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Income Taxes | 12 Months Ended
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Apr. 30, 2020
Income Taxes [Abstract] |
Income Taxes | Note 13 – Income Taxes The provisions for income taxes for the years ended April 30 were as follows:
|  | 2020 |  |  | 2019 |  |  | 2018 |
Current Provision |  |  |  |  |  |  |  |  |
U.S. – Federal |  | $ | 1,145 |  |  | $ | 2,384 |  |  | $ | (2,216 | )
International |  |  | 37,494 |  |  |  | 52,518 |  |  |  | 46,112 |
State and Local |  |  | 172 |  |  |  | 2,536 |  |  |  | 961 |
Total Current Provision |  | $ | 38,811 |  |  | $ | 57,438 |  |  | $ | 44,857 |
Deferred (Benefit) Provision |  |  |  |  |  |  |  |  |  |  |  |
U.S. – Federal |  | $ | (8,476 | ) |  | $ | 335 |  |  | $ | (26,062 | )
International |  |  | (15,022 | ) |  |  | (7,630 | ) |  |  | 2,420 |
State and Local |  |  | (4,118 | ) |  |  | (5,454 | ) |  |  | 530 |
Total Deferred (Benefit) Provision |  | $ | (27,616 | ) |  | $ | (12,749 | ) |  | $ | (23,112 | )
Total Provision |  | $ | 11,195 |  |  | $ | 44,689 |  |  | $ | 21,745 |
International and United States pretax (loss) income for the years ended April 30 were as follows:
|  | 2020 |  |  | 2019 |  |  | 2018 |
International |  | $ | 104,185 |  |  | $ | 204,326 |  |  | $ | 219,178 |
United States |  |  | (167,277 | ) |  |  | 8,626 |  |  |  | (5,247 | )
Total |  | $ | (63,092 | ) |  | $ | 212,952 |  |  | $ | 213,931 |
Our effective income tax rate as a percentage of pretax income differed from the U.S. federal statutory rate as shown below:
|  | 2020 |  |  | 2019 |  |  | 2018 |
U.S. Federal Statutory Rate |  |  | 21.0 | % |  |  | 21.0 | % |  |  | 30.4 | %
Cost (Benefit) of Higher (Lower) Taxes on Non-U.S. Income |  |  | 4.8 |  |  |  | 0.9 |  |  |  | (8.4 | )
State Income Taxes, net of U.S. Federal Tax Benefit |  |  | 3.3 |  |  |  | (1.3 | ) |  |  | 0.4 |
Deferred Tax (Benefit) from U.S. Tax Act |  |  | — |  |  |  | 0.1 |  |  |  | (11.7 | )
Tax Credits and Related Benefits |  |  | (1.1 | ) |  |  | (0.8 | ) |  |  | (1.7 | )
Impairment of goodwill and intangibles |  |  | (42.3 | ) |  |  | — |  |  |  | — |
Other |  |  | (3.4 | ) |  |  | 1.1 |  |  |  | 1.2 |
Effective Income Tax Rate |  |  | (17.7 | )% |  |  | 21.0 | % |  |  | 10.2 | %
Our loss for the year ended April 30, 2020, was due to the impairment of goodwill and intangibles for which we received a relatively small tax benefit, resulting in an overall negative effective income tax rate of (17.7)%. Excluding the tax cost from such impairment, our effective income tax rate benefit was 24.6%. Our income was earned outside the U.S. in jurisdictions with different statutory income tax rates than our U.S. statutory rate, at an average effective rate that is less than our combined U.S. Federal and State tax rate. The effective tax rate for the year ended April 30, 2020 was less than the year ended April 30, 2019 due to the impairment charges with respect to which we obtained a relatively small tax benefit. Excluding the effect of the impairment charges the tax benefit rate was 24.6% for the year ended April 30, 2020, compared to a 21.0% expense for the year ended April 30, 2019, primarily due to lower taxes on income outside the U.S. as well as increased tax credits and related benefits. Other: For the years ended April 30, 2020 and 2019, we recorded a tax benefit of $1.4 million and $0.3 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 CARES Act On March 27, 2020, the U.S. government enacted the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”). The CARES Act includes provisions relating to refundable payroll tax credits, deferral of the employer portion of certain payroll taxes, net operating loss carrybacks, modifications to net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property. The CARES Act did not have a material impact on our income tax expense for the year ended April 30, 2020. The Tax Act On December 22, 2017, the U.S. government enacted comprehensive tax legislation (“Tax Act”). The Tax Act significantly revised the U.S. corporate income tax system. We recorded a significant nonrecurring benefit from the Tax Act during the year ended April 30, 2018. Accounting for Uncertainty in Income Taxes: As of April 30, 2020 and April 30, 2019, the total amount of unrecognized tax benefits were $6.2 million and $7.7 million, respectively, of which $0.6 million and $0.7 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, 2020 and 2019, we recorded net interest expense on reserves for unrecognized and recognized tax benefits of $0.2 million and $0.3 million, respectively. As of April 30, 2020, and April 30, 2019, the total amounts of unrecognized tax benefits that would reduce our income tax provision, if recognized, were approximately $6.2 million and $7.7 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:
