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v3.25.2

INCOME TAXES | 12 Months Ended
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Jun. 30, 2025
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES (Loss) income before income taxes in fiscal 2025, 2024 and 2023 is presented below:
| Year Ended June 30,
| 2025 |  | 2024 |  | 2023
United States | $ | (696.0) |  |  | $ | (591.1) |  |  | $ | (253.6) |
Foreign | 351.2 |  |  | 795.6 |  |  | 958.4 |
Total | $ | (344.8) |  |  | $ | 204.5 |  |  | $ | 704.8 |
The components of the Company’s total provision (benefit) for income taxes during fiscal 2025, 2024 and 2023 are presented below:
| Year Ended June 30,
| 2025 |  | 2024 |  | 2023
Provision for income taxes: |  |  |  |  |
Current: |  |  |  |  |
Federal | $ | (7.8) |  |  | $ | 1.2 |  |  | $ | 2.6 |
State and local | 3.4 |  |  | (3.5) |  |  | 2.6 |
Foreign | 97.3 |  |  | 107.2 |  |  | 120.1 |
Total | 92.9 |  |  | 104.9 |  |  | 125.3 |
Deferred: |  |  |  |  |
Federal | (20.2) |  |  | (36.7) |  |  | (61.1) |
State and local | (16.9) |  |  | (16.7) |  |  | 1.0 |
Foreign | (50.4) |  |  | 43.6 |  |  | 116.4 |
Total | (87.5) |  |  | (9.8) |  |  | 56.3 |
Provision for income taxes | $ | 5.4 |  |  | $ | 95.1 |  |  | $ | 181.6 |
The reconciliation of the U.S. Federal statutory tax rate to the Company’s effective income tax rate during fiscal 2025, 2024 and 2023 is presented below:
| Year Ended June 30,
| 2025 |  | 2024 |  | 2023
Income (loss) before income taxes | $ | (344.8) |  |  | $ | 204.5 |  |  | $ | 704.8 |
Provision for income taxes at statutory rate | $ | (72.4) |  |  | $ | 42.9 |  |  | $ | 148.0 |
State and local taxes—net of federal benefit | (10.6) |  |  | (15.9) |  |  | 2.8 |
Foreign tax differentials | (0.1) |  |  | 20.9 |  |  | (10.1) |
Change in valuation allowances | 97.8 |  |  | 38.9 |  |  | 10.2 |
Change in unrecognized tax benefit | 34.3 |  |  | (15.5) |  |  | 32.5 |
Permanent differences—net | 43.9 |  |  | 7.6 |  |  | (4.9) |
Non-deductible executive stock compensation | 11.0 |  |  | 19.7 |  |  | 27.7 |
Currency Loss | 8.3 |  |  | (22.5) |  |  | (13.6) |
Russia exit uncertain tax position release | (10.0) |  |  | — |  |  | (7.0) |
Principal relocation revaluation | — |  |  | 27.6 |  |  | — |
Nondeductible Interest Expense | 6.8 |  |  | 12.1 |  |  | — |
Swiss Tax Credits-net of valuation allowance | (2.4) |  |  | (37.8) |  |  | — |
Tax Rate Change Deferred Tax Liability Revaluation | — |  |  | 24.2 |  |  | — |
Brazil tax recovery benefit | (78.5) |  |  | — |  |  | — |
Swiss Impairment | (31.2) |  |  | — |  |  | — |
Other | 8.5 |  |  | (7.1) |  |  | (4.0) |
Provision for income taxes | $ | 5.4 |  |  | $ | 95.1 |  |  | $ | 181.6 |
Effective income tax rate | (1.6) | % |  | 46.5 | % |  | 25.8 | %
The (1.6)% effective tax rate in fiscal 2025 results from reporting losses before income taxes and a provision for income taxes. The unfavorable impacts to the rate were primarily driven by the following items: •a 28.4% unfavorable impact to the effective tax rate due to an increase in valuation allowances recorded on interest expense carryforwards and the capital loss realized as a result of the sale of its investment in KKW Holdings during the period, compared with a 19.0% unfavorable impact in the prior period; •a 9.9% unfavorable impact to the effective tax rate due to changes in unrecognized tax benefits primarily related to new reserves for benefits realized as a result of a tax recovery benefit in Brazil, compared to a favorable impact of 7.6% in the prior period; •a 12.7% unfavorable impact to the effective tax rate as a result of various permanent differences including US foreign income inclusions. These unfavorable rate drivers were partially offset by the following favorable rate drivers: •a 22.8% favorable impact to the effective tax rate due to benefits realized as a result of a tax recovery benefit in Brazil (a majority of which are offset by the unrecognized tax benefit impact described above); •a 9.0% favorable impact due to a tax deductible impairment in Switzerland on its investment in subsidiaries. The 46.5% effective tax rate in fiscal 2024 results from reporting income before taxes and a provision for income taxes. The unfavorable impacts to the rate were primarily driven by the following items: •a 19.0% unfavorable impact from an increase in valuation allowances recorded primarily on interest expense carryforwards; •a 13.5% unfavorable impact due to changes to the net deferred taxes recognized on the assignment of strategic service functions from Amsterdam to Geneva, as an indirect result of the required revaluation of the original transfer of the main principal location from Geneva to Amsterdam