INCOME TAXES |
6 Months Ended |
|---|---|
Apr. 30, 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 that 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 an income tax expense during the first six months of fiscal 2025 of $2.6 million, compared to an income tax benefit of $0.6 million, for the same period in fiscal 2024. Our effective tax rate for the first six months of fiscal 2025 was (44%), compared to 9% in the corresponding prior year period. The year-over-year change was primarily due to a $3.7 million non-cash valuation allowance recorded on our Italian, U.S. and Chinese deferred tax assets, as well as changes in geographic mix of income and loss that includes jurisdictions with differing tax rates, and discrete items related to unvested stock compensation. Because we have a valuation allowance recorded against our Italian, U.S. and Chinese deferred tax assets, we did not record a tax benefit of $2.4 million for our U.S., Italian and Chinese pre-tax losses for the six months ended April 30, 2025. The valuation allowance recorded during the first six months of fiscal 2025 reflected a full valuation allowance 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 $28,000 as of each of April 30, 2025 and 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 April 30, 2025, the gross amount of interest accrued, reported in Accrued expenses, was approximately $8,000, which did not include the U.S. federal tax benefit of interest deductions. 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 audit for fiscal year 2021. |