XML 36 R16.htm IDEA: XBRL DOCUMENT v3.25.3
INCOME TAXES
 11 Months Ended
Sep. 30, 2025
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
The provision for income taxes consists of the following:
11 Months12 Months12 Months
September 30,October 31,October 31,
Year Ended (in millions)
202520242023
Current
Federal$21.8 $41.2 $61.7 
State and local11.1 7.4 15.6 
Non-U.S.60.2 59.8 49.1 
Total Current93.1 108.4 126.4 
Deferred
Federal(40.0)(61.5)(18.8)
State and local2.0 (12.7)(8.6)
Non-U.S.9.7 (12.0)(0.9)
Total Deferred(28.3)(86.2)(28.3)
Tax expense$64.8 $22.2 $98.1 
The U.S. income (loss) before income tax expense was $(97.2) million, $47.2 million and $142.4 million for the years ended September 30, 2025 (11-month), October 31, 2024 and October 31, 2023, respectively. The non-U.S. income before income tax expense was $200.9 million, $234.5 million and $254.0 million in for the years ended September 30, 2025 (11-month), October 31, 2024 and October 31, 2023, respectively.
The following is a reconciliation of the provision for income taxes based on the federal statutory rate to the Company’s effective income tax rate:
11 Months12 Months12 Months
September 30,October 31,October 31,
Year Ended202520242023
Federal statutory rate21.00 %21.00 %21.00 %
Impact of foreign tax rate differential6.30 %1.43 %2.22 %
State and local taxes, net of federal tax benefit(2.10)%(1.72)%1.12 %
Net impact of changes in valuation allowances11.00 %(3.76)%(2.76)%
Permanent book-tax differences9.49 %6.46 %(0.32)%
Withholding taxes11.10 %5.83 %3.68 %
Tax credits(6.90)%(5.53)%(0.17)%
Impact of intangible property transfers— %(17.45)%— %
Unrecognized tax benefits10.90 %0.37 %0.05 %
Other items, net1.70 %1.25 %(0.07)%
Company’s effective income tax rate62.49 %7.88 %24.75 %
The primary items that increased the Company’s effective income tax rate from the federal statutory rate in 2025 were non-recurring items affecting pre-tax income, significant permanent items that are primarily from foreign earnings currently taxed in the U.S., withholding taxes, uncertain tax positions, and valuation allowance adjustments. The increases were partially offset by tax credits.
The primary items that decreased the Company’s effective income tax rate from the federal statutory rate in 2024 were recognition of a deferred tax asset related to the onshoring of certain intangible property, tax credits and release of valuation allowances. The decreases were partially offset by permanent differences between book income and taxable income, including the allocation of goodwill to the Delta Divestiture for which a tax benefit will not be realized, and withholding taxes.
The primary items that increased the Company’s effective income tax rate from the federal statutory rate in 2023 were changes in the mix of earnings among tax jurisdictions, including jurisdictions for which valuation allowances have been recorded, state and local taxes and withholding taxes. The increases were partially offset by tax credits and release of valuation allowances.
On July 4, 2025, H.R. 1, commonly known as the One Big Beautiful Bill Act (“OBBBA”), was enacted into law. The OBBBA permanently extends several major provisions of the Tax Cuts and Jobs Act of 2017, including 100% bonus depreciation, domestic research cost expensing, enhanced business interest deductibility, and modifications to the international tax framework. Most provisions of the OBBBA, except for bonus depreciation, will not affect the Company until the 2026 fiscal year. The Company has evaluated the impact of the OBBBA and determined that it does not have a material impact on the consolidated financial statements for 2025.
