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INCOME TAXES (Tables)

12 Months Ended

Jun. 30, 2021

The components of loss from continuing operations before income taxes are as follows:


	Fiscal Years
	2021		2020		2019

	(Dollars in thousands)
Loss before income taxes
U.S.	$	(153,962)	$	(165,260)	$	(17,513)
International	35,203		(11,553)		(4,754)
	$	(118,759)	$	(176,813)	$	(22,267)

Benefit for income taxes

The benefit for income taxes consists of:


	Fiscal Years
	2021		2020		2019

	(Dollars in thousands)
Current:
U.S.	$	(620)	$	(925)	$	(519)
International	(1,421)		238		1,069
Deferred:
U.S.	(3,701)		(3,353)		(2,303)
International	314		(579)		(392)
	$	(5,428)	$	(4,619)	$	(2,145)

Benefit for income taxes, reconciliation to applicable U.S. statutory rate

The benefit for income taxes differs from the amount of income tax determined by applying the applicable U.S. statutory rate to loss from continuing operations before income taxes, as a result of the following:


	Fiscal Years
	2021		2020		2019

U.S. statutory rate	21.0	%	21.0	%	21.0	%
State income taxes, net of federal income tax benefit	7.6		4.0		0.5
Valuation allowance (1)	(58.3)		(29.4)		(14.5)
Foreign income taxes at other than U.S. rates	8.5		(0.6)		0.9
Work opportunity tax credits	0.2		0.4		7.2

Uncertain tax positions	0.2		(6.2)		1.0
Stock-based compensation	(0.6)		0.1		2.2
Capital loss	—		15.0		—
Loss on investment in Luxembourg	26.8		—		—
Other, net (2)	(0.8)		(1.7)		(8.7)
Effective tax rate	4.6	%	2.6	%	9.6	%

_______________________________________________________________________________

(1)See Note 1 to the Consolidated Financial Statements.

(2)The (0.8)% of Other, net in fiscal year 2021 does not include the rate impact of any items in excess of 5% of computed tax. The (1.7)% of Other, net in fiscal year 2020 includes the rate impact of goodwill derecognition and impairment and miscellaneous items of (1.2)% and (0.5)%, respectively. The (8.7)% of Other, net in fiscal year 2019 includes the rate impact of goodwill derecognition and miscellaneous items of (5.9)% and (2.8)%, respectively.

Components of the net deferred tax assets and liabilities

The components of the net deferred tax assets and liabilities are as follows:


	June 30,
	2021		2020

	(Dollars in thousands)
Deferred tax assets:

Payroll and payroll related costs	$	8,523	$	9,903
Net operating loss carryforwards	145,823		64,402
Tax credit carryforwards	37,433		37,072
Capital loss carryforwards	14,179		14,978
Deferred franchise fees	10,153		9,342
Operating lease liabilities	154,255		202,940
Financing lease liabilities	—		7,157
Other	12,608		8,214
Subtotal	382,974		354,008
Valuation allowance	(192,522)		(122,447)
Total deferred tax assets	$	190,452	$	231,561

Deferred tax liabilities:
Goodwill and intangibles	$	(43,375)	$	(40,904)
Operating lease assets	(150,573)		(197,304)
Other	(7,154)		(7,269)
Total deferred tax liabilities	(201,102)		(245,477)
Net deferred tax liability	$	(10,650)	$	(13,916)

Unrecognized tax benefits

A rollforward of the unrecognized tax benefits is as follows:


	Fiscal Years
	2021		2020		2019

	(Dollars in thousands)
Balance at beginning of period	$	14,045	$	2,763	$	3,027
Additions based on tax positions related to the current year, primarily salon vendition activity and tax positions related to a capital loss	292		11,985		287
Additions/(reductions) based on tax positions of prior years	50		(223)		(154)
Reductions on tax positions related to the expiration of the statute of limitations	(529)		(480)		(397)

Balance at end of period	$	13,858	$	14,045	$	2,763