of its foreign subsidiaries to be indefinitely reinvested and as a result has not provided for taxes on such earnings. To achieve its cash management objectives, during the fourth quarter of fiscal 2020, the Company reversed its reinvestment assertion on $93,359 of foreign earnings and recorded a deferred tax liability of $1,212. For the year ended June 30, 2021, the Company represents that $116,895 of foreign earnings are not permanently reinvested with a corresponding deferred tax liability of $1,172. The Company continues to reinvest $732,065 of undistributed earnings of its foreign subsidiaries and may be subject to additional foreign withholding taxes and U.S. state income taxes if it reverses its indefinite reinvestment assertion on these foreign earnings in the future. All other outside basis differences not related to earnings were impractical to account for a t this period of time and are currently considered as being permanent in duration. As required by the authoritative guidance on accounting for income taxes, the Company evaluates the realizability of deferred tax assets on a jurisdictional basis at each reporting date. Accounting for income taxes requires that a valuation allowance be established when it is more likely than not that all or a portion of the deferred tax assets will not be realized. In circumstances where there is sufficient negative evidence indicating that the deferred tax assets are not more likely than not realizable, the Company establishes a valuation allowance. T he Company has recorded valuation allowances in the amounts of $37,453 and $41,941 at June 30, 2021 and 2020, respectively. During fiscal 2019, the Company recorded a partial valuation allowance against state deferred tax assets and state net operating loss carryforwards as it is not more likely than not that the state tax attributes will be realized. As mentioned above, positive evidence has allowed the Company to utilize some state deferred tax assets as well release a portion of the previously established valuation allowance. The changes in valuation allowances against deferred income tax assets were as follows:
| Fiscal Year Ended June 30,
| 2021 |  | 2020
Balance at beginning of year | $ | 41,941 |  |  | $ | 34,912 |
Additions charged to income tax expense | 5,601 |  |  | 7,391 |
Reductions credited to income tax expense | (11,520) |  |  | 35 |
Currency translation adjustments | 1,431 |  |  | (397) |
Balance at end of year | $ | 37,453 |  |  | $ | 41,941 |
Unrecognized tax benefits activity, including interest and penalties, is summarized below:
| Fiscal Year Ended June 30,
| 2021 |  | 2020 |  | 2019
Balance at beginning of year | $ | 20,899 |  |  | $ | 11,869 |  |  | $ | 6,730 |
Additions based on tax positions related to the current year | 343 |  |  | 636 |  |  | 248 |
Additions based on tax positions related to prior years | 3,045 |  |  | 8,499 |  |  | 5,446 |
Reductions due to lapse in statute of limitations and settlements | (1,417) |  |  | (105) |  |  | (555) |
Balance at end of year | $ | 22,870 |  |  | $ | 20,899 |  |  | $ | 11,869 |
As of June 30, 2021, the Company had $22,870 of unrecognized tax benefits, of which $19,058 represents an amount that, if recognized, would impact the effective tax rate in future periods. As of June 30, 2020, the Company had $20,899 of unrecognized tax benefits, of which $17,087 represents the amount that, if recognized, would impact the effective tax rate in future periods. As of June 30, 2019, the C ompany had $11,869 of unrecognized tax benefits of which $8,057 would impact the effective income tax rate in future periods. Accrued liabilities for interest and penalties w ere $2,549 a nd $2,166 at June 30, 2021 and 2020, respectively. Interest and penalties (expense and/or benefit) are recorded as a component of the provision (benefit) for income taxes in the consolidated financial statements. The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction, various U.S. state jurisdictions and several foreign jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years prior to fiscal 2014. However, to the extent we generated NOLs or tax credits in closed tax years, future use of the NOL or tax credit carryforward balance would be subject to examination within the relevant statute of limitations for the year in which utilized. The Company is no longer subject to tax examinations in the United Kingdom for years prior to fisca l 2019. Given the uncertainty regarding when tax authorities will complete their examinations and the possible outcomes of their examinations, a current estimate of the range of reasonably possible significant increases or decreases of income tax that may occur within the next twelve months cannot be made. Although there are various tax audits currently ongoing, the Company does not believe the ultimate outcome of such audits will have a material impact on the Company’s consolidated financial statements.

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration