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INCOME TAXES | 12 Months Ended
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Jun. 30, 2022
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXESIncome (loss) from continuing operations before income taxes in fiscal 2022, 2021 and 2020 is presented below:
| Year Ended June 30,
| 2022 |  | 2021 |  | 2020
United States | $ | (277.5) |  |  | $ | (434.4) |  |  | $ | (960.3) |
Foreign | 704.3 |  |  | 194.6 |  |  | (507.3) |
Total | $ | 426.8 |  |  | $ | (239.8) |  |  | $ | (1,467.6) |
The components of the Company’s total provision (benefit) for income taxes from continuing operations during fiscal 2022, 2021 and 2020 are presented below:
| Year Ended June 30,
| 2022 |  | 2021 |  | 2020
Provision (benefit) for income taxes on continuing operations: |  |  |  |  |
Current: |  |  |  |  |
Federal | $ | 6.6 |  |  | $ | 3.8 |  |  | $ | — |
State and local | (6.0) |  |  | 14.9 |  |  | (0.3) |
Foreign | 152.1 |  |  | 55.2 |  |  | 90.7 |
Total | 152.7 |  |  | 73.9 |  |  | 90.4 |
Deferred: |  |  |  |  |
Federal | (2.7) |  |  | 41.1 |  |  | (286.7) |
State and local | (12.8) |  |  | 5.4 |  |  | (50.6) |
Foreign | 27.6 |  |  | (292.4) |  |  | (130.8) |
Total | 12.1 |  |  | (245.9) |  |  | (468.1) |
Provision (benefit) for income taxes on continuing operations | $ | 164.8 |  |  | $ | (172.0) |  |  | $ | (377.7) |
During fiscal 2022, the Company recorded a provision of $164.8 primarily due to the limitation on the deductibility of executive stock compensation and tax costs associated with the Russia exit, offset by large fair value gains related to the investment in the Wella business. During fiscal 2021, the Company recorded a benefit of $234.4 as a result of a tax rate differential on the deferred taxes recognized on the transfer of assets and liabilities, following the Company’s relocation of the main principal location from Geneva to Amsterdam. The overall value of the assets and liabilities transferred was negotiated with both the Swiss and Dutch tax authorities and per terms of the agreements, will be reevaluated after three years. The Company also recorded an expense of $130.0 related to an internal restructuring following the Wella divestiture, primarily intended to create a more efficient structure to hold its equity investment in Wella. During fiscal 2020, the Company recorded a benefit of $105.7 for the capital loss generated as a result of the disposition of its investment in Younique. The reconciliation of the U.S. Federal statutory tax rate to the Company’s effective income tax rate during fiscal 2022, 2021 and 2020 is presented below:
| Year Ended June 30,
| 2022 |  | 2021 |  | 2020
Income (loss) from continuing operations before income taxes | $ | 426.8 |  |  | $ | (239.8) |  |  | $ | (1,467.6) |
Provision (benefit) for income taxes at statutory rate | $ | 89.6 |  |  | $ | (50.4) |  |  | $ | (308.2) |
State and local taxes—net of federal benefit | (14.9) |  |  | 26.3 |  |  | (28.0) |
Foreign tax differentials | (16.4) |  |  | (23.3) |  |  | 7.2 |
Change in valuation allowances | (2.3) |  |  | (3.8) |  |  | 7.4 |
Change in unrecognized tax benefit | (10.6) |  |  | (18.0) |  |  | 21.3 |
Permanent differences—net | 25.4 |  |  | (13.1) |  |  | 14.3 |
Non-deductible executive stock compensation | 37.1 |  |  | — |  |  | — |
Dispositions of business assets | 12.7 |  |  | — |  |  | — |
Russia exit | 24.1 |  |  | — |  |  | — |
Goodwill impairment | — |  |  | — |  |  | 26.1 |
Principal relocation | — |  |  | (234.4) |  |  | — |
Post-divestiture restructuring | — |  |  | 130.0 |  |  | — |
Gain on sale of business adjustment | — |  |  | — |  |  | (132.1) |
Other | 20.1 |  |  | 14.7 |  |  | 14.3 |
Provision (benefit) for income taxes on continuing operations | $ | 164.8 |  |  | $ | (172.0) |  |  | $ | (377.7) |
Effective income tax rate | 38.6 | % |  | 71.7 | % |  | 25.7 | %
Significant components of deferred income tax assets and liabilities as of June 30, 2022 and 2021 are presented below:
| June 30, 2022 |  | June 30, 2021
Deferred income tax assets: |  |  |
Inventories | $ | 8.3 |  |  | $ | 9.7 |
Accruals and allowances | 58.6 |  |  | 86.4 |
Sales returns | 17.3 |  |  | 16.4 |
Share-based compensation | 5.1 |  |  | 5.8 |
Employee benefits | 60.3 |  |  | 101.6 |
Net operating loss carry forwards and tax credits | 296.4 |  |  | 295.4 |
Capital loss carry forwards | 1.1 |  |  | 1.1 |
Interest expense limitation carry forward | 28.5 |  |  | 15.5 |
Lease liability | 30.6 |  |  | 24.3 |
Principal relocation lease liability | 434.0 |  |  | 487.8 |
Property, plant and equipment | — |  |  | 7.7 |
Other | 31.7 |  |  | 36.8 |
Less: valuation allowances | (41.7) |  |  | (33.4) |
Net deferred income tax assets | 930.2 |  |  | 1,055.1 |
Deferred income tax liabilities: |  |  |
Intangible assets | 811.9 |  |  | 892.1 |
Property, plant and equipment | 9.2 |  |  | — |
Licensing rights | 25.7 |  |  | 23.3 |
Right of use asset | 31.2 |  |  | 27.4 |