The components of the Company’s deferred tax assets and liabilities as of September 30 and October 31 for the years indicated were as follows:
September 30,October 31,
(in millions)20252024
Deferred tax assets
Net operating loss and other carryforwards$130.0 $126.5 
Incentive liabilities20.2 20.5 
Operating lease liabilities44.7 68.1 
Other reserves13.5 12.5 
Research and development expenses64.1 56.7 
Other77.6 70.3 
Total deferred tax assets350.1 354.6 
Valuation allowance(113.3)(87.4)
Net deferred tax assets$236.8 $267.2 
Deferred tax liabilities
Properties, plants and equipment$141.8 $181.1 
Operating lease assets44.7 68.1 
Timberland transactions53.1 52.7 
Goodwill and other intangible assets158.1 163.2 
Undistributed profits of non-U.S. subsidiaries29.9 25.3 
Pension liabilities7.8 8.9 
Other25.1 26.1 
Total deferred tax liabilities460.5 525.4 
Net deferred tax liability$223.7 $258.2 
As of September 30, 2025 and October 31, 2024, the Company had deferred income tax benefits of $130.0 million and $126.5 million, respectively, from net operating losses and other tax credit carryforwards. For the fiscal year ended September 30, 2025 (11-month), these losses and carryforwards consist of $22.6 million, $3.3 million and $104.1 million in U.S. Federal, U.S. state and non-U.S. jurisdictions, respectively. For the fiscal year ended October 31, 2024, these losses and carryforwards consist of $19.5 million, $10.2 million and $96.8 million in U.S. Federal, U.S. state and non-U.S. jurisdictions, respectively. The Company has recorded valuation allowances of $87.9 million and $65.2 million against non-U.S. deferred tax assets as of September 30, 2025 and October 31, 2024, respectively. The Company has also recorded valuation allowances against U.S. deferred tax assets of $25.4 million and $22.2 million, as of September 30, 2025 and October 31, 2024, respectively. The Company had net changes in valuation allowances in 2025 of $25.9 million, primarily from increases in valuation allowance in certain foreign jurisdictions.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
(in millions)202520242023
Balance of unrecognized tax benefit at beginning of year$25.5 $23.4 $24.3 
Increases in tax positions for prior years6.9 1.7 0.6 
Increases in tax positions for current years3.5 3.9 4.1 
Lapse in statute of limitations(2.5)(3.6)(4.6)
Currency translation1.7 0.1 (1.0)
Balance of unrecognized tax benefit at end of year$35.1 $25.5 $23.4 
The 2025 net increase in unrecognized tax benefits is primarily related to increases in unrecognized tax benefits related to the prior and current year, partially offset by decreases related to lapses in the statute of limitations. The Company files income tax returns in the U.S. federal jurisdiction, various U.S. state jurisdictions and various non-U.S. jurisdictions and is subject to audit by various taxing authorities for 2015 through the current year. The Company has filed refund claims with the Internal Revenue
Service for 2019 and 2020. The Company is under audit for 2019, 2021 and 2022. Because the statute of limitations has lapsed for 2019 and 2020, any adjustments may only be made up to the amount of the refund claims for those years. The Company has extended the statute of limitations for 2021 and 2022.
The Company has completed its U.S. federal tax audit for the tax years through 2016, and the statutes of limitations have expired for years 2017 through 2020. The Company has filed a refund claim for 2019 and is under audit for this year. Adjustments may only be made up to the amount of the refund claim.
The September 30, 2025, October 31, 2024, and October 31, 2023 balances include $35.1 million, $25.5 million and $23.4 million, respectively, of unrecognized tax benefits that, if recognized, would have an impact on the effective tax rate. The Company also recognizes accrued interest and penalties related to unrecognized tax benefits in income tax expense net of tax, as applicable. As of September 30, 2025 and October 31, 2024, the Company had accrued for the payment of interest and penalties in the amounts of $7.7 million and $3.8 million, respectively.
The Company has estimated the reasonably possible expected net change in unrecognized tax benefits through September 30, 2025 (11-month) under ASC 740, “Income Taxes.” The Company’s estimate is based on lapses of the applicable statutes of limitations, settlements and payments of uncertain tax positions. Though actual results may materially differ, the estimated net decrease in unrecognized tax benefits for the next 12 months could be up to $13.6 million.