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Income Taxes - Effective Income Tax Rate Reconciliation (Detail)
12 Months Ended
Jun. 30, 2017
Jun. 30, 2016
Jun. 30, 2015
Income Tax Disclosure [Abstract]      
U.S. federal income tax rate 35.00% 35.00% 35.00%
State and local taxes, net 0.00% (8.00%) 1.00%
Effect of foreign operations [1] (17.00%) (1.00%) (2.00%)
Change in valuation allowance [2] (7.00%) (62.00%) 0.00%
Income tax audit settlements [3] (10.00%) 0.00% 0.00%
Non-deductible goodwill and asset impairment [4] (7.00%) 0.00% 0.00%
Non-deductible compensation and benefits (1.00%) 3.00% 1.00%
R&D credits 1.00% (2.00%) (1.00%)
Other, net 1.00% 5.00% 0.00%
Effective tax rate [5] (5.00%) (30.00%) 34.00%
[1] The Company's effective tax rate is impacted by the geographic mix of its pre-tax income. The Company's foreign operations are located primarily in Australia and the United Kingdom ("U.K.") which have lower income tax rates than the U.S. As indicated in the pre-tax income table above, for the fiscal year ended June 30, 2017, the Company recorded a pre-tax loss on a consolidated basis comprised of pre-tax income in the U.S. and pre-tax losses in foreign jurisdictions which includes impairments and write-downs of approximately $1 billion. The losses in our foreign operations had the effect of reducing the tax benefit of consolidated pre-tax losses measured at the U.S. statutory rate by $98 million resulting in a lower effective tax rate. For the fiscal years ended June 30, 2016 and June 30, 2015, the Company recorded pre-tax book income on a consolidated basis with pre-tax income in foreign jurisdictions. Accordingly, the effect of foreign operations at lower tax rates decreased the Company's effective tax rate.
[2] For the fiscal year ended June 30, 2017, valuation allowance increased by $40 million related to foreign net operating losses, which more likely than not will not be utilized. For the fiscal year ended June 30, 2016, included in the change in valuation allowance is a tax benefit of $106 million related to the release of previously established valuation allowances related to certain U.S. Federal net operating losses and state deferred tax assets. This benefit was recognized in conjunction with management's plan to dispose of the Company's digital education business during fiscal 2016, as the Company now expects to generate sufficient U.S. taxable income to utilize these deferred tax assets prior to expiration.
[3] In fiscal year ended June 30, 2017, the Company reached an agreement with a foreign tax authority to settle certain tax issues related to fiscal years 2010 through 2015. As a result of the settlement, the Company recorded net income tax expense of $63 million. See Uncertain Tax Positions below.
[4] The Company recorded non-cash charges of $48 million related to the impairment of Goodwill and a write-down of $360 million on U.K. fixed assets which reduced the Company's tax benefit by $12 million and $29 million, respectively. These impairments and write-downs have an impact on our effective tax rate to the extent a tax benefit is not recorded.
[5] For the fiscal year ended June 30, 2017, the effective tax rate of (5)% represents income tax expense when compared to consolidated pre-tax book loss. For the fiscal year ended June 30, 2016, the effective tax rate of (30)% represents income tax benefit when compared to consolidated pre-tax book income. For the fiscal year ended June 30, 2015, the effective tax rate of 34% represents an income tax expense when compared to consolidated pre-tax book income. As a result, certain reconciling items between the U.S. federal income tax rate and the Company's effective tax rate may have the opposite impact.