XML 138 R120.htm IDEA: XBRL DOCUMENT v3.5.0.2
Income Taxes - Effective Income Tax Rate Reconciliation (Detail)
12 Months Ended
Jun. 30, 2016
Jun. 30, 2015
Jun. 30, 2014
Income Taxes Disclosure [Line Items]      
U.S. Federal income tax rate 35.00% 35.00% 35.00%
State and local taxes, net (8.00%) 1.00% 3.00%
Effect of foreign operations [1] (1.00%) (2.00%) 38.00%
Foreign tax refund received [2] (0.00%) (0.00%) 405.00%
Change in valuation allowance [3] (62.00%) 0.00% 0.00%
Non-deductible compensation and benefits 3.00% 1.00% 0.00%
R&D credits (2.00%) (1.00%) 2.00%
Other, net 5.00% 0.00% 4.00%
Effective tax rate [4] (30.00%) 34.00% 345.00%
21st Century Fox [Member]      
Income Taxes Disclosure [Line Items]      
Foreign tax refund received (paid) [2] 0.00% 0.00% (142.00%)
[1] The Company's foreign operations are located primarily in Australia and the United Kingdom ("UK") which have lower income tax rates than the U.S. For the fiscal years ended June 30, 2016 and June 30, 2015, the effect of foreign operations at lower tax rates decreased the Company's effective tax rate 1% and 2%, respectively, as the Company recorded pre-tax book income on a consolidated basis. For the year ended June 30, 2014, the effect of foreign operations at lower tax rates increased the Company's effective tax rate 38% as the Company recorded pre-tax book loss on a consolidated basis.
[2] The Company recorded a tax benefit, net of applicable taxes on interest, of $721 million for the fiscal year ended June 30, 2014 to Income tax benefit (expense) in the Statements of Operations related to certain foreign tax refunds received. See the discussion of Foreign Tax Refund above. The tax benefit related to these refunds increased our effective tax rate 405%. These foreign tax refunds received were paid to 21st Century Fox, net of applicable taxes on interest, in accordance with the terms of the Tax Sharing and Indemnification Agreement. Accordingly, for the fiscal year ended June 30, 2014, the Company recorded an expense to Other, net of approximately $721 million for the payment to 21st Century Fox in the Statements of Operations. This expense is a non-deductible item the tax effect of which is approximately $252 million and reflected as a decrease of approximately 142% in our effective tax rate.
[3] Included in the change in valuation allowance is a tax benefit of $106 million related to the release of previously established valuation allowances related to certain U.S. federal net operating losses and state deferred tax assets. This benefit was recognized in conjunction with management's plan to dispose of the Company's digital education business during 2016, as the Company now expects to generate sufficient U.S. taxable income to utilize these deferred tax assets prior to expiration. Total tax benefits related to the release of valuation allowances decreased our effective tax rate by 62%.
[4] For the fiscal year ended June 30, 2016, the effective tax rate of (30%) represents income tax benefit when compared to consolidated pre-tax book income. For the fiscal year ended June 30, 2015, the effective tax rate of 34% represents an income tax expense when compared to consolidated pre-tax book income. For the fiscal year ended June 30, 2014, the effective tax rate of 345% represents an income tax benefit when compared to consolidated pre-tax book loss. As a result, certain reconciling items between the U.S. federal income tax rate and the Company's effective tax rate may have the opposite impact.