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Income Taxes
 12 Months Ended
Jun. 30, 2022
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
Income Before Income Taxes
The components of income before income taxes are as follows:
Year Ended June 30,202220212020
U.S.$287,367 $152,202 $36,161 
Foreign42,423 24,860 19,075 
Income before income taxes$329,790 $177,062 $55,236 
Provision
The provision for income taxes consists of:
Year Ended June 30,202220212020
Current:
Federal$40,608 $46,685 $31,149 
State and local10,188 11,035 7,580 
Foreign6,404 5,665 5,757 
Total current57,200 63,385 44,486 
Deferred:
Federal12,467 (24,168)(8,594)
State and local2,659 (4,740)(3,098)
Foreign50 (2,172)(1,600)
Total deferred15,176 (31,080)(13,292)
Total$72,376 $32,305 $31,194 
During the third quarter of fiscal 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was enacted in the U.S. As a result of the CARES Act, the Company recorded a $1,000 tax benefit related to the carryback of a tax net operating loss incurred in a year in which the U.S. federal corporate income tax rate was 21% to a year in which the U.S. federal corporate income tax rate was higher.
Effective Tax Rates
The following reconciles the U.S. federal statutory income tax rate to the Company’s effective income tax rate:
Year Ended June 30,202220212020
Statutory income tax rate21.0 %21.0 %21.0 %
Effects of:
State and local taxes3.3 3.2 6.4 
U.S. federal tax reform/CARES Act NOL carryback— — (1.8)
Goodwill impairment— — 31.4 
Stock compensation(1.5)(2.5)(1.3)
GILTI/FDII0.2 0.1 3.6 
R & D credit(0.4)(1.5)(1.2)
U.S. tax on foreign income, net(0.4)(0.5)(3.1)
Impact of foreign operations0.4 — 1.6 
Non-deductibles/Deductible dividend0.2 — 0.6 
Interest deduction(0.6)(1.1)(4.0)
Valuation allowance(0.6)0.1 2.6 
Other, net0.3 (0.6)0.7 
Effective income tax rate21.9 %18.2 %56.5 %
Consolidated Balance Sheets
Significant components of the Company’s deferred tax assets and liabilities are as follows:
June 30,20222021
Deferred tax assets:
Compensation liabilities not currently deductible$19,131 $17,436 
Other expenses and reserves not currently deductible17,143 18,676 
Leases26,688 23,126 
Net operating loss carryforwards 7,371 9,262 
Hedging instrument— 2,794 
Other563 799 
Total deferred tax assets$70,896 $72,093 
Less: Valuation allowance(6,271)(8,542)
Deferred tax assets, net of valuation allowance$64,625 $63,551 
Deferred tax liabilities:
Inventories$(13,728)$(9,215)
Goodwill and intangibles(46,513)(38,534)
Leases(26,509)(22,475)
Hedging instrument(6,446)— 
Depreciation and differences in property bases(9,760)(6,214)
Total deferred tax liabilities(102,956)(76,438)
Net deferred tax liabilities$(38,331)$(12,887)
Net deferred tax liabilities are classified as follows:
Other assets$5,677 $6,373 
Other liabilities(44,008)(19,260)
Net deferred tax liabilities$(38,331)$(12,887)
As of June 30, 2022 and 2021, the Company had foreign net operating loss carryforwards of approximately $32,018 and $35,415, respectively, the tax benefit of which is approximately $6,677 and $8,445, respectively. These loss carryforwards will expire at various dates beginning in 2033. Also, as of June 30, 2022 and 2021, the Company had state net operating loss carryforwards, the tax benefit of which is approximately $878 and $1,034 respectively, which will expire at various dates beginning in 2027.
Valuation allowances are provided against deferred tax assets where it is considered more-likely-than-not that the Company will not realize the benefit of such assets. The remaining net deferred tax asset is the amount management believes is more-likely-than-not of being realized. The realization of these deferred tax assets can be impacted by changes to tax laws, statutory tax rates and future income levels. The Company evaluates the realization of its deferred tax assets each quarter throughout the year. During the years ended June 30, 2022 and 2021, the Company released a valuation allowance of $2,270 and recorded a valuation allowance of $267, respectively, related to certain deferred tax assets in Canada. The total valuation allowance provided against the deferred tax assets in Canada is $6,228 and $8,498 as of June 30, 2022 and 2021, respectively.
As of June 30, 2022, the Company had accumulated undistributed earnings of non-U.S. subsidiaries of approximately $146,154. The vast majority of such earnings have previously been subjected to the one-time transition tax or the Global Intangible Low Taxed Income ("GILTI") inclusion. Therefore, any additional taxes due with respect to such earnings or the excess of the amount for financial reporting over the tax basis of our foreign investments would generally be limited to foreign withholding and state income taxes. In addition, we expect foreign tax credits would be available to either offset or partially reduce the tax cost in the event of a distribution. We intend, however, to indefinitely reinvest these earnings and expect future U.S. cash generation to be sufficient to meet future U.S. cash needs.
Unrecognized Income Tax Benefits
The Company and its subsidiaries file income tax returns in U.S. federal, various state, local and foreign jurisdictions. The following table sets forth the changes in the amount of unrecognized tax benefits for the years ended June 30, 2022, 2021, and 2020:
Year Ended June 30,202220212020
Unrecognized Income Tax Benefits at beginning of the year$5,230 $4,955 $4,979 
Current year tax positions505 285 105 
Prior year tax positions(83)620 177 
Expirations of statutes of limitations(726)(630)(306)
Unrecognized Income Tax Benefits at end of year$4,926 $5,230 $4,955 
The Company recognizes interest and penalties related to uncertain tax positions in the provision for income taxes. During 2022, 2021, and 2020, the Company recognized $(362), $144, and $256 of (income) expense, respectively, for interest and penalties related to unrecognized income tax benefits in its statements of consolidated income. The Company had a liability for penalties and interest of $876, $1,238, and $1,094 as of June 30, 2022, 2021, and 2020, respectively. The Company does not anticipate a significant change to the total amount of unrecognized income tax benefits within the next twelve months. Included in the balance of unrecognized income tax benefits at June 30, 2022, 2021, and 2020 are $4,813, $4,986, and $4,708 respectively, of income tax benefits that, if recognized, would affect the effective income tax rate.
The Company is subject to U.S. federal income tax examinations for the tax years 2019 through 2022 and to state and local income tax examinations for the tax years 2016 through 2022. In addition, the Company is subject to foreign income tax examinations for the tax years 2015 through 2022.
The Company’s unrecognized income tax benefits are included in other liabilities in the consolidated balance sheets since payment of cash is not expected within one year, or as a reduction of a deferred tax asset.