Income Taxes

12 Months Ended

Oct. 31, 2023

Income Tax Disclosure [Abstract]

Income Taxes

Income taxes

Income before income taxes and income tax expense (benefit) are comprised of the following:

	2023		2022		2021
Income before income taxes:
Domestic	$	269,934	$	302,549	$	279,701
Foreign	345,405		346,730		294,475
Total income before income taxes	$	615,339	$	649,279	$	574,176
Current:
U.S. federal	$	54,157	$	59,639	$	40,879
State and local	285		7,535		4,429
Foreign	89,520		79,734		70,429
Total current	143,962		146,908		115,737
Deferred:
U.S. federal	(9,119)		(9,408)		6,371
State and local	(1,279)		(596)		1,470
Foreign	(5,718)		(728)		(3,770)
Total deferred	(16,116)		(10,732)		4,071
	$	127,846	$	136,176	$	119,808

A reconciliation of the U.S. statutory federal rate to the worldwide consolidated effective tax rate follows:

	2023		2022		2021
Statutory federal income tax rate	21.00	%	21.00	%	21.00	%
Share-based and other compensation	(0.25)		0.26		(0.30)
Foreign tax rate variances	1.83		0.95		0.84
State and local taxes, net of federal income tax benefit	(0.13)		0.84		0.81
Foreign-Derived Intangible Income Deduction	(2.24)		(1.59)		(1.19)
Global Intangible Low-Taxed Income net of foreign tax credits	0.71		0.23		0.44
Other – net	(0.14)		(0.72)		(0.73)
Effective tax rate	20.78	%	20.97	%	20.87	%

Deferred income taxes are not provided on undistributed earnings of international subsidiaries that are intended to be permanently invested in their operations. These undistributed earnings represent the post-income tax earnings under U.S. GAAP not adjusted for previously taxed income which aggregated approximately $1,533,889 and $1,485,360 at October 31, 2023 and 2022, respectively. Should these earnings be distributed, applicable foreign tax credits, distributions of previously taxed income and utilization of other attributes would substantially offset taxes due upon the distribution. It is not practical to estimate the amount of additional taxes that might be payable on these basis differences because of the multiple methods by which these differences could reverse and the impact of withholding, U.S. state and local taxes and currency translation considerations.

At October 31, 2023 and 2022, total unrecognized tax benefits were $8,002 and $2,872, respectively. The amounts that, if recognized, would impact the effective tax rate were $4,497 and $2,769 at October 31, 2023 and 2022, respectively. During 2023, unrecognized tax benefits related primarily to domestic positions and, as recognized, a substantial portion of the gross unrecognized tax benefits were offset against assets recorded in the Consolidated Balance Sheets.

A reconciliation of the beginning and ending amount of unrecognized tax benefits for 2023, 2022 and 2021 is as follows:

	2023		2022		2021
Gross balance at beginning of year	$	2,872	$	3,720	$	6,717
Additions based on tax positions related to the current year	410		310		370
Additions for tax positions of prior years	10		—		—
Increases related to acquired businesses	6,602		—		—
Reductions for tax positions of prior years	—		(70)		(350)
Lapse of statute of limitations	(1,892)		(1,088)		(3,017)
Gross balance at end of year	$	8,002	$	2,872	$	3,720

At October 31, 2023 and 2022, we had accrued interest and penalty expense related to unrecognized tax benefits of $401 and $541, respectively. We include interest accrued related to unrecognized tax benefits in interest expense. Penalties, if incurred, would be recognized as other income (expense).

We are subject to United States Federal income tax as well as income taxes in numerous state and foreign jurisdictions. We are subject to examination in the U.S. by the Internal Revenue Service ("IRS") for the years 2020 through 2023; years prior to 2020 year are closed to further examination by the IRS. Generally, major state and foreign jurisdiction tax years remain open to examination for years after 2017. Within the next twelve months, it is reasonably possible that certain statute of limitations periods would expire, which could result in a minimal decrease in our unrecognized tax benefits.

Significant components of deferred tax assets and liabilities are as follows:

	2023		2022
Deferred tax assets:
Lease Liabilities	$	26,678	$	28,413
Employee benefits	26,680		22,079
Tax credit and loss carryforwards	28,667		11,336
Other accruals not currently deductible for taxes	8,944		15,616
Inventory adjustments	5,932		6,423
Total deferred tax assets	96,901		83,867
Valuation allowance	(23,732)		(10,130)
Total deferred tax assets	73,169		73,737
Deferred tax liabilities:
Depreciation and amortization	238,210		145,285
Lease right-of-use assets	25,925		27,548
Other - net	3,649		1,238
Total deferred tax liabilities	267,784		174,071
Net deferred tax liabilities	$	(194,615)	$	(100,334)

At October 31, 2023, we had $19,299 of tax credit carryforwards, $11,831 of which expires in 2028-2033 and $7,468 of which has an indefinite carryforward period. We also had $35,906 of state operating loss carryforwards, $36,850 of foreign operating loss carryforwards, and a $3,570 capital loss carryforward, of which $52,330 will expire in 2024 through 2038, and $23,997 of which has an indefinite carryforward period. The net change in the valuation allowance was an increase of $13,602 in 2023 and a decrease of $4,011 in 2022. The valuation allowance of $23,732 at October 31, 2023, related primarily to tax credits and loss carryforwards that may expire before being realized. We continue to assess the need for valuation allowances against deferred tax assets based on determinations of whether it is more likely than not that deferred tax benefits will be realized.