v3.25.3

Income Taxes | 12 Months Ended
--- | ---
Oct. 31, 2025
Income Tax Disclosure [Abstract] |
Income Taxes |
8 | Income Taxes
Earnings Before Income Taxes Earnings before income taxes were as follows (dollars in millions):
Fiscal Years Ended October 31 |  | 2025 |  | 2024 |  | 2023
Earnings before income taxes: |  |  |  |  |  |
United States |  | $ | 278.6 |  |  | $ | 436.6 |  |  | $ | 345.0 |
Foreign |  | 99.0 |  |  | 76.2 |  |  | 55.5 |
Total earnings before income taxes |  | $ | 377.6 |  |  | $ | 512.8 |  |  | $ | 400.5 |
Reconciliation of Effective Tax Rate A reconciliation of the statutory federal income tax rate to the company's effective tax rate is summarized as follows:
Fiscal Years Ended October 31 |  | 2025 |  | 2024 |  | 2023
Statutory federal income tax rate |  | 21.0 | % |  | 21.0 | % |  | 21.0 | %
Excess deduction for stock-based compensation |  | (0.1) |  |  | (0.6) |  |  | (1.1) |
State and local income taxes, net of federal benefit |  | 1.6 |  |  | 2.2 |  |  | 1.8 |
Foreign operations |  | (2.2) |  |  | (1.2) |  |  | (0.7) |
Federal research tax credit |  | (2.5) |  |  | (1.9) |  |  | (2.3) |
Foreign-derived intangible income |  | (1.2) |  |  | (0.9) |  |  | (1.1) |
Other, net |  | (0.3) |  |  | (0.3) |  |  | 0.1 |
Effective tax rate |  | 16.3 | % |  | 18.3 | % |  | 17.7 | %
Provision for Income Taxes Components of the company's provision for income taxes were as follows (dollars in millions):
Fiscal Years Ended October 31 |  | 2025 |  | 2024 |  | 2023
Current provision: |  |  |  |  |  |
Federal |  | $ | 91.6 |  |  | $ | 94.9 |  |  | $ | 94.4 |
State |  | 15.6 |  |  | 18.5 |  |  | 17.0 |
Foreign |  | 13.0 |  |  | 8.4 |  |  | 7.3 |
Total current provision |  | $ | 120.2 |  |  | $ | 121.8 |  |  | $ | 118.7 |
Deferred (benefit) provision: |  |  |  |  |  |
Federal |  | $ | (48.6) |  |  | $ | (23.6) |  |  | $ | (37.8) |
State |  | (8.2) |  |  | (4.6) |  |  | (10.3) |
Foreign |  | (1.9) |  |  | 0.3 |  |  | 0.2 |
Total deferred benefit |  | (58.7) |  |  | (27.9) |  |  | (47.9) |
Total provision for income taxes |  | $ | 61.5 |  |  | $ | 93.9 |  |  | $ | 70.8 |
The Organization for Economic Co-operation and Development ("OECD") has issued the Pillar Two Model Rules Framework (the "Framework"), which establishes global minimum tax rules with a minimum tax rate of 15%. The OECD continues to release additional guidance on these rules. Certain countries where the company operates have adopted legislation effective for fiscal years beginning on or after January 1, 2024, and other countries are in the process of introducing such legislation. The Framework did not have a material impact on the Consolidated Financial Statements. On July 4, 2025, new U.S tax legislation was signed into law (known as the "One Big Beautiful Bill Act" or "OBBB") which makes permanent many of the tax provisions enacted in 2017 as part of the Tax Cuts and Jobs Act that were set to expire at the end of 2025. These include but are not limited to the reinstatement of 100% bonus depreciation, the deduction of U.S. based research expenditures, the deduction of interest expense, the deduction for foreign-derived intangible income (FDII), the tax and related foreign tax credit on Global Intangible Low-Taxed Income (GILTI), and the base-erosion anti-abuse tax (BEAT). The legislation in effect for the Company's current fiscal year is the permanent reinstatement of 100% bonus depreciation. The other provisions within the OBBB have varying effective dates that will phase in between fiscal years 2026 and 2027. The Company continues to evaluate the future impact of these provisions. Deferred Income Taxes The components of the company's deferred income tax assets and liabilities were as follows (dollars in millions):
Fiscal Years Ended October 31 |  | 2025 |  | 2024
Deferred income tax assets: |  |  |  |
Research and experimentation |  | $ | 86.0 |  |  | $ | 64.6 |
Warranty and insurance |  | 40.1 |  |  | 40.0 |
Compensation and benefits |  | 35.5 |  |  | 32.3 |
Lease liabilities |  | 31.6 |  |  | 32.1 |
Advertising and sales promotions and incentives |  | 19.6 |  |  | 19.8 |
