XML 18 R23.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
Income Taxes
 12 Months Ended
Nov. 30, 2019
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes

The components of income before income taxes are as follows (in thousands):
 
 
Fiscal Year Ended
 
November 30, 2019
 
November 30, 2018
 
November 30, 2017
 
 
 
As Adjusted(1)
 
As Adjusted(1)
U.S.
$
(11,778
)
 
$
59,440

 
$
65,191

Foreign
40,273

 
1,356

 
(12,728
)
Total
$
28,495

 
$
60,796

 
$
52,463

(1)The Company adopted the accounting standard related to revenue recognition ("ASC 606") effective December 1, 2018 using the full retrospective method. See Note 1. Nature of Business and Summary of Significant Accounting Policies for further information.


The provision for income taxes is comprised of the following (in thousands):
 
 
Fiscal Year Ended
 
November 30, 2019
 
November 30, 2018
 
November 30, 2017
Current:
 
 
 
 
 
Federal
$
9,294

 
$
8,979

 
$
23,739

State
1,862

 
1,387

 
2,461

Foreign
5,808

 
3,088

 
1,496

Total current
16,964

 
13,454

 
27,696

Deferred, as adjusted(1):
 
 
 
 
 
Federal
(12,191
)
 
(863
)
 
(2,740
)
State
(2,399
)
 
(51
)
 
(292
)
Foreign
(279
)
 
(1,414
)
 
(1,222
)
Total deferred
(14,869
)
 
(2,328
)
 
(4,254
)
Total
$
2,095

 
$
11,126

 
$
23,442

(1)The Company adopted the accounting standard related to revenue recognition ("ASC 606") effective December 1, 2018 using the full retrospective method. See Note 1. Nature of Business and Summary of Significant Accounting Policies for further information.


A reconciliation of the income taxes incurred at the U.S. Federal statutory rate compared to the effective tax rate is as follows (in thousands):
 
 
Fiscal Year Ended
 
November 30, 2019
 
November 30, 2018
 
November 30, 2017
 
 
 
As Adjusted(1)
 
As Adjusted(1)
Tax at U.S. Federal statutory rate
$
5,984

 
$
13,513

 
$
18,362

Foreign rate differences
(2,619
)
 
1,281

 
4,793

Effects of foreign operations included in U.S. Federal provision
451

 
550

 
(186
)
State income taxes, net
(918
)
 
1,180

 
1,349

Research credits
(1,086
)
 
(302
)
 
(251
)
Domestic production activities deduction
(248
)
 
(1,283
)
 
(2,670
)
Tax-exempt interest
(27
)
 
(66
)
 
(101
)
Nondeductible stock-based compensation
1,043

 
502

 
808

Meals and entertainment
198

 
192

 
276

Compensation subject to 162(m)
422

 
227

 
208

Uncertain tax positions and tax settlements
(720
)
 
(1,626
)
 
429

Remeasurement of net deferred tax liabilities due to the Act
—

 
(1,660
)
 
—

Net excess tax benefit or detriment from stock-based compensation plans
(103
)
 
(861
)
 
—

Global intangible low tax inclusion
2,100

 
—

 
—

Foreign derived intangible deduction
(2,300
)
 
—

 
—

Other
(82
)
 
(521
)
 
425

Total
$
2,095

 
$
11,126

 
$
23,442

(1)The Company adopted the accounting standard related to revenue recognition ("ASC 606") effective December 1, 2018 using the full retrospective method. See Note 1. Nature of Business and Summary of Significant Accounting Policies for further information.


The effective income tax rate is based on the income for the year, the composition of the income in different countries, changes related to valuation allowances and adjustments, if any, for the potential tax consequences or benefits of audits or other tax contingencies. Our aggregate income tax rate in foreign jurisdictions is lower than our effective income tax rate in the United States. The majority of our income before provision for income taxes from foreign operations has been earned by our subsidiary in Bulgaria that is taxed at a 10% tax rate.

Our United States income before provision for income taxes was at a deficit for fiscal year 2019 largely due to increased expense for amortization of acquired intangibles and due to an impairment expense of intangibles and long-lived assets.

During the first quarter of fiscal year 2018, the Tax Cuts and Jobs Act (the "Act") was enacted in the United States. The Act reduced the U.S. federal corporate tax rate from 35% to 21% effective January 1, 2018, moved to a territorial tax system and eliminated the domestic production activities deduction. The Act also provided for a one-time deemed repatriation transition tax on the post-1986 undistributed foreign subsidiary earnings and profits through December 31, 2017. However, the Company concluded that it is not subject to the one-time transition tax due to the Company's foreign subsidiaries being in a net accumulated deficit position.

Other international provisions of the Act became effective in fiscal year 2019 for the Company. The global intangible low-taxed income ("GILTI") provisions require the Company to include in its U.S. income tax base foreign subsidiary earnings in excess of an allowable return of the foreign subsidiary's tangible assets.

During fiscal year 2018, the Company recognized a $1.7 million income tax benefit due to the re-measurement of its net U.S. deferred tax liabilities due to the Act.