in fiscal 2021; •an 11.8% unfavorable impact from the revaluation of the Company’s deferred tax liabilities due to a tax rate increase enacted in Switzerland; and •a 10.2% unfavorable impact in the foreign tax rate differential impact primarily due to fair value gains related to the investment in the Wella business taxed at a lower rate as compared to our U.S. Federal statutory rate of 21%. These unfavorable rate drivers were partially offset by the following favorable rate drivers: •a 18.5% favorable impact as a result of the issuance of non-refundable income tax credits received from the Swiss Tax Authorities of $97.1. The Company recorded a benefit for the tax credit of $37.8, net of a valuation allowance; and •a 7.6% favorable impact from a reduction of foreign tax audits due to the settlement of foreign tax audits. Significant components of deferred income tax assets and liabilities as of June 30, 2025 and 2024 are presented below:
| June 30, 2025 |  | June 30, 2024
Deferred income tax assets: |  |  |
Inventories | $ | 4.4 |  |  | $ | 7.0 |
Accruals and allowances | 64.1 |  |  | 62.1 |
Sales returns | 16.3 |  |  | 15.2 |
Share-based compensation | 4.0 |  |  | 5.3 |
Employee benefits | 46.5 |  |  | 55.7 |
Net operating loss carry forwards and tax credits | 376.3 |  |  | 308.6 |
Capital loss carry forwards | 29.8 |  |  | 0.2 |
Interest expense limitation carry forward | 173.5 |  |  | 102.8 |
Lease liability | 16.1 |  |  | 26.0 |
Principal relocation lease | 347.6 |  |  | 337.7 |
Property, plant and equipment | 42.0 |  |  | 21.1 |
Derivative Instruments | 70.5 |  |  | 0.3 |
Other | 63.0 |  |  | 58.2 |
Less: valuation allowances | (274.1) |  |  | (151.4) |
Net deferred income tax assets | 980.0 |  |  | 848.8 |
Deferred income tax liabilities: |  |  |
Intangible assets | 753.6 |  |  | 772.4 |
Licensing rights | 29.9 |  |  | 30.2 |
Right of use asset | 22.8 |  |  | 26.3 |
Investment in partnerships | 48.3 |  |  | 61.1 |
Other | 31.7 |  |  | 17.9 |
Deferred income tax liabilities | 886.3 |  |  | 907.9 |
Net deferred income tax (liability) asset | $ | 93.7 |  |  | $ | (59.1) |
The expirations of tax loss carry forwards, amounting to $623.1 as of June 30, 2025, 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
2026 | $ | — |  |  | $ | — |  |  | $ | 8.2 |  |  | $ | 8.2 |
2027 | — |  |  | 0.2 |  |  | 20.5 |  |  | 20.7 |
2028 | — |  |  | 52.0 |  |  | 16.6 |  |  | 68.6 |
2029 | — |  |  | — |  |  | 21.9 |  |  | 21.9 |
2030 and thereafter | — |  |  | 156.6 |  |  | 347.1 |  |  | 503.7 |
Total | $ | — |  |  | $ | 208.8 |  |  | $ | 414.3 |  |  | $ | 623.1 |
The total valuation allowances recorded are $274.1 and $151.4 as of June 30, 2025 and 2024, respectively. In fiscal 2025, the change in the valuation allowance was primarily due to the Company recording a valuation allowance on the capital loss realized as a result of the sale of its investment in KKW Holdings during the period as well as an increase to its valuation allowance on U.S. interest expense limitation carryforwards. A reconciliation of the beginning and ending amount of UTBs is presented below:
| Year Ended June 30,
| 2025 |  | 2024 |  | 2023
UTBs—July 1 | $ | 215.3 |  |  | $ | 235.5 |  |  | $ | 251.6 |
Additions based on tax positions related to the current year | 1.2 |  |  | 1.3 |  |  | 6.7 |
Additions for tax positions of prior years | 50.8 |  |  | 15.8 |  |  | 0.7 |
Reductions for tax positions of prior years | (6.0) |  |  | (19.0) |  |  | (1.4) |
Settlements | (0.3) |  |  | (1.2) |  |  | (4.6) |
Lapses in statutes of limitations | (33.1) |  |  | (17.8) |  |  | (13.8) |
Foreign currency translation | 12.9 |  |  | 0.7 |  |  | (3.7) |
UTBs—June 30 | $ | 240.8 |  |  | $ | 215.3 |  |  | $ | 235.5 |
As of June 30, 2025, the Company had $240.8 of UTBs of which $157.3 represents the amount that, if recognized, would impact the effective income tax rate in future periods. As of June 30, 2025 and 2024, the liability associated with UTBs, including accrued interest and penalties, is $194.3 and $200.2, 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 $7.1, $(2.4) and $7.8, respectively, in fiscal 2025, 2024 and 2023. The Company accrued immaterial penalties in fiscal 2025 and immaterial penalties in fiscal 2024, and no penalties in fiscal 2023. 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, 2025 and 2024 is $36.6 and $30.2, 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 2025 and 2024, the Company recognized a tax benefit of $33.4 and $19.0 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, 2025, it is reasonably possible that a decrease of up to $8.2 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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