Income Taxes

12 Months Ended

Jun. 30, 2020

The current and deferred components of the provision for income taxes consist of the following:



	For the Years Ended June 30,
(In thousands)	2020			2019			2018
Current:
Federal	$	—		$	(1,774	)	$	101
State	105			231			56
Total current income tax (benefit) expense	105			(1,543		)	157
Deferred:
Federal	(458		)	30,618			17,090
State	158			11,036			65
Total deferred income tax expense	(300		)	41,654			17,155
Income tax expense	$	(195	)	$	40,111		$	17,312

A reconciliation of income tax expense to the federal statutory tax rate is as follows:



	For the Years Ended June 30,
(In thousands)	2020			2019			2018
Statutory tax rate	21		%	21		%	28		%
Income tax (benefit) expense at statutory rate	$	(7,829	)	$	(7,032	)	$	(272	)
State income tax (benefit) expense, net of federal tax benefit	(1,523		)	(1,295		)	12
Valuation allowance	9,153			50,123			283
Change in tax rate	233			124			18,022
Retiree life insurance	—			—			19
Other (net)	(229		)	(1,809		)	(752		)
Income tax expense	$	(195	)	$	40,111		$	17,312

Pursuant to the Tax Cuts and Jobs Act enacted on December 22, 2017 (the "Tax Act"), the federal corporate tax rate was reduced to 21.0%, effective for the tax years beginning on or after January 1, 2018. Deferred tax amounts are calculated based on the rates at which they are expected to reverse in the future.

The primary components of the temporary differences which give rise to the Company’s net deferred tax assets (liabilities) are as follows:



	As of June 30,
(In thousands)	2020			2019
Deferred tax assets:
Postretirement benefits	$	20,232		$	20,775
Accrued liabilities	3,970			5,042
Net operating loss carryforwards	38,754			37,768
Intangible assets	9,482			—
Operating lease liabilities	5,419			—
Other	6,893			5,950
Total deferred tax assets	84,750			69,535
Deferred tax liabilities:
Fixed assets	(13,427		)	(15,562		)
Right-of-use operating lease assets	(5,513		)	—
Other	(2,950		)	(3,749		)
Total deferred tax liabilities	(21,890		)	(19,311		)
Valuation allowance	(64,354		)	(52,019		)
Net deferred tax liabilities	$	(1,494	)	$	(1,795	)

At June 30, 2020, the Company had approximately $150.6 million in federal and $115.0 million in state net operating loss carryforwards that will expire from June 30, 2021 to June 30, 2030. Additionally, at June 30, 2020, the Company had $0.8 million of federal business tax credits that will expire from June 30, 2025 to June 30, 2038.

At June 30, 2020, the Company had net deferred tax assets of $62.9 million before valuation allowance of $64.4 million. In assessing if the deferred tax assets will be realized, the Company considers whether it is probable that some or all of the deferred tax assets will not be realized. In determining whether the deferred taxes are realizable, the Company considers the period of expiration of the tax asset, historical and projected taxable income, and tax liabilities for the tax jurisdiction in which the tax asset is located. Valuation allowances are provided to reduce the amounts of deferred tax assets to an amount that is more likely than not to be realized based on an assessment of positive and negative evidence, including estimates of future taxable income necessary to realize future deductible amounts.

For the years ended June 30, 2020, 2019 and 2018, due to recent cumulative losses, the Company concluded that certain federal and state net operating loss carry forwards and tax credit carryovers will not be utilized before expiration. The amounts of valuation allowance recorded in the Consolidated Balance Sheets were $64.4 million, $52.0 million and $1.9 million to reduce deferred tax assets in fiscal 2020, 2019 and 2018, respectively. The Company's valuation allowance increased in fiscal 2020, 2019 and 2018 by $12.3 million, $50.1 million and $0.3 million, respectively.

As of, and for the three years ended June 30, 2020, 2019 and 2018, the Company had no significant uncertain tax positions.

The Company files income tax returns in the U.S. and in various state jurisdictions with varying statutes of limitations. The Company is no longer subject to U.S. income tax examinations for the fiscal years prior to June 30, 2018. Although the outcome of tax audits is always uncertain, the Company does not believe the outcome of any future audit will have a material adverse effect on the Company’s consolidated financial statements.

The Company’s policy is to recognize interest expense and penalties related to income tax matters as a component of income tax expense. There were no amount of interest and penalties recognized in the Consolidated Balance Sheets in the fiscal years ended June 30, 2020 and 2019, associated with uncertain tax positions. Additionally, the Company did not record any income tax expense related to interest and penalties on uncertain tax positions in the fiscal years ended June 30, 2020, 2019 and 2018, respectively.