NOTE 13—INCOME TAXES

Our income before taxes and equity method investments was as follows:

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Our income tax expense consisted of the following:

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A reconciliation of taxes at the federal statutory tax rate to our provision for income taxes for fiscal 2025, in accordance with our adoption of ASU 2023-09, was as follows:

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A reconciliation of taxes at the federal statutory tax rate to our provision for income taxes for fiscal 2024 and fiscal 2023, prior to our adoption of ASU 2023-09, was as follows:

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We have recorded deferred tax assets and liabilities based upon estimates of their realizable value, and such estimates are based upon likely future tax consequences. In assessing the need for a valuation allowance, we consider both positive and negative evidence related to the likelihood of realization of the deferred tax assets. If, based on the weight of available evidence, it is more likely than not that the deferred tax assets will not be realized, we record a valuation allowance.

Significant components of our deferred tax assets and liabilities were as follows:

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Cash paid for income taxes by jurisdiction, net of refunds received, in accordance with our adoption of ASU 2023-09 was as follows:

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Cash paid for income taxes in fiscal 2024 and fiscal 2023 was $21 million and $14 million, respectively, and we received refunds of $9.1 million in fiscal 2024. Refunds received in fiscal 2023 were immaterial.

A reconciliation of our valuation allowance against deferred tax assets in certain state and foreign jurisdictions was as follows:

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As of January 31, 2026, we had state and foreign net operating loss carryovers of $136 million and $27 million, respectively. As of January 31, 2026, we had no federal net operating loss carryover. The state net operating loss carryovers will begin to expire in fiscal 2026 and continue to expire at various times depending upon individual state carryforward rules. The foreign net operating losses will begin to expire in fiscal 2045. Internal Revenue Code Section 382 and similar state rules place a limitation on the amount of taxable income which can be offset by net operating loss carryforwards after a change in ownership (generally greater than 50% change in ownership). We cannot give any assurance that we will not undergo an ownership change in the future resulting in further limitations on utilization of net operating losses.

A reconciliation of the exposures related to unrecognized tax benefits was as follows:

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As of January 31, 2026, $2.8 million of our unrecognized tax benefits would reduce income tax expense and the effective tax rate, if recognized. The remaining unrecognized tax benefits would offset other deferred tax assets, if recognized.

We are subject to taxation in the United States and various states and foreign jurisdictions. As of January 31, 2026, we are subject to examination by the tax authorities for fiscal 2022 through fiscal 2025 and are currently under federal audit for fiscal 2021 and 2022. With few exceptions, as of January 31, 2026, we are no longer subject to U.S. federal, state or local, or foreign examinations, by tax authorities for years prior to fiscal 2022.

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We have not provided U.S. income or foreign withholding taxes on the undistributed earnings of our foreign subsidiaries as of January 31, 2026 because we intend to permanently reinvest such earnings outside of the United States. If these foreign earnings were to be repatriated in the future, the related U.S. tax liability is expected to be immaterial, due to the participation exemption put in place in the Tax Cuts and Jobs Act of 2017.

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On July 4, 2025, the United States enacted tax legislation through the H.R.1 Reconciliation Act, commonly referred to as the One Big Beautiful Bill Act (the “OBBBA”), which implemented several corporate tax law changes taking effect in fiscal 2025, including, but not limited to, limitations on deductions for interest expense, changes to the taxation of foreign activity and reinstatement of one hundred percent bonus depreciation for eligible property. A number of other provisions of the OBBBA will not take effect until fiscal 2026, including various changes to existing international tax provisions. The impacts of the OBBBA are reflected in our results for the year ended January 31, 2026. We will continue to monitor any future changes in our business or interpretations of the new tax law that could affect our tax position in subsequent periods.