INCOME TAXES |
6 Months Ended |
|---|---|
Apr. 30, 2026 | |
| 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 first six months of fiscal year 2026 of $1.2 million, compared to $2.6 million for the corresponding prior year period. Our effective tax rate for the first six months of fiscal year 2026 was (27%), compared to (44%) in the corresponding prior year period. The year-over-year change was primarily due to a $1.2 million valuation allowance recorded during the first quarter of 2025 on our Italian deferred tax assets and changes in geographic mix of income and loss that includes jurisdictions with differing tax rates. A full valuation allowance has been recorded against our Italian, U.S., and Chinese deferred tax assets as of April 30, 2026, based on our conclusion that the deferred tax assets were not more likely than not to be realized. The Budget Reconciliation Act (H.R. 1) (“OBBB”) was signed into law on July 4, 2025. The OBBB did not have a material impact on our condensed consolidated financial statements and related disclosures as of and for the three and six months ended April 30, 2026. While further evaluation is ongoing, the OBBB is not expected to have a material impact on our consolidated financial statements and related disclosures in future years. We file U.S. federal and state income tax returns, as well as tax returns in several foreign jurisdictions. We are currently under audit by the Internal Revenue Service (IRS) for our federal income tax return for fiscal year 2024 and our manufacturing subsidiary in Italy is under tax inspection for the fiscal year ended October 31, 2021. |