Income Taxes

12 Months Ended

Jun. 30, 2020

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Income (loss) before income taxes for the Company’s domestic and foreign operations was as follows:

	Years Ended June 30,
($ in millions)	2020			2019		2018
Domestic	$	20.9		$	204.2	$	140.3
Foreign	(14.8		)	11.8		19.9
Income before income taxes	$	6.1		$	216.0	$	160.2

The provision (benefit) for income taxes from continuing operations consisted of the following:

	Years Ended June 30,
($ in millions)	2020			2019			2018
Current:
Federal	$	1.3		$	23.2		$	22.6
State	1.8			4.4			3.5
Foreign	1.9			4.9			6.7
Total current	5.0			32.5			32.8
Deferred:
Federal	(1.8		)	13.1			(66.0		)
State	0.3			3.6			4.8
Foreign	1.1			(0.2		)	0.1
Total deferred	(0.4		)	16.5			(61.1		)
Total income tax expense (benefit)	$	4.6		$	49.0		$	(28.3	)

The following is a reconciliation of income taxes computed at the U.S. Federal income tax rate to the Company’s effective income tax rates: 

	Years Ended June 30,
(% of pre-tax income)	2020		2019		2018
Statutory federal income tax rate	21.0	%	21.0	%	28.1	%
State income taxes, net of federal tax benefit	2.1		3.0		2.6
Foreign tax rate differential	24.4		0.7		(0.1	)
Domestic manufacturing deduction	—		—		(1.5	)
Research and development tax credit	(63.2	)	(1.1	)	(1.4	)
Adjustments of prior years' income taxes	45.5		(0.2	)	0.2
Remeasurement of U.S. deferred taxes	—		0.1		(49.3	)
Transition tax on foreign earnings	—		(0.1	)	3.1
Non-deductible goodwill impairment	32.5		—		—
Non-taxable income	(1.2	)	(0.1	)	(0.3	)
Non-deductible expenses	24.9		1.0		0.6
Share-based compensation	(2.3	)	(0.5	)	(0.4	)
Changes in valuation allowances	(6.4	)	0.2		0.8
Law changes	(1.3	)	(0.7	)	0.1
Other, net	(0.6	)	(0.6	)	(0.2	)
Effective income tax rate	75.4	%	22.7	%	(17.7	)%

Deferred taxes are recorded for temporary differences between the carrying amounts of assets and liabilities and their tax bases. The significant components of deferred tax assets and liabilities that are recorded in the consolidated balance sheets are summarized in the table below. A valuation allowance is required when it is more likely than not that all or a portion of a deferred tax asset will not be realized. As of June 30, 2020, the Company had net operating loss carryforwards of $4.1 million and $1.5 million in the United Kingdom and Singapore, respectively. These losses have an indefinite carryforward period. However, realization of these future tax benefits is expected to be limited to approximately $2.3 million in the United Kingdom and $0.0 million in Singapore. The company also had state net operating loss carryforwards of $292.5 million expiring between fiscal years 2021 and 2040. A significant portion of the state net operating loss carryforwards are subject to an annual limitation that, under current law, is likely to limit future tax benefits to approximately $3.1 million. Realization is dependent on generating sufficient taxable income prior to expiration of the loss carryforwards. Although realization is not assured, management believes it is more likely than not that all of the deferred tax asset will be realized. The amount of the deferred tax asset considered realizable, however, could be reduced in the near term if estimates of future taxable income during the carryforward period are reduced.

Valuation allowances decreased by $0.4 million during fiscal year 2020. The expiration of $4.0 million net operating losses for which no tax benefit was recognized, caused a reduction in the valuation allowance. This was partially offset by a $3.6 million increase in net operating losses incurred in certain tax jurisdictions for which no tax benefit was recognized.

	June 30,
($ in millions)	2020			2019
Deferred tax assets:
Pensions	$	96.7		$	86.9
Postretirement provisions	39.1			35.7
Net operating loss carryforwards	28.1			28.8
Operating lease liability	14.7			—
Other	34.8			36.2
Gross deferred tax assets	213.4			187.6
Valuation allowances	(24.2		)	(24.6		)
Total deferred tax assets	189.2			163.0
Deferred tax liabilities:
Depreciation	(257.7		)	(249.5		)
Intangible assets	(5.2		)	(11.3		)
Inventories	(33.9		)	(36.1		)
Operating lease right-of-use asset	(12.6		)	—
Other	(5.1		)	(4.6		)
Total deferred tax liabilities	(314.5		)	(301.5		)
Deferred tax liabilities, net	$	(125.3	)	$	(138.5	)

The Company does not have unrecognized tax benefits as of June 30, 2020, 2019 and 2018. The Company recognizes interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense.

All years prior to fiscal year 2017 have been settled with the Internal Revenue Service and with most significant state, local and foreign tax jurisdictions.

Undistributed earnings of our foreign subsidiaries, totaling $61.7 million were considered permanently reinvested. Following enactment of the Act, the repatriation of cash to the U.S. is generally no longer taxable for federal income tax purposes. If these earnings were to be repatriated, approximately $0.1 million of tax expense would be incurred.