INCOME TAXES

(Loss) income from operations before income taxes in fiscal 2014, 2013 and 2012 is presented below:



	Year Ended June 30,
	2014			2013			2012
United States	$	(119.1	)	$	(53.5	)	$	(616.6	)
Foreign	75.0			372.2			285.5
Total	$	(44.1	)	$	318.7		$	(331.1	)

The components of the Company’s total provision (benefit) for income taxes during fiscal 2014, 2013 and 2012 are presented below:



	Year Ended June 30,
	2014			2013			2012
Provision (benefit) for income taxes:
Current:
Federal	$	5.6		$	(26.5	)	$	24.7
State and local	2.1			2.8			3.3
Foreign	50.8			110.6			87.8
Total	58.5			86.9			115.8
Deferred:
Federal	(30.6		)	8.3			(104.0		)
State and local	(0.7		)	2.6			(27.8		)
Foreign	(7.1		)	19.0			(21.8		)
Total	(38.4		)	29.9			(153.6		)
Provision (benefit) for income taxes	$	20.1		$	116.8		$	(37.8	)

The reconciliation of the U.S. Federal statutory tax rate to the Company’s effective income tax rate during fiscal 2014, 2013 and 2012 is presented below:



	Year Ended June 30,
	2014			2013			2012
(Loss) income before income taxes	$	(44.1	)	$	318.7		$	(331.1	)
(Benefit) provision for income taxes at statutory rate	$	(15.4	)	$	111.6		$	(115.9	)
State and local taxes—net of federal benefit	0.9			3.5			(15.9		)
Foreign tax differentials	(53.0		)	(44.2		)	(51.9		)
Change in valuation allowances	36.1			18.2			3.8
Change in unrecognized tax benefit	(24.4		)	4.8			36.2
Asset impairment charges	67.4			—			80.1
Share-based compensation	1.8			16.0			27.9
Permanent differences—net	1.8			7.2			(2.5		)
Other	4.9			(0.3		)	0.4
Provision (benefit) for income taxes	$	20.1		$	116.8		$	(37.8	)
Effective income tax rate	(45.6		)%	36.6		%	11.4		%

Significant components of Deferred income tax assets and liabilities as of June 30, 2014 and 2013 are presented below:



	June 30, 2014			June 30, 2013
Deferred income tax assets:
Inventories	$	20.2		$	13.6
Accruals and allowances	87.4			82.4
Sales returns	20.1			19.4
Share-based compensation	35.4			37.2
Employee benefits	50.9			43.7
Net operating loss carry forwards and tax credits	102.2			118.9
Other	45.3			38.3
Less: valuation allowances	(98.6		)	(61.5		)
Net deferred income tax assets	262.9			292.0
Deferred income tax liabilities:
Intangible assets	421.9			423.4
Licensing rights	6.4			84.6
Other	33.8			25.9
Deferred income tax liabilities	462.1			533.9
Net deferred income tax liabilities	$	(199.2	)	$	(241.9	)

The expirations of tax loss carry forwards, amounting to $251.0 as of June 30, 2014, 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
2015	$	—	$	—	$	0.9	$	0.9
2016	—		—		1.3		1.3
2017	—		—		36.8		36.8
2018	—		—		53.8		53.8
2019 and thereafter	65.1		25.9		67.2		158.2
Total	$	65.1	$	25.9	$	160.0	$	251.0

The total valuation allowances recorded are $98.6 and $61.5 as of June 30, 2014 and 2013, respectively. In fiscal 2014, the change in the valuation allowance was due primarily to an increase in valuation allowance for net operating losses.

A reconciliation of the beginning and ending amount of UTBs is presented below:



	Year Ended June 30,
	2014			2013			2012
UTBs—July 1	$	331.4		$	326.5		$	308.6
Additions based on tax positions related to the current year	29.5			36.8			38.3
Additions for tax positions of prior years	91.9			5.0			6.3
Reductions for tax positions of prior years	(9.9		)	—			(6.8		)
Settlements	(33.8		)	(27.9		)	(0.7		)
Lapses in statutes of limitations	(11.6		)	(13.8		)	(8.5		)
Foreign currency translation	3.0			4.8			(10.7		)
UTBs—June 30	$	400.5		$	331.4		$	326.5

As of June 30, 2014, the Company had $400.5 of UTBs of which $140.6 represents the amount that, if recognized, would impact the effective income tax rate in future periods. As of June 30, 2014 and 2013, the liability associated with UTBs, including accrued interest and penalties, is $159.4 and $189.6, respectively, which is recorded in Income and other taxes payable and Other non-current liabilities in the Consolidated Balance Sheets.

During fiscal 2014, the Company released interest accruals of $(1.7), while in fiscal 2013 and 2012 the Company accrued total interest of $1.1 and $5.3, respectively, and penalty benefit of nil, $0.9 and $0.8, respectively. 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, 2014 and 2013 is $25.5 and $25.7, respectively.

The Company is present in over 35 tax jurisdictions, and 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 2014, the Company recognized a tax benefit of $49.2 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 2004 and forward.

On the basis of information available at June 30, 2014, it is reasonably possible that a decrease of up to $29.2 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.

It is the Company’s intention to permanently reinvest undistributed earnings and income from the Company’s foreign operations that have been generated through June 30, 2014. Accordingly, no provision has been made for U.S. income taxes on the remaining undistributed earnings of foreign subsidiaries as of June 30, 2014. Cumulative undistributed earnings of non-U.S. subsidiaries was $1,879.1 as of June 30, 2014. It is not practicable for the Company to determine the amount of additional income and withholding taxes that may be payable in the event the remaining undistributed earnings are repatriated.