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INCOME TAXES
 12 Months Ended
Jun. 30, 2025
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
The components of income (loss) from continuing operations before income taxes are as follows:
 Fiscal Years
 202520242023
 (Dollars in thousands)
Income (loss) before income taxes
U.S. $2,709 $91,279 $(10,204)
International(1,173)(1,343)(1,794)
$1,536 $89,936 $(11,998)
The (benefit) provision for income taxes consists of:
 Fiscal Years
 202520242023
 (Dollars in thousands)
Current:   
U.S. $252 $427 $(219)
International— (77)(428)
Deferred (1):   
U.S. (109,886)531 (270)
International(5,862)(12)262 
$(115,496)$869 $(655)
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(1)The deferred income tax benefit in fiscal year 2025 is primarily due to the release of a prior year valuation allowance in the U.S. of $110.2 million and Canada of $6.1 million.
The (benefit) provision for income taxes differs from the amount of income tax determined by applying the applicable U.S. statutory rate to income (loss) from continuing operations before income taxes, as a result of the following:
 Fiscal Years
 202520242023
U.S. statutory rate21.0 %21.0 %21.0 %
State income taxes, net of federal income tax benefit(16.5)2.3 (2.7)
Valuation allowance (1)(7,897.3)(21.9)(12.9)
Foreign income taxes at other than U.S. rates(18.5)(0.2)(0.2)
Uncertain tax positions0.7 (0.1)6.7 
Stock-based compensation24.9 0.2 (2.7)
Deferred tax rate remeasurement(78.4)— (3.6)
Executive compensation limitation10.0 — (0.9)
Acquired deferred taxes(2.3)— — 
Tax attribute expiration (2)428.4 — (1.1)
Other, net (3)8.7 (0.3)1.9 
Effective tax rate(7,519.3)%1.0 %5.5 %
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(1)The change in valuation allowance for fiscal year 2025 primarily relates to a release of a majority of the U.S. prior year valuation allowance and a release of a portion of the Canadian prior year valuation allowance.
(2)The tax attribute expiration primarily relates to the expiration of a capital loss generated in fiscal year 2020, which was not offset by subsequent capital gains and is subject to a five-year carryforward period.
(3)The 8.7% of other, net in fiscal year 2025 includes the rate impact of the federal provision to return true-up and permanent adjustments of 6.2% and 2.5%, respectively. The (0.3)% of other, net in fiscal year 2024 does not include the rate impact of any items in excess of 5% of computed tax. The 1.9% of other, net in fiscal year 2023 includes the rate impact of the federal provision to return true-up and miscellaneous items of 1.3% and 0.6%, respectively.
The components of the net deferred tax assets and liabilities are as follows:
 June 30,
 20252024
 (Dollars in thousands)
Deferred tax assets:  
Payroll and payroll related costs$4,929 $5,422 
Net operating loss carryforwards136,471 138,691 
Tax credit carryforwards37,443 37,647 
Capital loss carryforwards1,027 5,879 
Deferred franchise fees3,395 5,301 
Operating lease liabilities57,492 74,409 
Interest expense carryforward 13,289 8,200 
Other2,580 6,346 
Subtotal256,626 281,895 
Valuation allowance(60,460)(181,759)
Total deferred tax assets$196,166 $100,136 
Deferred tax liabilities:  
Goodwill and intangibles$(34,087)$(35,509)
Operating lease assets(57,149)(73,809)
Other(2,426)(2,220)
Total deferred tax liabilities(93,662)(111,538)
Net deferred tax asset (liability)$102,504 $(11,402)
At June 30, 2025, the Company has tax-effected federal, state, Canada, and U.K. net operating loss carryforwards of approximately $100.2 million, $26.9 million, $9.1 million and $0.3 million, respectively. The Company's federal loss carryforward consists of $9.6 million that will expire in fiscal year 2038 and $90.6 million that has no expiration. The state loss carryforwards consist of $23.4 million that will expire from fiscal years 2026 to 2045 and $3.5 million that has no expiration. The federal and state loss carryforwards reported in the financial statements are reduced for uncertain tax positions by $17.6 million and $2.0 million, respectively. The Canada loss carryforward will expire from fiscal years 2036 to 2045. The U.K. loss carryforward has no expiration.
The Company's tax credit carryforward of $37.4 million primarily consists of Work Opportunity Tax Credits that will expire from fiscal years 2031 to 2044.
The Company's prior year capital loss carryforward of $5.9 million expired in fiscal year 2025. The current year capital loss carryforward will expire in fiscal year 2030.
The Company considers the earnings of certain non-U.S. subsidiaries to be indefinitely invested outside the U.S. Accordingly, we have not recorded deferred taxes related to the U.S. federal and state income taxes and foreign withholding taxes on approximately $0.02 million of undistributed earnings of foreign subsidiaries, which have been reinvested outside the U.S. As a result of the Tax Cuts and Jobs Act of 2017, taxes payable on the remittance of such earnings is expected to be minimal.
The Company files tax returns and pays tax primarily in the U.S., Canada, and the U.K., as well as states, cities, and provinces within these jurisdictions. With limited exceptions, due to net operating loss carryforwards, the Company's federal, state, and foreign tax returns are open to examination for all years since 2014, 2013, and 2016, respectively.
A rollforward of the unrecognized tax benefits is as follows:
 Fiscal Years
 20252024
 (Dollars in thousands)
Balance at beginning of period$21,232 $21,393 
Additions based on tax positions related to the current year3 3 
Additions based on tax positions of prior years8 12 
Reductions on tax positions related to the expiration of the statute of limitations(49)(176)
Balance at end of period$21,194 $21,232 
If the Company were to prevail on all unrecognized tax benefits recorded, a net benefit of approximately $0.7 million would be recorded in the effective tax rate. Interest and penalties associated with unrecognized tax benefits are recorded within income tax expense. The Company recorded interest and penalties of approximately $0.1 million, $0.1 million, and $0.1 million, as reductions to the accrual, net of the respective reversal of previously accrued interest and penalties during fiscal years 2025, 2024, and 2023, respectively. As of June 30, 2025, the Company had accrued interest and penalties related to unrecognized tax benefits of $0.7 million. This amount is not included in the gross unrecognized tax benefits noted above.
It is reasonably possible the amount of the unrecognized tax benefit with respect to certain of our unrecognized tax positions will increase or decrease during the next fiscal year. However, an estimate of the amount or range of the change cannot be made at this time.