Income Taxes

12 Months Ended

Jun. 30, 2022

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)	2022		2021		2020
Domestic	$	(74.0)	$	(252.5)	$	20.9
Foreign	10.9		(45.4)		(14.8)
(Loss) income before income taxes	$	(63.1)	$	(297.9)	$	6.1

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

	Years Ended June 30,
($ in millions)	2022		2021		2020
Current:
Federal	$	(14.7)	$	(37.3)	$	1.3
State	0.1		(0.6)		1.8
Foreign	3.7		3.2		1.9
Total current	(10.9)		(34.7)		5.0
Deferred:
Federal	(1.0)		(22.6)		(1.8)
State	(2.7)		(10.5)		0.3
Foreign	0.6		(0.5)		1.1
Total deferred	(3.1)		(33.6)		(0.4)
Total income tax (benefit) expense	$	(14.0)	$	(68.3)	$	4.6

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)	2022		2021		2020
Statutory federal income tax rate	21.0	%	21.0	%	21.0	%
State income taxes, net of federal tax benefit	3.1		2.9		2.1
Foreign tax rate differential	(1.0)		(0.4)		24.4
Federal tax rate differential loss carryback	—		2.3		—
Research and development tax credit	4.4		1.1		(63.2)
Adjustments of prior years' income taxes	(7.4)		(0.2)		45.5
Non-deductible goodwill impairment	—		(3.3)		32.5
Non-taxable income	(1.0)		0.4		(1.2)
Non-deductible expenses	(1.8)		—		24.9
Share-based compensation	(0.7)		(0.5)		(2.3)
Changes in valuation allowances	6.0		(0.3)		(6.4)
Law changes	—		—		(1.3)
Other, net	(0.4)		(0.1)		(0.6)
Effective income tax rate	22.2	%	22.9	%	75.4	%

Deferred taxes are recorded for temporary differences between the carrying amounts of assets and liabilities and their tax bases. 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, 2022, the Company had net operating loss carryforwards of $9.1 million in the United Kingdom and $1.7 million in Singapore. These losses have an indefinite carryforward period. However, realization of these future tax benefits is expected to be limited to approximately $3.5 million in the United Kingdom and no realized benefit in Singapore. The Company also had state net operating loss carryforwards of $338.6 million expiring between fiscal years 2023 and 2042. 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 than 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 decreased by $3.9 million during fiscal year 2022. The expiration of $4.0 million net operating losses for which no tax benefit was recognized, caused a reduction in the valuation allowance. This was offset by a $0.1 million increase in net operating losses incurred in certain tax jurisdictions for which no tax benefit was recognized.

The significant components of deferred tax assets and liabilities that are recorded in the consolidated balance sheets are summarized in the table below:

	June 30,
($ in millions)	2022		2021
Deferred tax assets:
Pensions	$	43.2	$	51.5
Postretirement provisions	26.9		30.5
Net operating loss carryforwards	44.5		38.7
Tax credit carryforwards	17.0		26.0
Operating lease liability	10.5		8.9
Other	36.8		38.7
Gross deferred tax assets	178.9		194.3
Valuation allowances	(21.3)		(25.2)
Total deferred tax assets	157.6		169.1
Deferred tax liabilities:
Depreciation	(262.9)		(271.3)
Intangible assets	(5.2)		(6.1)
Inventories	(28.9)		(30.6)
Operating lease right-of-use asset	(8.3)		(6.6)
Other	(9.0)		(6.0)
Total deferred tax liabilities	(314.3)		(320.6)
Deferred tax liabilities, net	$	(156.7)	$	(151.5)

The Company does not have unrecognized tax benefits as of June 30, 2022, 2021 and 2020. 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 2017 have been settled with the Internal Revenue Service and with most significant state, local and foreign tax jurisdictions.

During the quarter ended March 31, 2022, the Company changed its assertion regarding undistributed earnings from foreign subsidiaries. The Company now asserts that substantially all undistributed earnings from foreign subsidiaries will not be considered indefinitely reinvested. The potential tax implications from the distribution of these future earnings are expected to be limited to withholding taxes in certain jurisdictions and are not expected to materially impact the consolidated financial statements.