XML 48 R23.htm IDEA: XBRL DOCUMENT
v3.19.2

Income Taxes | 12 Months Ended
--- | ---
Apr. 30, 2019
Income Taxes [Abstract] |
Income Taxes | Note 12 – Income Taxes The provisions for income taxes for the years ended April 30 were as follows:
|  | 2019 |  |  | 2018 |  |  | 2017 |
Current Provision |  |  |  |  |  |  |  |  |
U.S. – Federal |  | $ | 2,384 |  |  | $ | (2,216 | ) |  | $ | 912 |
International |  |  | 52,518 |  |  |  | 46,112 |  |  |  | 105,228 |
State and Local |  |  | 2,536 |  |  |  | 961 |  |  |  | 100 |
Total Current Provision |  | $ | 57,438 |  |  | $ | 44,857 |  |  | $ | 106,240 |
Deferred Provision (Benefit) |  |  |  |  |  |  |  |  |  |  |  |
U.S. – Federal |  | $ | 335 |  |  | $ | (26,062 | ) |  | $ | (13,852 | )
International |  |  | (7,630 | ) |  |  | 2,420 |  |  |  | (15,330 | )
State and Local |  |  | (5,454 | ) |  |  | 530 |  |  |  | 415 |
Total Deferred (Benefit) Provision |  | $ | (12,749 | ) |  | $ | (23,112 | ) |  | $ | (28,767 | )
Total Provision |  | $ | 44,689 |  |  | $ | 21,745 |  |  | $ | 77,473 |
International and United States pretax income for the years ended April 30 were as follows:
|  | 2019 |  |  | 2018 |  |  | 2017 |
International |  | $ | 204,326 |  |  | $ | 219,178 |  |  | $ | 192,910 |
United States |  |  | 8,626 |  |  |  | (5,247 | ) |  |  | (1,794 | )
Total |  | $ | 212,952 |  |  | $ | 213,931 |  |  | $ | 191,116 |
Our effective income tax rate as a percentage of pretax income differed from the U.S. federal statutory rate as shown below:
| 2019 |  | 2018 |  | 2017
U.S. Federal Statutory Rate | 21.0% |  | 30.4% |  | 35.0%
German Tax Litigation Expense | — |  | — |  | 25.7
Cost (Benefit) of Higher (Lower) Taxes on Non-U.S. Income | 0.9 |  | (8.4) |  | (12.7)
State Income Taxes, net of U.S. Federal Tax Benefit | (1.3) |  | 0.4 |  | 0.1
Deferred Tax (Benefit) from U.S. Tax Reform Rate Change | 0.1 |  | (11.7) |  | —
Deferred Tax Benefit from U.K. Statutory Tax Rate Change | — |  | — |  | (1.3)
Tax Credits and Related Benefits | (0.8) |  | (1.7) |  | (6.2)
Tax Adjustments and Other | 1.1 |  | 1.2 |  | (0.1)
Effective Income Tax Rate | 21.0% |  | 10.2% |  | 40.5%
A substantial portion of our 2019 income was earned outside the U.S. in jurisdictions with different statutory income tax rates than our U.S. statutory rate including: U.K. (57%), Germany (24%), and Australia (7%). On December 22, 2017, the U.S. government enacted comprehensive Federal tax legislation originally known as the Tax Cuts and Jobs Act of 2017 (the “Tax Act”). In December 2017, the SEC staff issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (“SAB 118”), which allowed us to record provisional amounts related to the effect of the Tax Act during a measurement period not to extend beyond one year of the enactment date. We completed our analysis during the year ended April 30, 2019 within the measurement period in accordance with SAB 118. The effective tax rate for the year ended April 30, 2019 was greater than the year ended April 30, 2018 due to the net deferred tax benefit from the Tax Act in the year ended April 30, 2018. Excluding the effect of the Tax Act, the rate was 21.9% for the year ended April 30, 2018, compared to 21.0% for the year ended April 30, 2019. The effective tax rate was equal to the U.S. statutory rate for the year ended April 30, 2019. The increase from higher taxes on non-U.S. income and various other items was offset by a state tax benefit from more favorable apportionment factors which reduced our deferred tax liabilities, net of federal benefit. German Tax Litigation Expense: In the year ended April 30, 2017, the German Federal Fiscal Court affirmed a lower court decision disallowing deductions related to a stepped-up basis in certain assets. As a result, we incurred an income tax charge of approximately $49 million ($0.85 per share). Deferred Tax Benefit from U.K. Statutory Tax Rate Change: In fiscal year 2016, the U.K. reduced its statutory rate to 19% beginning April 1, 2017, and 18% beginning April 1, 2020, and in fiscal year 2017, the U.K. further reduced its statutory rate beginning on April 1, 2020, from 18% to 17%. This resulted in a non-cash deferred tax benefit from the re-measurement of our applicable U.K. deferred tax balances of $2.6 million ($0.04 per share) in the year ended April 30, 2017. Tax Adjustments and Other: In each of the years ended April 30, 2019 and April 30, 2018, we recorded a tax benefit of $0.3 million and $0.6 million, respectively related to the expiration of the statute of limitations or favorable resolutions of federal, state, and foreign tax matters with tax authorities. The Tax Act On December 22, 2017, the U.S. government enacted comprehensive tax legislation. The Tax Act significantly revised the U.S. corporate income tax system by, among other changes, the following:
| • | lowering the U.S. federal corporate income tax rate to 21% with a potentially lower rate for certain foreign derived income;
| • | accelerating deductions for certain business assets;
| • | establishing a dividend received deduction, generally eliminating federal income taxes on cash repatriation from foreign subsidiaries;
| • | requiring companies to pay a one-time transition tax on post-1986 unrepatriated cumulative non-U.S. earnings and profits (“E&P”) of foreign subsidiaries;
| • | eliminating certain deductions such as the domestic production deduction;
| • | establishing limitations on the deductibility of certain expenses including interest and executive compensation; and
| • | creating new taxes on certain foreign earnings.
