XML 90 R23.htm IDEA: XBRL DOCUMENT v3.24.1.1.u2
Income Taxes
 12 Months Ended
Apr. 30, 2024
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The provisions for income taxes were as follows:
For the Years Ended April 30,
202420232022
Current Provision
US – Federal$2,152 $2,857 $(324)
International49,357 48,694 57,905 
State and local(337)1,797 221 
Total current provision$51,172 $53,348 $57,802 
Deferred (benefit) provision
US – Federal$(25,026)$(24,368)$(9,793)
International(4,772)(8,705)15,882 
State and local(8,102)(4,408)(2,539)
Total deferred (benefit) provision$(37,900)$(37,481)$3,550 
Total provision$13,272 $15,867 $61,352 
International and United States pretax income (loss) were as follows:
For the Years Ended April 30,
202420232022
International$109,616 $204,055 $256,456 
United States(296,663)(170,955)(46,795)
Total$(187,047)$33,100 $209,661 
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,
202420232022
US federal statutory rate21.0 %21.0 %21.0 %
Impact of foreign operations(11.7)%(10.5)%9.5 %
Foreign tax credits related to CARES Act carryback and audit— %— %(11.9)%
Change in valuation allowance(14.0)%(7.4)%11.9 %
State income taxes, net of US federal tax benefit4.6 %(7.2)%(1.0)%
Tax credits and related net benefits1.8 %(12.1)%(1.1)%
Impairment of goodwill(10.9)%66.7 %— %
Return to provision6.1 %(13.7)%— %
Other(4.0)%11.1 %0.9 %
Effective income tax rate(7.1)%47.9 %29.3 %
The Company's effective tax rate for the fiscal year ended April 30, 2024, was primarily driven by the following items: i) an increase in the valuation allowance of $30.2 million, ii) the impairment of goodwill resulting from the segment realignment described in Note 11, “Goodwill and Intangible Assets”, and iii) the rate differential with respect to certain restructuring and related charges in foreign operations.
Accounting for Uncertainty in Income Taxes:
As of April 30, 2024, and April 30, 2023, the total amount of unrecognized tax benefits was $9.2 million and $9.4 million, respectively, of which $0.2 million and $0.3 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, 2024 and 2023. As of April 30, 2024, and April 30, 2023, the total amounts of unrecognized tax benefits that would reduce our income tax provision, if recognized, were approximately $9.2 million and $9.4 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:
20242023
Balance at May 1$9,421 $8,592 
Additions for current year tax positions1,607 1,236 
Additions for prior year tax positions— 533 
Reductions for prior year tax positions(181)— 
Foreign translation adjustment— (24)
Payments and settlements(849)— 
Reductions for lapse of statute of limitations(847)(916)
Balance at April 30$9,151 $9,421 
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.
The significant components of deferred tax assets and liabilities as of April 30 were as follows:
20242023
Net operating losses$22,587 $27,434 
Reserve for sales returns and doubtful accounts2,363 2,523 
Accrued employee compensation27,293 24,928 
Foreign and federal credits33,742 31,930 
Other accrued expenses3,822 3,732 
Retirement and post-employment benefits10,203 16,880 
Operating lease liabilities23,095 26,631 
Interest expense disallowance10,676 570 
Total gross deferred tax assets$133,781 $134,628 
Less valuation allowance(53,498)(27,448)
Total deferred tax assets$80,283 $107,180 
Prepaid expenses and other assets$(5,352)$(4,716)
Unremitted foreign earnings(3,115)(2,835)
Intangible and fixed assets(155,862)(216,251)
Right-of-use assets(12,685)(16,049)
Total deferred tax liabilities$(177,014)$(239,851)
Net deferred tax liabilities$(96,731)$(132,671)
Reported As
Deferred tax assets excluding held-for-sale
3,147 11,371 
Deferred tax assets held-for-sale
6,176 — 
   Deferred tax assets$9,323 $11,371 
Deferred tax liabilities excluding held-for-sale
(97,186)(144,042)
Deferred tax liabilities held-for-sale
(8,868)— 
   Deferred tax liabilities(106,054)(144,042)
   Net deferred tax liabilities$(96,731)$(132,671)
The change in net deferred taxes was primarily due to the decrease in net deferred tax liabilities primarily attributable to a decrease in tax liabilities in intangibles and fixed assets. In addition, we had a decrease in net deferred tax assets related to an increase in the valuation allowance. In assessing the need for a valuation allowance, we take into account prior earnings history, expected future earnings, reversal of existing taxable temporary differences, carry back and carry forward periods and tax planning strategies that could potentially enhance the likelihood of the realization of a deferred tax asset. Changes to tax laws and statutory tax rates can also have an impact on our valuation allowances. Changes in valuation allowances are included in the Company’s income tax provision in the period of change.
We have provided a $53.5 million valuation allowance as of April 30, 2024. In fiscal year 2024, due to temporary differences in the US, our deferred taxes reversed from a net deferred tax liability position to a net deferred tax asset position. Due to losses in the US resulting from impairments, restructuring, and acceleration of amortization expense on capitalized software, we concluded it was more-likely-than-not that a portion of our deferred tax asset may not be realized. As a result we increased the valuation allowance by $30.2 million.
This valuation allowance is increased by approximately $26.1 million from the valuation allowance as of April 30, 2023.
As of April 30, 2024, we have apportioned state net operating loss carryforwards totaling approximately $113 million, with a tax effected value of $6.4 million net of federal benefits. We have foreign net operating loss carryforwards totaling approximately $47.2 million, with a tax effected value of $11.8 million, and federal net operating loss carryforwards totaling $2.9 million, with a tax effected value of $0.6 million. Our state, foreign, and federal NOLs and credits, to the extent they expire, expire in various amounts from 1 year to indefinite.
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, 2024, we have recorded a $3.1 million liability related to the estimated taxes that would be incurred upon repatriating certain non-US earnings to the US.