Inventory |  | 16.1 |  |  | 6.8 |
Net operating losses and other carryforwards |  | 6.9 |  |  | 5.4 |
Other |  | 10.5 |  |  | 6.9 |
Valuation allowance |  | (5.5) |  |  | (5.1) |
Deferred income tax assets |  | $ | 240.8 |  |  | $ | 202.8 |
Deferred income tax liabilities: |  |  |  |
Right-of-use assets |  | $ | (31.1) |  |  | $ | (31.5) |
Depreciation |  | (50.1) |  |  | (55.1) |
Amortization |  | (54.7) |  |  | (71.7) |
Deferred income tax liabilities |  | (135.9) |  |  | (158.3) |
Deferred income tax assets, net |  | $ | 104.9 |  |  | $ | 44.5 |
As of October 31, 2025, the company has domestic net operating loss carryforwards of $1.1 million for federal income tax purposes, and $2.8 million state income tax purposes, that do not expire and $1.0 million for state income tax purposes that expire between fiscal 2038 and fiscal 2045. As of October 31, 2025, the company has net operating loss carryforwards of approximately $8.8 million in foreign jurisdictions, which are comprised of $8.6 million that do not expire and $0.2 million that expires between fiscal 2035 and fiscal 2041. The company also has domestic credit carryforwards of $3.5 million that expire between fiscal 2027 and fiscal 2043. The net change in the total valuation allowance between the fiscal years ended October 31, 2025 and 2024 was an increase of $0.3 million. The change in valuation allowance is related to capital loss carryforwards, domestic tax credits, and foreign net operating losses that are expected to expire prior to utilization. The company expects that $27.6 million of the total undistributed earnings of its foreign operations will be indefinitely reinvested. Should these earnings be distributed in the future in the form of dividends or otherwise, the company may be subject to foreign withholding taxes, state income taxes, and/or additional federal taxes for currency fluctuations. As of October 31, 2025, the unrecognized deferred tax liabilities for temporary differences related to the company’s investment in non-U.S. subsidiaries, and any withholding, state, or additional federal taxes that may be applied upon any future repatriation, are expected to be immaterial. Unrecognized Tax Benefits A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (dollars in millions):
Unrecognized tax benefits as of October 31, 2024 |  | $ | 3.5 |
Increase as a result of tax positions taken during the current period |  | 0.4 |
Reductions as a result of statute of limitations lapses |  | (0.7) |
Unrecognized tax benefits as of October 31, 2025 |  | $ | 3.2 |
The company recognizes interest and penalties related to unrecognized tax benefits as a component of the provision for income taxes within the Consolidated Statements of Earnings. In addition to the unrecognized tax benefits of $3.2 million, which have been recorded as an other accrued liability within the Consolidated Balance Sheets as of October 31, 2025, the company recorded $1.0 million of accrued interest and penalties as an other accrued liability within the Consolidated Balance Sheets as of October 31, 2025. Included in the balance of unrecognized tax benefits as of October 31, 2025 are potential benefits of $3.4 million that, if recognized, would affect the effective tax rate. The company and its wholly owned subsidiaries file income tax returns in the U.S. federal jurisdiction, and numerous state and foreign jurisdictions. With few exceptions, the company is no longer subject to U.S. federal, state and local, and foreign income tax examinations by tax authorities for taxable years before fiscal 2020. The Internal Revenue Service has commenced an audit of fiscal 2022, with no material adjustments to tax expense or unrecognized tax benefits expected. The company is under audit in certain state jurisdictions and expects various statutes of limitation to expire during the next 12 months. Due to the uncertainty related to the response of taxing authorities, a range of outcomes cannot be reasonably estimated at this time.

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