XML 31 R20.htm IDEA: XBRL DOCUMENT v3.25.2
INCOME TAXES
 9 Months Ended
Jul. 31, 2025
INCOME TAXES  
INCOME TAXES

12.  INCOME TAXES

​

Our provision for income taxes and effective tax rate is affected by the geographic composition of pre-tax income which includes jurisdictions with differing tax rates, conditional reduced tax rates, and other events that are not consistent from period to period, such as changes in income tax laws.

​

We recorded income tax expense during the nine months of fiscal 2025 of $3.1 million compared to $6.4 million for the same period in fiscal 2024. Our effective tax rate for the nine months of fiscal 2025 was (35%), compared to (74%) in the corresponding prior year period. The year-over-year change in income tax expense was due mainly to a lower valuation allowance recorded against our U.S. deferred tax assets, as well as changes in geographic mix of income and loss that include jurisdictions with differing tax rates, partially offset by an increase in valuation allowance recorded against our Italian deferred tax assets.  We recorded a valuation allowance of $5.3 million for the nine months of fiscal year 2025, compared to $8.2 million recorded for the corresponding prior year period. Because we have a $4.0 million valuation allowance recorded against our U.S., Chinese and Italian deferred tax assets, we did not record a tax benefit of $4.0 million for our U.S., Chinese and Italian net losses for the nine months of fiscal 2025.  The valuation allowance recorded in the nine months of fiscal year 2025 reflected a full valuation allowance of our U.S., Chinese and Italian deferred tax assets and was recorded based on our conclusion that the deferred tax assets were not more likely than not going to be realized.  

​

Our unrecognized tax benefits were $29,000 as of July 31, 2025, and $28,000 as of October 31, 2024, and in each case included accrued interest.

​

We recognize accrued interest and penalties related to unrecognized tax benefits as components of income tax expense. As of July 31, 2025, the gross amount of interest accrued, reported in Accrued expenses, was approximately $8,000, which did not include the federal tax benefit of interest deductions.

​

On July 4, 2025, the United States Congress passed budget reconciliation bill H.R. 1 referred to as the One Big Beautiful Bill ("OBBB"). The OBBB contains several changes to corporate taxation including modifications to capitalization of research and development expenses, limitations on deductions for interest expense, and accelerated fixed asset depreciation. We are still evaluating the impact of the OBBB, but we expect that the legislation will likely not have a material impact on our consolidated financial statements and related disclosures. 

​

We file U.S. federal and state income tax returns, as well as tax returns in several foreign jurisdictions. The statutes of limitations with respect to unrecognized tax benefits will expire this fiscal year.

​

Currently our manufacturing subsidiary in Italy is under tax inspection for fiscal year October 31, 2021.