XML 39 R23.htm IDEA: XBRL DOCUMENT
v3.25.2

Income Taxes | 12 Months Ended
--- | ---
May 31, 2025
Income Taxes | 11. Income Taxes Income before income taxes by source consists of the following amounts:
|  | Year Ended May 31, |
|  | 2025 |  |  | 2024 |  |  | 2023 |
U.S. |  | $ | (1,026,641 | ) |  | $ | (92,161 | ) |  | $ | (85,681 | )
Foreign |  |  | (106,469 | ) |  |  | 77,856 |  |  |  | 63,639 |
|  | $ | (1,133,110 | ) |  | $ | (14,305 | ) |  | $ | (22,042 | )
The provision for income taxes consists of the following:
|  | Year Ended May 31, |
|  | 2025 |  |  | 2024 |  |  | 2023 |
Current |  |  |  |  |  |  |  |  |
Domestic |  |  |  |  |  |  |  |  |
Federal |  | $ | (638 | ) |  | $ | 6,800 |  |  | $ | 8,674 |
Change in tax-related uncertainties |  |  | 1,251 |  |  |  | 1,896 |  |  |  | 278 |
State |  |  | 999 |  |  |  | 1,495 |  |  |  | 1,616 |
Foreign |  |  | 14,086 |  |  |  | 14,413 |  |  |  | 9,490 |
Total Current |  |  | 15,698 |  |  |  | 24,604 |  |  |  | 20,058 |
Deferred |  |  |  |  |  |  |  |  |
Domestic |  |  |  |  |  |  |  |  |
Federal |  |  | (37,705 | ) |  |  | (22,457 | ) |  |  | (17,406 | )
State |  |  | (3,368 | ) |  |  | (4,881 | ) |  |  | (1,865 | )
Foreign |  |  | (15,691 | ) |  |  | (2,150 | ) |  |  | 41 |
Total Deferred |  |  | (56,764 | ) |  |  | (29,488 | ) |  |  | (19,230 | )
Income tax (benefit) expense |  | $ | (41,066 | ) |  | $ | (4,884 | ) |  | $ | 828 |
The reconciliation of income taxes computed at the U.S. federal statutory tax rate to income tax expense is as follows:
|  | Year Ended May 31 , |
|  | 2025 |  |  | 2024 |  |  | 2023 |
Tax at U.S. statutory rate |  | $ | (237,901 | ) |  | $ | (3,004 | ) |  | $ | (4,629 | )
Permanent differences |  |  | (1,488 | ) |  |  | 273 |  |  |  | 325 |
Global intangible low-taxed income (GILTI) |  |  | 8,153 |  |  |  | 7,082 |  |  |  | 6,482 |
Foreign derived intangible income deduction (FDII) |  |  | (567 | ) |  |  | (376 | ) |  |  | (643 | )
Foreign rate differential |  |  | (2,338 | ) |  |  | (3,951 | ) |  |  | (3,742 | )
Goodwill impairment |  |  | 202,763 |  |  |  | — |  |  |  | — |
Subpart F income |  |  | 2,139 |  |  |  | 1,178 |  |  |  | 152 |
Tax-effect from stock-based compensation |  |  | 2,558 |  |  |  | 2,256 |  |  |  | 1,946 |
Provision for state income taxes, net of federal benefit |  |  | (1,871 | ) |  |  | (2,693 | ) |  |  | 18 |
Non-deductible acquisition expenses |  |  | — |  |  |  | — |  |  |  | 7,187 |
Tax credits |  |  | (11,451 | ) |  |  | (7,739 | ) |  |  | (6,709 | )
Impact of tax rate changes |  |  | (1,016 | ) |  |  | — |  |  |  | — |
Change in tax-related uncertainties |  |  | 1,251 |  |  |  | 1,896 |  |  |  | 278 |
Changes in valuation allowances |  |  | (71 | ) |  |  | (534 | ) |  |  | 355 |
Research expenditures deduction |  |  | (370 | ) |  |  | (293 | ) |  |  | (365 | )
Other |  |  | (857 | ) |  |  | 1,021 |  |  |  | 173 |
Income tax (benefit) expense |  | $ | (41,066 | ) |  | $ | (4,884 | ) |  | $ | 828 |
Foreign tax credits, primarily offsetting taxes associated with Subpart F and GILTI income, were $9,373, $7,124, and $5,324 in fiscal years 2025, 2024, and 2023, respectively. The Company’s research and development credits were $2,078, $615, and $1,385 in fiscal years 2025, 2024, and 2023, respectively. Income tax expense was impacted significantly by the goodwill impairments discussed in Note 6 "Goodwill and Other Intangible Assets", which are primarily not deductible for tax purposes. Deferred income taxes reflect the tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of our deferred income tax liabilities and assets are as follows:
|  | Year Ended May 31, |
|  | 2025 |  |  | 2024 |
Deferred income tax liabilities |  |  |  |  |  |
Indefinite and long-lived assets |  | $ | (316,391 | ) |  | $ | (356,971 | )
Right of use asset |  |  | (4,313 | ) |  |  | (3,673 | )
Prepaid expenses |  |  | (1,734 | ) |  |  | (1,401 | )
|  |  | (322,438 | ) |  |  | (362,045 | )
Deferred income tax assets |  |  |  |  |  |
Interest expense not currently deductible |  |  | 25,694 |  |  |  | 13,994 |
