v3.26.1
INCOME TAXES
 12 Months Ended
Jun. 30, 2026
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
The provision for income taxes, by tax jurisdiction, consisted of the following for the fiscal years ended June 30:
202620252024
Current:
Federal$40 $165 $132 
State11 39 18 
Foreign58 68 56 
Total current$109 $272 $206 
Deferred:
Federal71 (17)(99)
State11 (2)(5)
Foreign(1)1 4 
Total deferred81 (18)(100)
Total$190 $254 $106 
The summary of income taxes paid, net of refunds, by tax jurisdiction, is as follows for the fiscal year ended June 30:
2026
U.S. Federal$13 
U.S. state and local:
California7 
Other11 
Foreign:
Canada37 
Ireland11 
Saudi Arabia10 
Other15 
Total income taxes paid, net of refunds$104 
Income taxes paid, net of refunds, were $264 and $347 for the fiscal years ended June 30, 2025 and 2024, respectively. The higher tax payments in fiscal year 2024 were primarily driven by payments of fiscal year 2023 income taxes in fiscal year 2024 that were previously deferred as a result of the relief provided by the IRS announced in January 2023 due to winter storms in California. The lower tax payments in fiscal year 2026 were driven by accelerated tax deductions under The One Big Beautiful Bill Act (OBBBA).
The components of Earnings before income taxes, by tax jurisdiction, consisted of the following for the fiscal years ended June 30:
202620252024
United States$629 $886 $311 
Foreign162 192 87 
Total$791 $1,078 $398 
A reconciliation of the statutory federal income tax rate to the Company’s effective tax rate on operations follows for the fiscal years ended June 30:
2026
AmountPercent
Statutory federal tax rate$166 21.0 %
State income taxes, net of federal benefit (1)
18 2.3 
Foreign tax effects:
Puerto Rico
Expired tax credit carryforwards30 3.8 
Change in valuation allowance(30)(3.8)
Other14 1.8 
Effect of changes in tax laws or rates enacted in the current period— — 
Effect of cross-border tax laws(5)(0.6)
Tax credits:
Foreign tax credits(9)(1.1)
Other tax credits(3)(0.4)
Changes in valuation allowances(6)(0.8)
Nontaxable or nondeductible items8 1.0 
Changes in unrecognized tax benefits3 0.4 
Other4 0.4 
Effective tax rate$190 24.0 %
(1)State taxes in California, Illinois, New Jersey and Texas for FY26 made up the majority (greater than 50%) of the tax effect in this category.
20252024
Statutory federal tax rate21.0 %21.0 %
State taxes (net of federal tax benefits)2.7 2.5 
Foreign tax rate differential2.6 7.7 
Federal excess tax benefits(0.3)(0.3)
Net U.S tax on foreign income(0.5)(5.2)
Loss on divestiture2.3 10.5 
International legal entity reorganization(1.1)(6.1)
Federal research and development credits(0.5)(1.2)
Other differences(2.6)(2.4)
Effective tax rate23.6 %26.5 %
The OBBBA was enacted in the United States on July 4, 2025. This legislation includes provisions that allow accelerated tax deductions for acquisitions of qualified property and for research expenses. It also modified the U.S. taxation of certain earnings associated with international business. The Company assessed the provisions of the OBBBA and determined the corporate tax changes did not have a material impact on the effective tax rate in future periods. The OBBBA's provisions for accelerated tax deductions has changed the timing of cash tax payments in the current fiscal year and future periods.
Foreign withholding taxes are provided on unremitted foreign earnings that are not indefinitely reinvested at the time the earnings are generated. The Company regularly reviews and assesses whether there are any changes to its indefinite reinvestment assertion. None of the undistributed earnings of its foreign subsidiaries were indefinitely reinvested. As a result, the Company is providing foreign withholding taxes on the undistributed earnings of all foreign subsidiaries where applicable. These withholding taxes had no significant impact on the Company’s consolidated results.
The components of net deferred tax assets (liabilities) as of June 30 are shown below:
20262025
Deferred tax assets:
Compensation and benefit programs$95 $105 
Loss and tax credit carryforwards
177 208 
Operating and finance lease liabilities130 106 
Accruals and reserves34 27 
Capitalized research and development31 63 
Other29 51 
496 560 
Valuation allowance(132)(166)
Total deferred tax assets$364 $394 
Deferred tax liabilities:
Property, plant and equipment and intangible assets
$(140)$(115)
Lease right-of-use assets(119)(95)
Other(39)(37)
Total deferred tax liabilities(298)(247)
Net deferred tax assets (liabilities)$66 $147 
The net deferred tax assets and liabilities included in the consolidated balance sheet at June 30 were as follows:
20262025
Net deferred tax assets (1)
$83 $167 
Net deferred tax liabilities(17)(20)
Net deferred tax assets (liabilities)$66 $147 
(1)Net deferred tax assets are recorded in Other assets.
The Company reviews its deferred tax assets for recoverability on a quarterly basis. A valuation allowance is established when the Company believes that it is more likely than not that some portion of its deferred tax assets will not be realized. Valuation allowances have been provided to reduce deferred tax assets to amounts considered recoverable.
Changes in the valuation allowance on deferred tax assets were as follows for the fiscal years ended June 30:
202620252024
Valuation allowance at beginning of year$(166)$(115)$(59)
Net decrease/(increase) for U.S. capital loss carryforwards6 (62)(46)
Net decrease/(increase) for other foreign deferred tax assets— 1 (2)
Net decrease/(increase) for foreign and U.S. net operating loss carryforwards and tax credits28 10 (8)
Valuation allowance at end of year$(132)$(166)$(115)
The Company's carryforwards for capital losses, net operating losses, and tax credits, with related valuation allowances were as follows as of June 30:
2026
Carryforwards
Valuation Allowances
Net Carryforwards
Fiscal Year Expiring
Federal capital loss$95 $(92)$3 2029 - 2030
State capital loss10 (10)— 2029 - 2030
Capital losses in U.S. jurisdictions
105 (102)3 
Net operating losses:
U.S. jurisdictions
3 (2)1 2031 - 2038
U.S. jurisdictions (with no expiration)
4 (3)1 N/A
Foreign jurisdictions
12 (10)2 2027 - 2040
Foreign jurisdictions (with no expiration)
9 — 9 N/A
Total net operating losses
28 (15)13 
Income tax credits:
U.S. jurisdictions
33 — 33 2027 - 2035
U.S. jurisdictions (with no expiration)
1 — 1 N/A
Foreign jurisdictions (with no expiration)
10 (9)1 N/A
Total income tax credits
44 (9)35 
Total carryforwards
$177 $(126)$51 
2025
Carryforwards
Valuation Allowances
Net Carryforwards
Fiscal Year Expiring
Federal capital loss$98 $(98)$— 2029 - 2030
State capital loss10 (10)— 2029 - 2030
Capital losses in U.S. jurisdictions
108 (108)— 
Net operating losses:
U.S. jurisdictions
2 (2)— 2031 - 2038
U.S. jurisdictions (with no expiration)
4 (3)1 N/A
Foreign jurisdictions
16 (12)4 2026 - 2039
Foreign jurisdictions (with no expiration)
7 — 7 N/A
Total net operating losses
29 (17)12 
Income tax credits:
U.S. jurisdictions
33 — 33 2026 - 2035
U.S. jurisdictions (with no expiration)
2 — 2 N/A
Foreign jurisdictions
30 (30)— 2026
Foreign jurisdictions (with no expiration)
6 (5)1 N/A
Total income tax credits
71 (35)36 
Total carryforwards
$208 $(160)$48 
The Company files income tax returns in the U.S. federal and various state, local and foreign jurisdictions. The federal statute of limitations has expired for all tax years through June 30, 2022. Various income tax returns in state and foreign jurisdictions are currently in the process of examination.
The Company recognizes interest and penalties related to uncertain tax positions as a component of income tax expense. As of June 30, 2026 and 2025, the total balance of accrued interest and penalties related to uncertain tax positions was $6 and $4, respectively. Interest and penalties related to uncertain tax positions included in income tax expense resulted in an expense of $1 in each of fiscal years 2026, 2025, and 2024.
The following is a reconciliation of the beginning and ending amounts of the Company’s gross unrecognized tax benefits for the fiscal years ended June 30:
202620252024
Unrecognized tax benefits at beginning of year$27 $22 $17 
Gross increases - tax positions in prior periods3 3 — 
Gross decreases - tax positions in prior periods(3)(1)(4)
Gross increases - current period tax positions5 3 9 
Unrecognized tax benefits at end of year$32 $27 $22 
Included in the balance of unrecognized tax benefits as of June 30, 2026, 2025 and 2024, were potential benefits of $25, $20 and $15, respectively, which if recognized, would affect the effective tax rate.