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Income Taxes
 12 Months Ended
Apr. 30, 2023
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The provisions for income taxes were as follows:
For the Years Ended April 30,
202320222021
Current Provision
US – Federal$2,857 $(324)$(6,631)
International48,694 57,905 43,269 
State and local1,797 221 1,359 
Total current provision$53,348 $57,802 $37,997 
Deferred provision (benefit)
US – Federal$(24,368)$(9,793)$(11,996)
International(8,705)15,882 1,175 
State and local(4,408)(2,539)480 
Total deferred provision (benefit)$(37,481)$3,550 $(10,341)
Total provision$15,867 $61,352 $27,656 
International and United States pretax income were as follows:
For the Years Ended April 30,
202320222021
International$204,055 $256,456 $202,490 
United States(170,955)(46,795)(26,578)
Total$33,100 $209,661 $175,912 
Our effective income tax rate as a percentage of pretax income differed from the US federal statutory rate as shown below:
For the Years Ended April 30,
202320222021
US federal statutory rate21.0 %21.0 %21.0 %
Cost (benefit) of higher (lower) taxes on non-US income(9.2)%9.7 %1.1 %
Foreign tax credits related to CARES Act carryback and audit— %(11.9)%12.3 %
Change in valuation allowance(7.4)%11.9 %(12.3)%
State income taxes, net of US federal tax benefit(7.2)%(1.0)%0.8 %
US NOL carryback under CARES Act— %— %(8.0)%
Tax credits and related net benefits(10.4)%(0.5)%(0.5)%
Impairment of goodwill66.7 %— %— %
Other(5.6)%0.1 %1.3 %
Effective income tax rate47.9 %29.3 %15.7 %
The effective tax rate was 47.9% for the year ended April 30, 2023, compared to 29.3% for the year ended April 30, 2022. Our US GAAP effective tax rate for the year ended April 30, 2023, was higher primarily due to the rate differential with respect to certain restructuring items, which includes the impairment of non-deductible goodwill resulting from the segment realignment described in Note 11, "Goodwill and Intangible Assets," offset by the release of valuation allowances associated with foreign tax credits, and a more favorable mix of non-US income by jurisdiction. Our US GAAP effective tax rate for the year ended April 30, 2022, included an increase in the UK statutory rate from 19% to 25% enacted during the period, which resulted in a $21.4 million noncash, nonrecurring deferred tax expense from the remeasurement of applicable UK net deferred tax liabilities.
Accounting for Uncertainty in Income Taxes:
As of April 30, 2023, and April 30, 2022, the total amount of unrecognized tax benefits were $9.4 million and $8.6 million, respectively, of which $0.3 million and $0.6 million represented accruals for interest and penalties recorded as additional tax expense in accordance with our accounting policy. We recorded net interest expense on reserves for unrecognized and recognized tax benefits of $0.2 million in each of the years ended April 30, 2023 and 2022. As of April 30, 2023, and April 30, 2022, the total amounts of unrecognized tax benefits that would reduce our income tax provision, if recognized, were approximately $9.4 million and $8.6 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 is as follows:
20232022
Balance at May 1$8,592 $9,144 
Additions for current year tax positions1,236 947 
Additions for prior year tax positions533 16 
Reductions for prior year tax positions— — 
Foreign translation adjustment(24)(55)
Payments and settlements— — 
Reductions for lapse of statute of limitations(916)(1,460)
Balance at April 30$9,421 $8,592 
Tax Audits:
We file income tax returns in the US and various states and non-US tax jurisdictions. Our major taxing jurisdictions are the United States, the United Kingdom, and Germany. 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.
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 as of April 30 were as follows:
2023
2022 (1)
Net operating losses$27,434 $20,847 
Reserve for sales returns and doubtful accounts2,523 3,771 
Accrued employee compensation24,928 26,722 
Foreign and federal credits31,930 34,537 
Other accrued expenses2,513 2,700 
Retirement and post-employment benefits16,880 15,769 
Operating lease liabilities26,631 28,111 
Total gross deferred tax assets$132,839 $132,457 
Less valuation allowance(27,448)(30,000)
Total deferred tax assets$105,391 $102,457 
Prepaid expenses and other current assets$(2,927)$(2,684)
Unremitted foreign earnings(2,835)(2,685)
Intangible and fixed assets(216,251)(249,104)
Right-of-use assets(16,049)(19,286)
Total deferred tax liabilities$(238,062)$(273,759)
Net deferred tax liabilities$(132,671)$(171,302)
Reported As
Deferred tax assets$11,371 $8,763 
Deferred tax liabilities(144,042)(180,065)
Net Deferred Tax Liabilities$(132,671)$(171,302)
(1)Prior year amounts were updated to reflect an immaterial correction of previous netting of certain deferred taxes.
The decrease in net deferred taxes was due to the decrease in net deferred tax liabilities, which was primarily attributable to a decrease in intangible and fixed assets. In addition, we had an increase in net deferred tax assets related to net operating losses and retirement and post-employment benefits. 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, 2023. 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.
We have provided a $27.4 million valuation allowance as of April 30, 2023, based primarily on the uncertainty of utilizing the tax benefits related to our deferred tax assets for foreign tax credits. This valuation allowance is decreased by approximately $2.6 million from the valuation allowance as of April 30, 2022.
As of April 30, 2023, we have apportioned state net operating loss carryforwards totaling approximately $111 million, with a tax effected value of $6.3 million net of federal benefits. Our state and federal NOLs and credits, to the extent they expire, expire in various amounts over 1 to 20 years.
We intend to repatriate earnings from our non-US subsidiaries, and to the extent we repatriate these funds to the US, we will be required to pay income taxes in various US state and local jurisdictions and applicable non-US withholding or similar taxes in the periods in which such repatriation occurs. As of April 30, 2023, we have recorded a $2.8 million liability related to the estimated taxes that would be incurred upon repatriating certain non-US earnings to the US.