The components of deferred tax assets and liabilities are as follows (in thousands):
 
 
November 30, 2019
 
November 30, 2018
 
 
 
As Adjusted(1)
Deferred tax assets:
 
 
 
Accounts receivable
$
174

 
$
134

Accrued compensation
3,283

 
1,863

Accrued liabilities and other
2,690

 
2,106

Deferred revenue
3,995

 
—

Stock-based compensation
4,342

 
3,166

Depreciation and amortization
15,341

 
—

Tax credit and loss carryforwards
21,867

 
24,338

Gross deferred tax assets
51,692

 
31,607

Valuation allowance
(8,864
)
 
(8,790
)
Total deferred tax assets
42,828

 
22,817

Deferred tax liabilities:
 
 
 
Goodwill
(18,879
)
 
(17,966
)
Deferred revenue
(4,541
)
 
(1,610
)
Depreciation and amortization
—

 
(7,151
)
Prepaid expenses
(810
)
 
(923
)
Total deferred tax liabilities
(24,230
)
 
(27,650
)
Total
$
18,598

 
$
(4,833
)
(1)The Company adopted the accounting standard related to revenue recognition ("ASC 606") effective December 1, 2018 using the full retrospective method. See Note 1. Nature of Business and Summary of Significant Accounting Policies for further information.


The valuation allowance primarily applies to net operating loss carryforwards and unutilized tax credits in jurisdictions or under conditions where realization is not more likely than not. The $0.1 million increase in the valuation allowance during fiscal year 2019 primarily relates to acquired foreign net operating losses which have a valuation allowance recorded against them. The $7.3 million increase in the valuation allowance during fiscal year 2018 primarily relates to losses in a foreign subsidiary that are more likely than not going to expire prior to utilization. The $1.7 million decrease in the valuation allowance during fiscal year 2017 primarily relates to a foreign subsidiary that utilized net operating loss carryforwards in fiscal year 2017 that had a valuation allowance recorded against them.

At November 30, 2019, we have federal and foreign net operating loss carryforwards of $133.7 million expiring on various dates through 2034. In addition, we have state net operating loss carryforwards of $0.9 million expiring on various dates through 2020. At November 30, 2019, we have state tax credit carryforwards of approximately $3.2 million expiring on various
dates through 2034 and $2.3 million that may be carried forward indefinitely. In addition, we have federal tax credit carryforwards of approximately $0.9 million expiring on various dates through 2036.

It is our intention to indefinitely reinvest the earnings of our non-U.S. subsidiaries. We have not provided for U.S. income taxes on the undistributed earnings of non-U.S. subsidiaries, which totaled $72.3 million as of November 30, 2019, as these earnings have been indefinitely reinvested. It is not practicable to determine the amount of the unrecognized deferred tax liability if the undistributed earnings were to be repatriated due to the complexity of the income tax laws and regulations and the effects of the Tax Reform Act. These earnings could be subject to non-U.S. withholding taxes and other federal, state and/or foreign taxes if they were remitted to the U.S.

As of November 30, 2019, the total amount of unrecognized tax benefits was $5.0 million, of which $2.9 million was recorded in other noncurrent liabilities on the consolidated balance sheet and $2.1 million of deferred tax assets, principally related to U.S and foreign net operating loss carry-forwards and state research and development tax credits, have not been recorded.

A reconciliation of the balance of our unrecognized tax benefits is as follows (in thousands):
 
 
Fiscal Year Ended
 
November 30, 2019
 
November 30, 2018
 
November 30, 2017
Balance, beginning of year
$
5,787

 
$
7,520

 
$
7,046

Tax positions related to current year
—

 
—

 
785

Tax positions related to a prior period
110

 
(15
)
 
(120
)
Settlements with tax authorities
(181
)
 
(39
)
 
(155
)
Lapses due to expiration of the statute of limitations
(723
)
 
(1,679
)
 
(36
)
Balance, end of year
$
4,993

 
$
5,787

 
$
7,520



If recognized, all amounts of unrecognized tax benefits would affect the effective tax rate.

We recognize interest and penalties related to uncertain tax positions as a component of our provision for income taxes. In fiscal year 2019 a net benefit of $0.1 million was recorded to the provision for income taxes related to estimated interest and penalties of $0.1 million offset by a reduction of $0.2 million related to statute expirations. In fiscal year 2018 a net benefit of $0.1 million was recorded to the provision for income taxes related to estimated interest and penalties of $0.2 million offset by a reduction of $0.3 million related to statute expirations. In fiscal year 2017 estimated interest and penalties of $0.2 million were recorded to the provision for income taxes. We have accrued $0.4 million and $0.4 million of estimated interest and penalties at November 30, 2019 and 2018, respectively. We do not expect any significant changes to the amount of unrecognized tax benefits in the next twelve months.

Our Federal income tax returns have been examined or are closed by statute for all years prior to fiscal year 2016. State income tax authorities in certain jurisdictions are examining state income tax returns and the Company does not expect the results of these examinations to be material to our consolidated balance sheets, cash flows or statements of income. Our state income tax returns have been examined or are closed by statute for all years prior to fiscal year 2013, and we are no longer subject to audit for those periods.

Tax authorities for certain non-U.S. jurisdictions are also examining tax returns and the Company does not expect the results of these examinations to be material to our consolidated balance sheets, cash flows or statements of income. With some exceptions, we are generally no longer subject to tax examinations in non-U.S. jurisdictions for years prior to fiscal year 2014.