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INCOME TAXES
 12 Months Ended
Jun. 30, 2022
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
The components of loss from continuing operations before income taxes are as follows:
 Fiscal Years
 20222021
 (Dollars in thousands)
Loss before income taxes
U.S. $(41,231)$(143,104)
International(3,211)34,470 
$(44,442)$(108,634)
The provision (benefit) for income taxes consists of:
 Fiscal Years
 20222021
 (Dollars in thousands)
Current:  
U.S. $(535)$(620)
International(425)(1,421)
Deferred:  
U.S. 3,130 (3,701)
International(153)314 
$2,017 $(5,428)
The provision (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
 20222021
U.S. statutory rate21.0 %21.0 %
State income taxes, net of federal income tax benefit1.4 7.9 
Valuation allowance (1)(6.6)(61.5)
Foreign income taxes at other than U.S. rates3.0 9.4 
Uncertain tax positions(17.9)0.2 
Stock-based compensation(2.8)(0.7)
Loss on investment in Luxembourg— 29.3 
Other, net (2)(2.6)(0.6)
Effective tax rate(4.5)%5.0 %
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(1)See Note 1 to the Consolidated Financial Statements.
(2)The (2.6)% of Other, net in fiscal year 2022 includes the rate impact of the federal provision to return true-up and miscellaneous items of (2.0)% and (0.6)%, respectively. The (0.6)% of Other, net in fiscal year 2021 does not include the rate impact of any items in excess of 5% of computed tax.
The components of the net deferred tax assets and liabilities are as follows:
 June 30,
 20222021
 (Dollars in thousands)
Deferred tax assets:  
Payroll and payroll related costs$5,267 $8,523 
Net operating loss carryforwards153,190 145,823 
Tax credit carryforwards37,664 37,433 
Capital loss carryforwards5,338 14,179 
Deferred franchise fees8,694 10,153 
Operating lease liabilities124,905 154,255 
Other (1)17,542 12,608 
Subtotal352,600 382,974 
Valuation allowance (1)(201,731)(192,522)
Total deferred tax assets$150,869 $190,452 
Deferred tax liabilities:  
Goodwill and intangibles$(33,466)$(43,375)
Operating lease assets(123,333)(150,573)
Other(5,049)(7,154)
Total deferred tax liabilities(161,848)(201,102)
Net deferred tax liability$(10,979)$(10,650)
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(1)The $17.5 million of Other in fiscal year 2022 includes $5.3 million of deferred tax assets with a corresponding valuation allowance of the same amount related to discontinued operations.
Significant components of the valuation allowance which occurred during fiscal year 2022 are as follows:
•The Company determined that it no longer had sufficient U.S. state indefinite-lived taxable temporary differences to support realization of its U.S. state indefinite-lived NOLs and its existing U.S. deferred tax assets that upon reversal are expected to generate state indefinite-lived NOLs. As a result, the Company recorded a $4.1 million valuation allowance on its U.S. state indefinite-lived deferred tax assets.
Significant components of the valuation allowance which occurred during fiscal year 2021 are as follows:
•The Company recognized a tax loss on its investment in Luxembourg and established a corresponding valuation allowance of $34.4 million.
At June 30, 2022, the Company has tax-effected federal, state, Canada, and U.K. net operating loss carryforwards of approximately $116.8, $28.1, $7.8 and $0.5 million, respectively. The Company's federal loss carryforward consists of $27.3 million that will expire from fiscal years 2034 to 2038 and $89.5 million that has no expiration. The state loss carryforwards consist of $24.4 million that will expire from fiscal years 2023 to 2042 and $3.7 million that has no expiration. The Canada loss carryforward will expire from fiscal years 2036 to 2042. The U.K. loss carryforward has no expiration.
The Company's tax credit carryforward of $37.7 million primarily consists of Work Opportunity Tax Credits that will expire from fiscal years 2031 to 2042.
The Company's capital loss carryforward of $5.3 million will expire in fiscal year 2025.
We consider 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 $7.8 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, the U.K. and Luxembourg, as well as states, cities, and provinces within these jurisdictions. The Company is no longer subject to Internal Revenue Service examinations for years before 2014. With limited exceptions, the Company is no longer subject to state and international income tax examination by tax authorities for years before 2012.
A rollforward of the unrecognized tax benefits is as follows:
 Fiscal Years
 20222021
 (Dollars in thousands)
Balance at beginning of period$13,858 $14,045 
Additions based on tax positions related to the current year, primarily salon vendition activity and tax positions related to a capital loss8,636 292 
Additions based on tax positions of prior years81 50 
Reductions on tax positions related to the expiration of the statute of limitations(402)(529)
Balance at end of period$22,173 $13,858 
If the Company were to prevail on all unrecognized tax benefits recorded, a net benefit of approximately $1.0 million would be recorded in the effective tax rate. Interest and penalties associated with unrecognized tax benefits are recorded within income tax expense. During each of the fiscal years 2022 and 2021, the Company recorded interest and penalties of approximately $0.2 million as reductions to the accrual, net of the respective reversal of previously accrued interest and penalties. As of June 30, 2022, 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.