INCOME TAXES (Tables)

12 Months Ended

Jun. 30, 2018

INCOME TAXES

Provision for income taxes

	Year Ended June 30
(In millions)	2018			2017			2016
Current:
Federal	$	334		$	218		$	224
Foreign	357			253			293
State and local	(3		)	8			11
	688			479			528
Deferred:
Federal	135			(58		)	(73		)
Foreign	35			(61		)	(22		)
State and local	5			1			1
	175			(118		)	(94		)
	$	863		$	361		$	434

Reconciliation of the U.S. federal statutory income tax rate and actual effective tax rate on earnings before income taxes

	Year Ended June 30
	2018		2017		2016
Provision for income taxes at statutory rate	28.1	%	35.0	%	35.0	%
Increase (decrease) due to:
State and local income taxes, net of federal tax benefit	0.5		0.7		0.9
TCJA net income tax impact	22.8		—		—
Stock-based compensation arrangements – excess tax benefits	(2.5	)	—		—
Taxation of foreign operations	(4.7	)	(7.5	)	(8.0	)
China deferred tax asset valuation allowance reversal	—		(4.6	)	—
Income tax reserve adjustments	(0.5	)	(1.2	)	(0.3	)
Other, net	(0.1	)	(0.1	)	0.3
Effective tax rate	43.6	%	22.3	%	27.9	%

Significant components of deferred income tax assets and liabilities

	June 30
(In millions)	2018			2017
Deferred tax assets:
Compensation related expenses	$	161		$	256
Inventory obsolescence and other inventory related reserves	57			97
Retirement benefit obligations	45			124
Various accruals not currently deductible	175			189
Net operating loss, credit and other carryforwards	48			65
Unrecognized state tax benefits and accrued interest	12			24
Other differences between tax and financial statement values	55			91
	553			846
Valuation allowance for deferred tax assets	(45		)	(42		)
Total deferred tax assets	508			804
Deferred tax liabilities:
Depreciation and amortization	(338		)	(465		)
Other differences between tax and financial statement values	(50		)	(17		)
Total deferred tax liabilities	(388		)	(482		)
Total net deferred tax assets	$	120		$	322

Reconciliation of the beginning and ending amount of gross unrecognized tax benefits

	June 30
(In millions)	2018			2017
Beginning of the year balance of gross unrecognized tax benefits	$	68		$	82
Gross amounts of increases as a result of tax positions taken during a prior period	8			6
Gross amounts of decreases as a result of tax positions taken during a prior period	(18		)	(23		)
Gross amounts of increases as a result of tax positions taken during the current period	7			10
Amounts of decreases in unrecognized tax benefits relating to settlements with taxing authorities	(3		)	(5		)
Reductions to unrecognized tax benefits as a result of a lapse of the applicable statutes of limitations	(2		)	(2		)
End of year balance of gross unrecognized tax benefits	$	60		$	68

Tax years that remain subject to examination vary by the major tax jurisdictions

Major Jurisdiction	Open Fiscal Years
Belgium	2014 – 2018
Canada	2015 – 2018
China	2014 – 2018
France	2013 – 2018
Germany	2013 – 2018
Hong Kong	2012 – 2018
Italy	2014 – 2018
Japan	2016 – 2018
Korea	2014 – 2018
Russia	2015 – 2018
Spain	2014 – 2018
Switzerland	2016 – 2018
United Kingdom	2017 – 2018
United States	2018
State of California	2013 – 2018
State and City of New York	2015 – 2018