Deferred tax balances – In the year ended April 30, 2018 we remeasured our U.S. deferred tax assets and liabilities based on the federal rate at which they are expected to reverse in the future, generally 21% for reversals anticipated to occur after April 30, 2019. In the prior period, the provisional amount recorded related to the re-measurement of our net deferred tax liability was an estimated net benefit of $25.0 million. During the year ended April 30, 2019, in accordance with SAB 118, we completed the analysis and recorded a minimal $0.2 million expense. Foreign tax effects – In connection with the transition from a global tax system, the Tax Act established a mandatory deemed repatriation tax. The tax was computed using our post-1986 E&P that was previously deferred from U.S. income taxes. The tax was based on the amount of foreign earnings held in cash equivalents and certain net assets, which were taxed at 15.5%, and those held in other assets, which were taxed at 8.0%. In accordance with the Tax Act including certain rules applicable to non-calendar year taxpayers, we recorded a provisional amount of $14.2 million in the year ended April 30, 2018. Since April 30, 2018, we no longer assert that we intend to permanently reinvest earnings outside the U.S. The Tax Act reduced the Federal statutory tax rate from 35% to 21% effective January 1, 2018. As a result, our U.S. federal statutory tax rate was 21.0% for the year ended April 30, 2019 and a blended rate of 30.4% for the year ended April 30, 2018. The Tax Act created new taxes, effective for us on May 1, 2018, including a provision designed to tax global low taxed income (“GILTI”) and a provision establishing new minimum taxes, such as the base erosion anti-abuse tax (“BEAT”). We have evaluated these provisions and determined there is no material impact to our effective tax rate. The Tax Act also created a new benefit, effective for us on May 1, 2018, for Foreign Derived Intangible Income (“FDII”), providing a deduction intended to result in a reduced federal income tax rate of approximately 13.125% on certain foreign derived eligible income. For the year ended April 30, 2019, we recorded a tax benefit of $1.2 million. Accounting for Uncertainty in Income Taxes: As of April 30, 2019 and April 30, 2018, the total amount of unrecognized tax benefits were $7.7 million and $6.8 million, respectively, of which $0.7 million and $0.6 million represented accruals for interest and penalties recorded as additional tax expense in accordance with our accounting policy. Within the income tax provision for the years ended April 30, 2019 and 2018, we recorded net interest expense on reserves for unrecognized and recognized tax benefits of $0.3 million and $0.2 million, respectively. As of April 30, 2019, and April 30, 2018, the total amounts of unrecognized tax benefits that would reduce our income tax provision, if recognized, were approximately $7.7 million and $6.8 million, respectively. We do not expect any significant changes to the unrecognized tax benefits within the next twelve months. A reconciliation of the unrecognized tax benefits included within the Other Long-Term Liabilities line item on the Consolidated Statements of Financial Position follows:
|  | 2019 |  |  | 2018 |
Balance at May 1 |  | $ | 6,833 |  |  | $ | 6,124 |
Additions for Current Year Tax Positions |  |  | 1,473 |  |  |  | 1,372 |
Additions for Prior Year Tax Positions |  |  | 414 |  |  |  | 69 |
Reductions for Prior Year Tax Positions |  |  | (578 | ) |  |  | (38 | )
Foreign Translation Adjustment |  |  | (42 | ) |  |  | 45 |
Payments and Settlements |  |  | (136 | ) |  |  | (124 | )
Reductions for Lapse of Statute of Limitations |  |  | (305 | ) |  |  | (615 | )
Balance at April 30 |  | $ | 7,659 |  |  | $ | 6,833 |