|  | 2020 |  |  | 2019 |
Balance at May 1 |  | $ | 7,659 |  |  | $ | 6,833 |
Additions for Current Year Tax Positions |  |  | 694 |  |  |  | 1,473 |
Additions for Prior Year Tax Positions |  |  | — |  |  |  | 414 |
Reductions for Prior Year Tax Positions |  |  | (655 | ) |  |  | (578 | )
Foreign Translation Adjustment |  |  | (15 | ) |  |  | (42 | )
Payments and Settlements |  |  | (56 | ) |  |  | (136 | )
Reductions for Lapse of Statute of Limitations |  |  | (1,433 | ) |  |  | (305 | )
Balance at April 30 |  | $ | 6,194 |  |  | $ | 7,659 |
Tax Audits: We file income tax returns in the U.S. and various states and non-U.S. tax jurisdictions. Our major taxing jurisdictions are the United States, 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. We received tax audit notices for our German entities for the audit period fiscal years 2014-2017. The audit process has been delayed due to COVID-19. Our last completed U.S. federal tax audit of our fiscal years 2011 through 2013 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:
|  | 2020 |  |  | 2019 |
Net Operating Losses |  | $ | 17,966 |  |  | $ | 14,491 |
Reserve for Sales Returns and Doubtful Accounts |  |  | 2,638 |  |  |  | 2,923 |
Accrued Employee Compensation |  |  | 20,114 |  |  |  | 17,528 |
Foreign and Federal Credits |  |  | 31,487 |  |  |  | 34,401 |
Other Accrued Expenses |  |  | 11,827 |  |  |  | 6,262 |
Retirement and Post-Employment Benefits |  |  | 37,927 |  |  |  | 40,653 |
Total Gross Deferred Tax Assets |  | $ | 121,959 |  |  | $ | 116,258 |
Less Valuation Allowance |  |  | (23,287 | ) |  |  | (21,179 | )
Total Deferred Tax Assets |  | $ | 98,672 |  |  | $ | 95,079 |
Prepaid Expenses and Other Current Assets |  | $ | (1,142 | ) |  | $ | (744 | )
Unremitted Foreign Earnings |  |  | (1,985 | ) |  |  | (1,985 | )
Intangible and Fixed Assets |  |  | (205,882 | ) |  |  | (226,898 | )
Total Deferred Tax Liabilities |  | $ | (209,009 | ) |  | $ | (229,627 | )
Net Deferred Tax Liabilities |  | $ | (110,337 | ) |  | $ | (134,548 | )
Reported As |  |  |  |  |  |  |  |
Deferred Tax Assets |  | $ | 8,790 |  |  | $ | 9,227 |
Deferred Tax Liabilities |  |  | (119,127 | ) |  |  | (143,775 | )
Net Deferred Tax Liabilities |  | $ | (110,337 | ) |  | $ | (134,548 | )
The decrease in net deferred tax liabilities is due to the non-cash impairment charge of our Blackwell trademark. This was partially offset by deferred tax liabilities relating to non-goodwill intangibles acquired in our various acquisitions as well as the amortization of our deferred tax liabilities related to non-goodwill intangibles, primarily from prior acquisitions. Our increase in deferred tax assets is primarily attributable to an increase in our accrued expenses and net operating losses, partially offset by a decrease in our foreign and federal credits. 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, 2020. 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 $23.3 million valuation allowance has been provided based primarily on the uncertainty of utilizing the tax benefits related to our deferred tax assets for foreign tax credits and state credits and net operating loss carry losses. As of April 30, 2020, we have apportioned state net operating loss carryforwards totaling $102.0 million, with a tax effected value of $6.0 million net of federal benefits, expiring in various amounts over 1 to 20 years. Our tax credits expire in various amounts over 6-20 years. 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.

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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://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=116825942&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=116825942&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 + Details
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