INCOME TAXES |
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Jul. 31, 2026 | |||||||||||||||||||||||||||||||||||||||||||||||||
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| INCOME TAXES | NOTE 14. INCOME TAXES Income tax benefit (expense) for the three months ended July 31, 2026 and 2025, consisted of the following (in thousands):
Immersion Immersion recorded an income tax benefit of $2.1 million on a pre-tax loss of $6.7 million for the three months ended July 31, 2026, resulting in an effective tax rate of 31.9%, compared to an income tax benefit of $7.7 million on a pre-tax loss of $21.4 million, resulting in an effective tax rate of 36.0%, for the three months ended July 31, 2025. The effective tax rate for the three months ended July 31, 2026 differed from the U.S. federal statutory rate primarily due to foreign tax rate differentials, uncertain tax positions, return-to-provision adjustments, and other discrete tax items recognized during the period. The year-over-year change in the effective tax rate was primarily attributable to changes in the geographic mix of earnings and discrete tax items recognized in the current and prior-year periods. Barnes & Noble Education Barnes & Noble Education recorded an income tax benefit of $8.2 million on pre-tax loss of $22.1 million during the three months ended July 31, 2026, which represented an effective income tax rate of 36.9% and an income tax benefit of $8.6 million on pre-tax loss of $26.9 million during the three months ended July 31, 2025, which represented an effective income tax rate of 32.1%. In assessing the realizability of the deferred tax assets, management considered whether it is more likely than not that some or all of the deferred tax assets would be realized. As of July 31, 2026, Barnes & Noble Education determined that it was more likely than not that it would not realize all deferred tax assets and its tax rate for the current fiscal year reflects this determination. Barnes & Noble Education will continue to evaluate this position. Under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended (the “Code”), if a corporation undergoes an “ownership change” (generally defined as a cumulative change in our ownership by “5-percent shareholders” that exceeds 50 percentage points over a rolling three-year period), Barnes & Noble Education’s ability to use its pre-change net operating losses and certain other pre-change tax attributes to offset its post-change income and taxes may be limited. Similar rules may apply under state tax laws. As a result of the Rights Offering, Backstop Commitment, Private Investment, and Term Loan Debt Conversion completed on June 10, 2024 (as defined in the Company's Annual Report on Form 10-K for the fiscal year ended April 30, 2026), Barnes & Noble Education may have experienced an ownership change as defined by Sections 382 and 383. Barnes & Noble Education conducted a study to determine if an ownership change occurred. It was determined that an ownership change occurred under Section 382 and 383 of the Code, and the corresponding annual limitations materially impact the utilization of Barnes & Noble Education’s tax attributes including its $195.8 million NOL carryforwards, $44.3 million disallowed interest expense carryforwards, and $1.1 million tax credit carryforwards as of May 2, 2026. Barnes & Noble Education anticipates that $29.7 million of these tax attributes will be made available during fiscal year 2027. |
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