INCOME TAXES (Tables)

12 Months Ended

Jun. 30, 2023

Provision for Income Taxes on Continuing Operations by Tax Jurisdiction

The provision for income taxes, by tax jurisdiction, consisted of the following for the fiscal years ended June 30:


	2023		2022		2021
Current
Federal	$	153	$	71	$	146
State	33		17		26
Foreign	40		43		41
Total current	$	226	$	131	$	213
Deferred
Federal	$	(120)	$	6	$	(26)
State	(28)		(2)		(9)
Foreign	(1)		1		3
Total deferred	(149)		5		(32)
Total	$	77	$	136	$	181

Earnings from Continuing Operations before Income Taxes, by Tax Jurisdiction

The components of Earnings before income taxes, by tax jurisdiction, consisted of the following for the fiscal years ended June 30:


	2023		2022		2021
United States	$	154	$	483	$	696
Foreign	84		124		204
Total	$	238	$	607	$	900

Tax Rate Reconciliation

A reconciliation of the statutory federal income tax rate to the Company’s effective tax rate on operations follows for the fiscal years ended June 30:


	2023		2022		2021
Statutory federal tax rate	21.0	%	21.0	%	21.0	%
State taxes (net of federal tax benefits)	1.6		1.9		1.5
Foreign tax rate differential	8.6		3.1		0.2

Federal excess tax benefits	(1.8)		(0.9)		(2.7)
Net U.S. tax on foreign income	(2.3)		(1.7)		(0.5)
VMS goodwill impairment	8.6		—		—
Federal research and development credits	(2.7)		(0.8)		(0.4)
Other differences	(0.6)		(0.2)		1.0
Effective tax rate	32.4	%	22.4	%	20.1	%

Components of Net Deferred Tax Assets (Liabilities)

The components of net deferred tax assets (liabilities) as of June 30 are shown below:


	2023		2022
Deferred tax assets
Compensation and benefit programs	$	123	$	100
Net operating loss and tax credit carryforwards	94		93
Operating and finance lease liabilities	104		98
Accruals and reserves	46		35
Capitalized research and development	34		—
Inventory costs	32		25
Other	34		32
Subtotal	467		383
Valuation allowance	(59)		(52)
Total deferred tax assets	$	408	$	331
Deferred tax liabilities
Fixed and intangible assets	$	(157)	$	(242)
Lease right-of-use assets	(96)		(91)

Other	(36)		(29)
Total deferred tax liabilities	(289)		(362)
Net deferred tax assets (liabilities)	$	119	$	(31)

The net deferred tax assets and liabilities included in the consolidated balance sheet at June 30 were as follows:

Net deferred tax assets (1)	$	147	$	35
Net deferred tax liabilities	(28)		(66)
Net deferred tax assets (liabilities)	$	119	$	(31)

(1)Net deferred tax assets are recorded in Other assets.

Summary of Valuation Allowance

Details of the valuation allowance were as follows as of June 30:


	2023		2022		2021
Valuation allowance at beginning of year	$	(52)	$	(42)	$	(38)
Net decrease/(increase) for other foreign deferred tax assets	(1)		(1)		(1)
Net decrease/(increase) for foreign and U.S. net operating loss carryforwards and tax credits	(6)		(9)		(3)
Valuation allowance at end of year	$	(59)	$	(52)	$	(42)

Reconciliation of Gross Unrecognized Tax Benefits

The following is a reconciliation of the beginning and ending amounts of the Company’s gross unrecognized tax benefits:


	2023		2022		2021
Unrecognized tax benefits at beginning of year	$	17	$	21	$	22
Gross increases - tax positions in prior periods	1		—		1
Gross decreases - tax positions in prior periods	(3)		(7)		(5)
Gross increases - current period tax positions	2		4		3
Gross decreases - current period tax positions	—		—		—
Lapse of applicable statute of limitations	—		(1)		—
Settlements	—		—		—
Unrecognized tax benefits at end of year	$	17	$	17	$	21