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Income Taxes
 12 Months Ended
Apr. 30, 2023
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Income from continuing operations before provision for income taxes was as follows:
Year Ended April 30,
202320222021
(in thousands)
Domestic$136,269 $184,877 $34,661 
Foreign159,468 248,024 129,039 
Income before provision for income taxes$295,737 $432,901 $163,700 
The provision for domestic and foreign income taxes was as follows:
Year Ended April 30,
202320222021
(in thousands)
Current income taxes:
Federal$39,188 $43,993 $16,913 
State15,879 15,962 4,719 
Foreign42,019 59,064 40,646 
Current provision for income taxes97,086 119,019 62,278 
Deferred income taxes:   
Federal(13,228)(13,858)(5,809)
State(5,723)(3,936)(5,025)
Foreign4,548 831 (3,306)
Deferred benefit for income taxes(14,403)(16,963)(14,140)
Total provision for income taxes$82,683 $102,056 $48,138 
The reconciliation of the statutory federal income tax rate to the effective consolidated tax rate is as follows:
Year Ended April 30,
202320222021
U.S. federal statutory income tax rate21.0 %21.0 %21.0 %
State tax, net of federal effect2.8 2.5 1.0 
Foreign tax rates differential4.0 2.5 4.5 
Non-deductible officer's compensation1.0 0.7 2.3 
Excess tax (benefit) expense on stock-based compensation(0.9)(0.6)0.8 
Change in valuation allowance0.3 (0.7)0.3 
COLI increase, net(0.8)(0.3)(1.7)
Change in uncertain tax positions0.1 0.3 1.1 
R&D tax credit(0.6)(1.3)(0.9)
Other1.1 (0.5)1.0 
Effective income tax rate28.0 %23.6 %29.4 %
Components of deferred tax assets and liabilities were as follows:
April 30,
20232022
(in thousands)
Deferred tax assets:
Deferred compensation$120,361 $111,133 
Operating lease liability26,952 35,158 
Loss carryforwards28,707 33,360 
Reserves and accruals21,140 20,887 
Allowance for doubtful accounts7,272 5,645 
Deferred revenue6,436 6,207 
Gross deferred tax assets210,868 212,390 
Deferred tax liabilities:
Operating lease, right-of-use, assets(22,056)(27,513)
Intangibles and goodwill(26,310)(28,388)
Property and equipment(15,953)(24,063)
Prepaid expenses(20,037)(24,453)
Other(4,581)(1,951)
Gross deferred tax liabilities(88,937)(106,368)
Valuation allowances(25,226)(24,025)
Net deferred tax asset$96,705 $81,997 
Deferred tax assets are reduced by a valuation allowance if it is more-likely-than-not that some portion or all of the deferred tax assets will not be realized. Management believes uncertainty exists regarding the realizability of certain deferred tax assets and has, therefore, established a valuation allowance offsetting deferred tax assets that are not more-likely-than-not to be realized. Realization of the deferred tax asset is dependent on the Company generating enough taxable income of the appropriate nature in future years. Although realization is not assured, management believes that it is more-likely-than-not that the net deferred tax assets will be realized. In fiscal 2023, the Company’s valuation allowance increased by $1.2 million primarily due to increases in deferred tax asset balances, including net operating loss carryforwards, in certain foreign jurisdictions that were not more-likely-than-not to be realized. In fiscal 2022 and 2021, the Company’s valuation allowance decreased by $1.1 million and increased by $7.3 million, respectively, primarily due to changes in deferred tax asset balances, including net operating loss carryforwards in certain foreign jurisdictions that were not more-likely-than-not to be realized. Deferred tax assets and deferred tax liabilities are presented net on the consolidated balance sheets by tax jurisdiction.
As of April 30, 2023, the Company had U.S. federal net operating loss carryforwards of $8.2 million, which if unutilized, will begin to expire in fiscal 2036. The Company has state net operating loss carryforwards of $32.1 million, which, if unutilized, will begin to expire in fiscal 2024. The Company also has foreign net operating loss carryforwards of $103.7 million, which, if unutilized, will begin to expire in fiscal 2024.
We continue to consider approximately $730.9 million of undistributed earnings of our foreign subsidiaries to be indefinitely reinvested, and, accordingly, have provided no state, local or foreign withholding income taxes on such earnings. While we do not anticipate a need to repatriate funds to the U.S. to satisfy domestic liquidity needs, we review our cash positions regularly and, to the extent we determine that all or a portion of our foreign earnings are not indefinitely reinvested, we provide additional state, local and foreign withholding income taxes. Under current U.S. federal tax law, we do not expect to incur a U.S. federal income tax liability on the undistributed earnings in the event they are repatriated to the United States.
The Company elected to treat taxes due on future U.S. inclusions in taxable income related to Global Intangible Low-Taxed Income as an expense when incurred (the “period cost method”) as opposed to factoring such amounts in the Company’s measurement of its deferred taxes (the “deferred method”).
The Company and its subsidiaries file federal and state income tax returns in the U.S. as well as in foreign jurisdictions. These income tax returns are subject to audit by the Internal Revenue Service (the “IRS”) and various state and foreign tax
authorities. Currently, income tax returns of the Company’s subsidiaries are under audit in Brazil, Germany, Switzerland, Japan, and India. The Company’s income tax returns are not otherwise under examination in any material jurisdictions. The statute of limitations varies by jurisdiction in which the Company operates. With few exceptions, however, the Company’s tax returns for years prior to fiscal 2017 are no longer open to examination by tax authorities (including U.S. federal, state and foreign).
Unrecognized tax benefits are the differences between the amount of benefits of tax positions taken, or expected to be taken, on a tax return and the amount of benefits recognized for financial reporting purposes. As of April 30, 2023, the Company had a liability of $10.6 million for unrecognized tax benefits. A reconciliation of the beginning and ending balances of the unrecognized tax benefits is as follows:
Year Ended April 30,
202320222021
(in thousands)
Unrecognized tax benefits, beginning of year$10,682 $9,954 $6,037 
Additions based on tax positions related to the current year1,257 456 1,716 
Additions based on tax positions related to prior years28 272 2,201 
Settlement with tax authority(545)— — 
Lapse of applicable statute of limitations(856)— — 
Unrecognized tax benefits, end of year$10,566 $10,682 $9,954 
The full amount of unrecognized tax benefits would impact the effective tax rate if recognized. In the next 12 months, it is reasonably possible that the Company’s unrecognized tax benefits could change due to the resolution of certain tax matters either because the tax positions are sustained on audit or the Company agrees to their disallowance. These resolutions could reduce the Company’s liability for unrecognized tax benefits by approximately $1.4 million.
The Company classifies interest and penalties related to unrecognized tax benefits as a component of the provision for income taxes. The Company had accruals of $1.8 million, $1.4 million, and $0.9 million for interest related to unrecognized tax benefits as of April 30, 2023, 2022, and 2021 respectively. The Company had an accrual of $0.5 million and $0.5 million as of April 30, 2023 and 2022, respectively, for penalties related to unrecognized tax benefits. The Company recognized tax expense of $0.4 million, $0.4 million, and $0.8 million for interest and penalties related to unrecognized tax benefits during fiscal 2023, 2022, and 2021, respectively.