Research and experimentation capitalization |  |  | 9,705 |  |  |  | 7,230 |
Stock options |  |  | 2,465 |  |  |  | 2,228 |
Inventories and accounts receivable |  |  | 8,545 |  |  |  | 5,597 |
Tax loss carryforwards |  |  | 6,574 |  |  |  | 5,580 |
Lease liability |  |  | 4,467 |  |  |  | 3,841 |
Accrued expenses and other |  |  | 3,303 |  |  |  | 2,171 |
|  |  | 60,753 |  |  |  | 40,641 |
Valuation allowance |  |  | (1,440 | ) |  |  | (1,526 | )
Net deferred income tax liabilities |  | $ | (263,125 | ) |  | $ | (322,930 | )
Net deferred income tax assets (jurisdictional) - other non-current assets |  | $ | 17,782 |  |  | $ | 3,788 |
Net deferred income tax liabilities (jurisdictional) |  |  | (280,907 | ) |  |  | (326,718 | )
Net deferred income tax liabilities |  | $ | (263,125 | ) |  | $ | (322,930 | )
The Company has the following net operating loss carryforwards:
|  | As of May 31, 2025 |  |  | Expiry
U.S. |  | $ | 91 |  |  | 2038
Foreign |  |  | 18,822 |  |  | 2026 to Indefinite
Total net operating loss carryforwards |  | $ | 18,913 |  |  |
Valuation allowances against certain deferred tax assets are established based on management’s determination of a more likely than not standard that the tax benefits will not be realized. Management evaluates all available evidence, both positive and negative, when determining the need for a valuation allowance. Valuation allowances related to net operating losses are primarily evaluated based on evidence (or lack thereof) of historical and future earnings. Valuation allowances related to long-lived assets primarily are evaluated based on Management’s tax planning and intentions for underlying assets. The balance of deferred tax liabilities for indefinite and long-live assets was affected by the goodwill impairments discussed in Note 6, related to the portion of the impairments on goodwill carrying value that is deductible in some jurisdictions. These impairments resulted in a reduction of $22,801 to the deferred tax liability balance during the year ended May 31, 2025. We are subject to income taxes in the U.S. (federal and state) and in numerous foreign jurisdictions. Significant judgment is required in evaluating our tax positions and determining our provision for income taxes. During the ordinary course of business, there are transactions and calculations for which the ultimate tax determination is uncertain. We establish reserves for tax-related uncertainties based on estimates of whether, and the extent to which, additional taxes will be due. These reserves are established when we believe that certain positions might be challenged despite our belief that our tax return positions are fully supportable. We adjust these reserves in light of changing facts and circumstances, such as the outcome of tax audits. The provision for income taxes includes the impact of reserve provisions and changes to reserves that are considered appropriate. The Company’s policy is to recognize both accrued interest expense and penalties related to unrecognized tax benefits in income tax expense. The amount of interest and penalties included in the unrecognized tax benefits reserve was $385 at May 31, 2025, $246 at May 31, 2024, and $145 at May 31, 2023. Of the total unrecognized tax benefits at May 31, 2025 and 2024, $3,849 and $2,739, respectively, comprise unrecognized tax positions that would, if recognized, affect our effective tax rate. The reconciliation of our unrecognized tax benefits is as follows:
|  | Year Ended May 31, |
|  | 2025 |  |  | 2024 |  |  | 2023 |
Beginning balance |  | $ | 2,739 |  |  | $ | 946 |  |  | $ | 741 |
Increase/(decrease) related to prior periods |  |  | 136 |  |  |  | (47 | ) |  |  | 2 |
Increase related to current period |  |  | 1,128 |  |  |  | 2,004 |  |  |  | 479 |
Lapses of applicable statute of limitations |  |  | (154 | ) |  |  | (164 | ) |  |  | (276 | )
Ending balance |  | $ | 3,849 |  |  | $ | 2,739 |  |  | $ | 946 |