Tax Audits: We file income tax returns in the U.S. and various states and non-U.S. tax jurisdictions. Our major taxing jurisdictions include the United States, the United Kingdom, and Germany. Except for one immaterial item, we are no longer subject to income tax examinations for years prior to fiscal year 2014 in the major jurisdictions in which we are subject to tax. Our last completed U.S. federal tax audit was for fiscal years 2011 through 2013, which resulted in minimal adjustments related to temporary differences. Deferred Taxes: Deferred taxes result from temporary differences in the recognition of revenue and expense for tax and financial reporting purposes. We believe that it is more likely than not that the results of future operations will generate sufficient taxable income to realize the net deferred tax assets. The significant components of deferred tax assets and liabilities at April 30 were as follows:
|  | 2019 |  |  | 2018 |
Net Operating Losses |  | $ | 14,491 |  |  | $ | 8,976 |
Reserve for Sales Returns and Doubtful Accounts |  |  | 2,923 |  |  |  | 2,506 |
Accrued Employee Compensation |  |  | 17,528 |  |  |  | 20,096 |
Foreign and Federal Credits |  |  | 34,401 |  |  |  | 31,109 |
Other Accrued Expenses |  |  | 6,262 |  |  |  | 4,632 |
Retirement and Post-Employment Benefits |  |  | 40,653 |  |  |  | 39,160 |
Total Gross Deferred Tax Assets |  | $ | 116,258 |  |  | $ | 106,479 |
Less Valuation Allowance |  |  | (21,179 | ) |  |  | (8,811 | )
Total Deferred Tax Assets |  | $ | 95,079 |  |  | $ | 97,668 |
Prepaid Expenses and Other Current Assets |  | $ | (744 | ) |  | $ | (3,203 | )
Unremitted Foreign Earnings |  |  | (1,985 | ) |  |  | (1,985 | )
Intangible and Fixed Assets |  |  | (226,898 | ) |  |  | (231,869 | )
Total Deferred Tax Liabilities |  | $ | (229,627 | ) |  | $ | (237,057 | )
Net Deferred Tax Liabilities |  | $ | (134,548 | ) |  | $ | (139,389 | )
Reported As |  |  |  |  |  |  |  |
Deferred Tax Assets |  | $ | 9,227 |  |  | $ | 4,129 |
Deferred Tax Liabilities |  |  | (143,775 | ) |  |  | (143,518 | )
Net Deferred Tax Liabilities |  | $ | (134,548 | ) |  | $ | (139,389 | )
The decrease in net deferred tax liabilities is attributable to a foreign exchange driven decrease in our deferred tax liability primarily related to intangible and fixed assets. Our increase in deferred tax liabilities relating to our acquisition of Learning House was offset by the amortization of our deferred tax liabilities related to intangibles and fixed assets, primarily from prior acquisitions. Our increase in deferred tax assets, primarily from foreign and federal tax credits as well as net operating losses, was offset by an increase in our valuation allowance related to those assets. We have concluded that after valuation allowances, it is more likely than not that we will realize substantially all of the net deferred tax assets at April 30, 2019. In assessing the need for a valuation allowance, we take into account related deferred tax liabilities and estimated future reversals of existing temporary differences, future taxable earnings and tax planning strategies to determine which deferred tax assets are more likely than not to be realized in the future. Changes to tax laws, statutory tax rates and future taxable earnings can have an impact on our valuation allowances. A $21.2 million valuation allowance has been provided based on the uncertainty of utilizing the tax benefits related to our deferred tax assets for foreign tax credits, state, and, to a small extent, Federal net operating loss carry forwards. As of April 30, 2019, we have apportioned state net operating loss carryforwards totaling $99 million, with a tax effected value of $6 million net of federal benefits, expiring in various amounts over 1 to 20 years. On June 18, 2019, U.S. Treasury published certain proposed and temporary regulations which would, among other changes, eliminate the dividend received deduction with respect to certain income recognized by us with respect to the transition tax imposed by the Tax Act. Although we are still reviewing the regulations, if applied, such regulations would not materially impact our consolidated financial position or results of operations, as the decrease in our foreign tax credit carryforward would most likely be offset by a decrease in our valuation allowance. Since April 30, 2018, we no longer intend to permanently reinvest earnings outside the U.S. We have a $2.0 million liability related to the estimated taxes that would be incurred upon repatriating certain non-U.S. earnings.

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration