Income Taxes |
3 Months Ended |
|---|---|
May 31, 2026 | |
| Income Tax Disclosure [Abstract] | |
| Income Taxes | INCOME TAXES For the three months ended May 31, 2026, the Company’s net effective income tax expense rate was approximately 48% compared to a net effective income tax expense rate of 61% for the three months ended May 31, 2025. The Company’s income tax rate reflects the change in unrecognized income tax benefit, if any, and the fact that the Company has a significant valuation allowance against its deferred income tax assets; in particular, any change in loss carry forwards or research and development credits, amongst other items, is offset by a corresponding adjustment of the valuation allowance. The Company’s net effective income tax rate also reflects the geographic mix of earnings in jurisdictions with different income tax rates. The Company records a valuation allowance to reduce deferred income tax assets to the amount that is more likely than not to be realized. The Company assesses the need for a valuation allowance on its deferred tax assets each reporting period. In assessing the realizability of deferred tax assets, the Company considers both positive and negative evidence, to determine whether, based upon the weight of that evidence, it is more likely than not that the Company’s deferred tax assets will not be realized and a valuation allowance is required. This assessment involves significant judgment, particularly with respect to the relative impact of such evidence. All available evidence, both positive and negative, that may affect the realization of deferred tax assets must be identified and considered in determining the appropriate amount of the valuation allowance. The Company has recently generated cumulative pre-tax income in certain jurisdictions and continues to evaluate whether sufficient positive evidence exists to support the realization of its deferred tax assets. This evaluation is performed on a jurisdiction-by-jurisdiction basis, and the conclusions reached may vary based on the sustainability of earnings in each jurisdiction. Based on recent operating profits and current forecasts, it is reasonably possible that the Company’s assessment of the realizability of its deferred tax assets may change in a future period, including within the current fiscal year, as additional positive evidence becomes available in relation to the realizability of deferred tax assets. Such a change could result in the release of a significant portion of the Company’s valuation allowance, which could have a material impact on income tax expense in the period of release. The Company’s total unrecognized income tax benefits as at May 31, 2026 were $19.7 million (February 28, 2026 - $19.7 million). As at May 31, 2026, $19.6 million of the unrecognized income tax benefits have been netted against deferred income tax assets and $0.1 million has been recorded within income taxes payable on the Company’s consolidated balance sheets. The Company is subject to ongoing examination by tax authorities in certain jurisdictions in which it operates. The Company regularly assesses the status of these examinations and the potential for adverse outcomes to determine the adequacy of the provision for income taxes as well as the provisions for indirect and other taxes and related penalties and interest. While the final resolution of audits is uncertain, the Company believes the ultimate resolution of these audits will not have a material adverse effect on its consolidated financial position, liquidity or results of operations.
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