The Company is no longer subject to examination by the Internal Revenue Service for fiscal year 2021 and preceding years. As of May 31, 2025, the Company has approximately $294,933 of undistributed earnings in its foreign subsidiaries. Approximately $124,734 of these earnings are no longer considered permanently reinvested. The incremental tax cost to repatriate these earnings to the US is insignificant. The Company has not provided deferred taxes on approximately $170,199 of undistributed earnings from non-U.S. subsidiaries as of May 31, 2025 which are indefinitely reinvested in operations. Based on historical experience, as well as management’s future plans, earnings from these subsidiaries will continue to be re-invested indefinitely for future expansion and working capital needs. On an annual basis, we evaluate the current business environment and whether any new events or other external changes might require future evaluation of the decision to indefinitely re-invest these foreign earnings. It is not practical to determine the income tax liability that would be payable if such earnings were not reinvested indefinitely. The Organization for Economic Cooperation and Development (“OECD”) Pillar 2 global minimum tax rules, which generally provide for a minimum effective tax rate of 15%, are intended to apply for tax years beginning in 2024. The Company is closely monitoring developments and evaluating the impact these new rules will have on our tax rate, including eligibility to qualify for certain safe harbors. Where no safe harbor is met, the Company has included in its income tax for the year ended May 31, 2025, a calculated amount of “top-up” tax for its foreign subsidiaries as required under the applicable rules of the countries that have adopted the Pillar Two directives. For the year ended May 31, 2025, no foreign subsidiary incurred a material top-up tax under Pillar Two. Subsequent Event On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted into law in the United States. OBBBA includes significant provisions, including the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for depreciation and interest expenses. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. The Company is currently assessing its impact on its consolidated financial statements.

X
- Definition The entire disclosure for income tax. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-12 Reference 2: http://www.xbrl.org/2003/role/exampleRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 55 -Paragraph 231 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482663/740-10-55-231 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12C -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-12C Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12B -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-12B Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 270 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Publisher FASB -URI https://asc.fasb.org/1943274/2147477891/740-270-50-1 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SAB Topic 6.I.5.Q1) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479360/740-10-S99-1 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 946 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 13 -Publisher FASB -URI https://asc.fasb.org/1943274/2147480990/946-20-50-13 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 235 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -Publisher FASB -URI https://asc.fasb.org/1943274/2147480678/235-10-S99-1 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/740/tableOfContent Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 14 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-14 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 21 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-21 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 17 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-17 Reference 13: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479360/740-10-S99-2 Reference 14: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 30 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482603/740-30-50-2 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration