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Income Taxes (Tables)

12 Months Ended

Jul. 31, 2021

Income Tax Disclosure [Abstract]

Income before provision for income taxes

(Loss) income before (benefit from) provision for income taxes consists of the following:

						Fiscal Years Ended July 31,
						2021						2020						2019
U.S.						$	(73,153,000)					7,226,000						28,813,000
Foreign						(1,827,000)						2,084,000						97,000
						$	(74,980,000)					9,310,000						28,910,000

Provision for income taxes

The (benefit from) provision for income taxes included in the accompanying Consolidated Statements of Operations consists of the following:

						Fiscal Years Ended July 31,
						2021						2020						2019
Federal – current						$	608,000					1,053,000						(2,190,000)
Federal – deferred						(877,000)						721,000						4,782,000
State and local – current						466,000						1,137,000						1,715,000
State and local – deferred						(598,000)						(1,312,000)						(321,000)
Foreign – current						688,000						298,000						62,000
Foreign – deferred						(1,787,000)						393,000						(179,000)
(Benefit from) provision for income taxes						$	(1,500,000)					2,290,000						3,869,000

Provision for income taxes differed from amounts computed by applying the U.S. Federal income tax rate

The (benefit from) provision for income taxes differed from the amounts computed by applying the U.S. Federal income tax rate as a result of the following:

						Fiscal Years Ended July 31,
						2021												2020												2019
						Amount						Rate						Amount						Rate						Amount						Rate
Computed "expected" tax expense (benefit)						$	(15,746,000)					21.0		%				1,955,000						21.0		%				6,071,000						21.0		%
Increase (reduction) in income taxes resulting from:
State and local income taxes, net of federal benefit						(1,371,000)						1.8						(278,000)						(3.0)						967,000						3.3
Stock-based compensation						(20,000)						—						308,000						3.3						(44,000)						(0.1)
Research and experimentation credits						(1,018,000)						1.4						(1,210,000)						(13.0)						(1,129,000)						(3.9)
Foreign-derived intangible income deduction						164,000						(0.2)						(162,000)						(1.7)						(632,000)						(2.2)
Nondeductible transaction costs						402,000						(0.5)						301,000						3.2						394,000						1.4
Nondeductible executive compensation						628,000						(0.8)						595,000						6.4						330,000						1.1
Fines and penalties						—						—						189,000						2.0						2,000						—
Audit settlements						6,000						—						1,000						—						(2,081,000)						(7.2)
Change in the beginning of the year valuation allowance for deferred tax assets						(805,000)						1.1						—						—						—						—
Change in valuation allowance						15,582,000						(20.8)						—						—						—						—
Remeasurement of deferred taxes						(224,000)						0.3						(135,000)						(1.5)						—						—
Foreign income taxes						676,000						(0.9)						453,000						4.9						5,000						—
Other, net						226,000						(0.4)						273,000						3.0						(14,000)						—
(Benefit from) provision for income taxes						$	(1,500,000)					2.0		%				2,290,000						24.6		%				3,869,000						13.4		%

Tax effects of temporary differences

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities at July 31, 2021 and 2020 are presented below:

						2021						2020
Deferred tax assets:
Inventory and warranty reserves						$	6,774,000					5,786,000
Compensation and commissions						4,338,000						3,210,000
Federal, state and foreign research and experimentation credits						19,324,000						19,656,000
Stock-based compensation						4,979,000						4,955,000
Foreign scientific research and experimental development expenditures						1,496,000						1,765,000
Federal, state and foreign net operating losses						5,413,000						3,942,000
Federal and state capital losses						15,582,000						28,000
Lease liabilities						10,980,000						7,335,000
Other						4,550,000						6,572,000
Less: valuation allowance						(28,384,000)						(11,471,000)
Total deferred tax assets						45,052,000						41,778,000
Deferred tax liabilities:
Plant and equipment						(1,146,000)						(801,000)
Lease right-of-use assets						(10,085,000)						(7,080,000)
Intangibles						(54,635,000)						(50,368,000)
Total deferred tax liabilities						(65,866,000)						(58,249,000)
Net deferred tax liabilities						$	(20,814,000)					(16,471,000)

Summary of unrecognized tax benefits

The following table summarizes the activity related to our unrecognized tax benefits for fiscal years 2021, 2020 and 2019 (excluding interest):

						2021						2020						2019
Balance at beginning of period						$	8,270,000					7,203,000						9,137,000
Increase related to current period						528,000						684,000						893,000
Increase related to prior periods						338,000						464,000						17,000
Expiration of statute of limitations						(48,000)						(73,000)						(394,000)
Decrease related to prior periods						(79,000)						(8,000)						(2,450,000)
Balance at end of period						$	9,009,000					8,270,000						7,203,000

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Tabular disclosure of the components of income tax expense attributable to continuing operations for each year presented including, but not limited to: current tax expense (benefit), deferred tax expense (benefit), investment tax credits, government grants, the benefits of operating loss carryforwards, tax expense that results from allocating certain tax benefits either directly to contributed capital or to reduce goodwill or other noncurrent intangible assets of an acquired entity, adjustments of a deferred tax liability or asset for enacted changes in tax laws or rates or a change in the tax status of the entity, and adjustments of the beginning-of-the-year balances of a valuation allowance because of a change in circumstances that causes a change in judgment about the realizability of the related deferred tax asset in future years.

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Tabular disclosure of the components of net deferred tax asset or liability recognized in an entity's statement of financial position, including the following: the total of all deferred tax liabilities, the total of all deferred tax assets, the total valuation allowance recognized for deferred tax assets.

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Tabular disclosure of the reconciliation using percentage or dollar amounts of the reported amount of income tax expense attributable to continuing operations for the year to the amount of income tax expense that would result from applying domestic federal statutory tax rates to pretax income from continuing operations.

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