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Income Taxes | 9 Months Ended
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Jul. 31, 2019
Income Tax Disclosure [Abstract] |
Income Taxes | Note 11. Income Taxes For interim financial reporting, the Company estimates its annual effective tax rate based on the projected income for its entire fiscal year and records a provision (benefit) for income taxes on a quarterly basis based on the estimated annual effective income tax rate, adjusted for any discrete tax items. The Company recorded income tax expense of $1.9 million for the three months ended July 31, 2019, or 25.7% of pre-tax income, compared to income tax expense of $3.8 million, or 17.2% of pre-tax income, for the three months ended July 31, 2018. Results for the three months ended July 31, 2019 were unfavorably impacted by $0.1 million of net discrete expense primarily related to a federal provision-to-return adjustment. Results for the three months ended July 31, 2018 were favorably impacted by $2.1 million of net discrete tax benefits, primarily related to the remeasurement of net deferred tax liabilities as a result of new tax legislation in the United States. The Company recorded income tax expense of less than $0.1 million for the nine months ended July 31, 2019, or (0.2)% of pre-tax loss, compared to income tax benefit of $7.2 million, or (25.8)% of pre-tax income, for the nine months ended July 31, 2018. Results for the nine months ended July 31, 2019 were unfavorably impacted by $0.8 million of net discrete expense primarily related to share-based compensation tax deductions. Results for the nine months ended July 31, 2018 were favorably impacted by $14.7 million of net discrete tax benefits, including a $1.1 million benefit related to a federal provision-to-return adjustment and a $12.5 million benefit related to the remeasurement of net deferred tax liabilities as a result of new tax legislation in the United States. On December 22, 2017, the Tax Reform Act was signed into law by President Trump. The Tax Reform Act significantly revised the U.S. corporate income tax regime by, among other things, lowering the U.S. corporate tax rate from 35% to 21% effective January 1, 2018, while also repealing the deduction for domestic production activities, limiting interest expense deductions, implementing a territorial tax system, imposing a repatriation tax on deemed repatriated earnings of foreign subsidiaries (the “Transition Tax”), and creating new taxes on certain foreign-sourced earnings. U.S. GAAP requires that the impact of tax legislation be recognized in the period in which the law was enacted. The U.S. Securities and Exchange Commission issued Staff Accounting Bulletin (SAB) No. 118, which provided guidance on how to account for the effects of the Tax Reform Act under ASC 740, Income Taxes. SAB No. 118 enabled companies to record a provisional amount for the effects for the Tax Reform Act based on a reasonable estimate, subject to adjustment during a measurement period of up to one year. In the first quarter of fiscal year 2019, the Company completed its accounting for the Tax Reform Act under SAB No. 118 resulting in no change to the estimated cumulative tax benefit recorded in fiscal year 2018. In full fiscal year 2018, the Company recorded $11.3 million of cumulative tax benefit related to remeasurement of net deferred tax liabilities. The Company periodically evaluates its valuation allowance requirements in light of changing facts and circumstances and may adjust its deferred tax asset valuation allowances accordingly. It is reasonably possible that the Company will either add to or reverse a portion of its existing deferred tax asset valuation allowances in the future. Such changes in the deferred tax asset valuation allowances will be reflected in the current operations through the Company’s effective income tax rate. During the three and nine months ended July 31, 2019, there were no changes to the Company’s valuation allowances. The Company’s liability for unrecognized tax benefits, including interest and penalties, was $2.5 million as of July 31, 2019 and $2.2 million as of October 31, 2018. The unrecognized tax benefits are presented in other long-term liabilities in the Company’s Condensed Unaudited Consolidated Balance Sheets. During the next twelve months, it is reasonably possible that $0.2 million of the unrecognized tax benefits, if recognized, would affect the annual effective income tax rate. The Company recognizes accrued interest and penalties related to unrecognized tax benefits in the provision for income taxes in its consolidated statement of operations. The Company regularly assesses the likelihood of an adverse outcome resulting from examinations to determine the adequacy of its tax reserves. As of July 31, 2019, the Company believes that it is more likely than not that the tax positions it has taken will be sustained upon the resolution of its audits resulting in no material impact on its consolidated financial position and the results of operations and cash flows. However, the final determination with respect to any tax audits, and any related litigation, could be materially different from the Company’s estimates and/or from its historical income tax provisions and income tax liabilities and could have a material effect on operating results and/or cash flows in the periods for which that determination is made. In addition, future period earnings may be adversely impacted by litigation costs, settlements, penalties, and/or interest assessments related to income tax examinations.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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