Other | 69.4 |  |  | 28.7 |
Deferred income tax liabilities | 947.4 |  |  | 971.5 |
Net deferred income tax (liability) asset | $ | (17.2) |  |  | $ | 83.6 |
The expirations of tax loss carry forwards, amounting to $1,074.7 as of June 30, 2022, in each of the fiscal years ending June 30, are presented below:
Fiscal Year Ending June 30, | United States |  | Western Europe |  | Rest of World |  | Total
2023 | $ | — |  |  | $ | — |  |  | $ | 1.5 |  |  | $ | 1.5 |
2024 | — |  |  | — |  |  | 3.5 |  |  | 3.5 |
2025 | — |  |  | 60.2 |  |  | 11.6 |  |  | 71.8 |
2026 | — |  |  | 33.0 |  |  | 1.9 |  |  | 34.9 |
2027 and thereafter | — |  |  | 712.9 |  |  | 250.1 |  |  | 963.0 |
Total | $ | — |  |  | $ | 806.1 |  |  | $ | 268.6 |  |  | $ | 1,074.7 |
The total valuation allowances recorded are $41.7 and $33.4 as of June 30, 2022 and 2021, respectively. In fiscal 2022, the change in the valuation allowance was primarily due to a valuation allowance recorded in the current period. A reconciliation of the beginning and ending amount of UTBs is presented below:
| Year Ended June 30,
| 2022 |  | 2021 |  | 2020
UTBs—July 1 | $ | 279.9 |  |  | $ | 277.9 |  |  | $ | 263.6 |
Additions based on tax positions related to the current year | 1.7 |  |  | 32.1 |  |  | 15.9 |
Additions for tax positions of prior years | 20.8 |  |  | — |  |  | 42.9 |
Reductions for tax positions of prior years | (29.4) |  |  | (4.5) |  |  | (27.6) |
Settlements | (0.2) |  |  | (0.4) |  |  | (0.1) |
Lapses in statutes of limitations | (14.1) |  |  | (33.3) |  |  | (12.7) |
Foreign currency translation | (7.1) |  |  | 8.1 |  |  | (4.1) |
UTBs—June 30 | $ | 251.6 |  |  | $ | 279.9 |  |  | $ | 277.9 |
As of June 30, 2022, the Company had $251.6 of UTBs of which $174.8 represents the amount that, if recognized, would impact the effective income tax rate in future periods. As of June 30, 2022 and 2021, the liability associated with UTBs, including accrued interest and penalties, is $191.8 and $181.2, respectively, which is recorded in Income and other taxes payable and Other non-current liabilities in the Consolidated Balance Sheets. The Company accrued interest of $4.2, $0.8 and $3.2, respectively, in fiscal 2022, 2021 and 2020. The Company accrued no penalties in fiscal 2022 and fiscal 2020, but released penalties of $0.5 in fiscal 2021. The total gross accrued interest and penalties recorded in the Other noncurrent liabilities in the Consolidated Balance Sheets related to UTBs as of June 30, 2022 and 2021 is $26.4 and $21.7, respectively. The Company is present in approximately 40 tax jurisdictions, and at any point in time is subject to several audits at various stages of completion. As a result, the Company evaluates tax positions and establishes liabilities for UTBs that may be challenged by local authorities and may not be fully sustained, despite a belief that the underlying tax positions are fully supportable. UTBs are reviewed on an ongoing basis and are adjusted in light of changing facts and circumstances, including progress of tax audits, developments in case law, and closing of statute of limitations. Such adjustments are reflected in the provision for income taxes as appropriate. In fiscal 2022 and 2021, the Company recognized a tax benefit of $14.3 and $33.7 respectively associated with the settlement of tax audits in multiple jurisdictions and the expiration of foreign and state statutes of limitation. The Company has open tax years ranging from 2009 and forward. On the basis of information available at June 30, 2022, it is reasonably possible that a decrease of up to $17.8 in UTBs related to U.S. and foreign exposures may be necessary within the coming year. It is also possible the ongoing audits by tax authorities may result in increases or decreases to the balance of UTBs. Since it is common practice to extend audits beyond the Statute of Limitations, the Company is unable to predict the timing or conclusion of these audits and, accordingly, the Company is unable to estimate the amount of changes to the balance of UTBs that are reasonably possible at this time. However, the Company believes it has adequately provided for its UTBs for all open tax years in each tax jurisdiction.

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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 https://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 https://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 https://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 https://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 https://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 https://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 https://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 https://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 https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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