Income Taxes

12 Months Ended

Jun. 30, 2021

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

(Loss) income before income taxes for the Company's domestic and foreign operations was as follows:

	Years Ended June 30,
($ in millions)	2021		2020		2019
Domestic	$	(252.5)	$	20.9	$	204.2
Foreign	(45.4)		(14.8)		11.8
(Loss) income before income taxes	$	(297.9)	$	6.1	$	216.0

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

	Years Ended June 30,
($ in millions)	2021		2020		2019
Current:
Federal	$	(37.3)	$	1.3	$	23.2
State	(0.6)		1.8		4.4
Foreign	3.2		1.9		4.9
Total current	(34.7)		5.0		32.5
Deferred:
Federal	(22.6)		(1.8)		13.1
State	(10.5)		0.3		3.6
Foreign	(0.5)		1.1		(0.2)
Total deferred	(33.6)		(0.4)		16.5
Total income tax (benefit) expense	$	(68.3)	$	4.6	$	49.0

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 (loss) income)	2021		2020		2019
Statutory federal income tax rate	21.0	%	21.0	%	21.0	%
State income taxes, net of federal tax benefit	2.9		2.1		3.0
Foreign tax rate differential	(0.4)		24.4		0.7
Federal tax rate differential loss carryback	2.3		—		—
Research and development tax credit	1.1		(63.2)		(1.1)
Adjustments of prior years' income taxes	(0.2)		45.5		(0.2)
Remeasurement of U.S. deferred taxes	—		—		0.1
Transition tax on foreign earnings	—		—		(0.1)
Non-deductible goodwill impairment	(3.3)		32.5		—
Non-taxable income	0.4		(1.2)		(0.1)
Non-deductible expenses	—		24.9		1.0
Share-based compensation	(0.5)		(2.3)		(0.5)
Changes in valuation allowances	(0.3)		(6.4)		0.2
Law changes	—		(1.3)		(0.7)
Other, net	(0.1)		(0.6)		(0.6)
Effective income tax rate	22.9	%	75.4	%	22.7	%

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, 2021, the Company had net operating loss carryforwards of $8.2 million, $1.7 million and $0.7 million in the United Kingdom, Singapore, and Sweden, respectively. These losses have an indefinite carryforward period. However, realization of these future tax benefits is expected to be limited to approximately $3.9 million in the United Kingdom, $0.0 million in Singapore and $0.0 million in Sweden. The Company also had state net operating loss carryforwards of $388.8 million expiring between fiscal years 2022 and 2041. 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 $11.0 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 that 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 carry forward periods are reduced.

Valuation allowances increased by $1.0 million during fiscal year 2021. The expiration of $2.6 million net operating losses for which no tax benefit was recognized, caused a reduction in the valuation allowance. This was offset by a $2.6 million increase in net operating losses incurred in certain tax jurisdictions for which no tax benefit was recognized. As a result of a law change in the United Kingdom which will increase the tax rate in future years, the United Kingdom valuation allowances were remeasured at the new rate causing an increase of $1.0 million.

	June 30,
($ in millions)	2021		2020
Deferred tax assets:
Pensions	$	51.5	$	96.7
Postretirement provisions	30.5		39.1
Net operating loss carryforwards	38.7		28.1
Tax credit carryforwards	26.0		0.6
Operating lease liability	8.9		14.7
Other	38.7		34.2
Gross deferred tax assets	194.3		213.4
Valuation allowances	(25.2)		(24.2)
Total deferred tax assets	169.1		189.2
Deferred tax liabilities:
Depreciation	(271.3)		(257.7)
Intangible assets	(6.1)		(5.2)
Inventories	(30.6)		(33.9)
Operating lease right-of-use asset	(6.6)		(12.6)
Other	(6.0)		(5.1)
Total deferred tax liabilities	(320.6)		(314.5)
Deferred tax liabilities, net	$	(151.5)	$	(125.3)

The Company does not have unrecognized tax benefits as of June 30, 2021, 2020 and 2019. 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 2018 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 $56.4 million were considered permanently reinvested. If these earnings were to be repatriated, approximately $0.8 million of tax expense would be incurred.