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INCOME TAXES
 12 Months Ended
Jul. 31, 2024
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
The components of income before provision for income taxes are as follows:
SuccessorPredecessor
Fiscal Year Ended July 31,May 1 to July 31,August 1, 2022 to April 30,
202420232023
(In thousands)
Income before income taxes:
U.S.$14,460 $9,866 $2,021 
Foreign6,497 (2,115)7,069 
Total income before income taxes$20,957 $7,751 $9,090 

The components of income tax (benefit) expense consist of the following:
SuccessorPredecessor
Fiscal Year Ended July 31,May 1 to July 31,August 1, 2022 to April 30,
202420232023
(In thousands)
Current provision (benefit):
Federal$53 $72 $487 
State(141)(110)48 
Foreign1,535 (110)1,095 
1,447 (148)1,630 
Deferred (benefit) provision:
Federal(62,128)— — 
State(6,410)— — 
Foreign68 (250)— 
(68,470)(250)— 
Total tax (benefit) provision$(67,023)$(398)$1,630 

As of July 31, 2024, the Company recorded a non-current deferred tax asset of $68.3 million and a non-current deferred tax liability of $0.3 million in "Deferred tax asset" and "Other long-term liabilities", respectively. As of July 31, 2023, the Company recorded a non-current deferred tax asset of $0.3 million and a non-current deferred tax liability of $0.8 million in "Deferred tax asset" and "Other long-term liabilities," respectively. The components of deferred tax assets and liabilities are as follows:
Successor
July 31, 2024July 31, 2023
(In thousands)
Deferred tax assets:
Accruals and reserves$2,667 $2,645 
Tax basis in excess of financial basis for intangible and fixed assets166 175 
Lease liability3,031 3,574 
Convertible debt25 — 
Research and experiment43 — 
Interest expense disallowance— — 
Credit carry forwards25 25 
Net operating loss and capital loss carry forwards85,157 95,832 
Total gross deferred tax assets91,114 102,251 
Less: valuation allowance(12,721)(90,436)
Net deferred tax assets$78,393 $11,815 
Deferred tax liabilities:
Financial basis in excess of tax basis for intangible and fixed assets$(7,262)$(8,446)
Right-of-use asset(2,838)(3,454)
Prepaid expenses(322)— 
Convertible debt— (404)
Total gross deferred tax liabilities(10,422)(12,304)
Net deferred tax assets (liabilities)$67,971 $(489)

The net change in the total valuation allowance for the fiscal year ended July 31, 2024 was a decrease of approximately $77.7 million. This decrease is primarily due to release of the U.S. valuation allowance associated with the company’s NOLs. During the fiscal year ended July 31, 2024, the Company reassessed the need for a valuation allowance against its deferred tax assets. As described in Part I, Item 7 "Critical Accounting Estimates - Income Taxes", after considering historical and projected future taxable income and existing taxable temporary differences, the Company determined that it is more likely than not that the deferred tax assets will be realized. As a result, the Company released substantially all of its valuation allowance on the NOLs carried forward after July 31, 2024, other than the valuation allowance relating to approximately $0.9 million of state NOLs that the Company anticipates will expire unutilized. This release of the valuation allowance resulted in a non-cash income tax benefit of $73.4 million for the year ended July 31, 2024, which increased from the income tax benefit of $71.5 million in the third quarter of fiscal year 2024 due to an increase in taxable income that resulted in more NOLs being utilized before their expiration at fiscal year end. A valuation allowance has also been recorded against the gross deferred tax asset in certain foreign subsidiaries because management believes that after considering all the available objective evidence, both positive and negative, historical and prospective, it is more likely than not that certain assets will not be realized. The net change in the total valuation allowance for the fiscal year ended July 31, 2023 was a decrease of approximately $390.7 million.

The Company has certain deferred tax benefits, including those generated by net operating losses and certain other tax attributes (collectively, the "Tax Benefits"). The Company's ability to use these Tax Benefits could be substantially limited if it were to experience an "ownership change," as defined under Section 382 of the Internal Revenue Code of 1986, as amended (the "Code"). In general, an ownership change would occur if there is a greater than 50-percentage point change in ownership of securities by stockholders owning (or deemed to own under Section 382 of the Code) five percent or more of a corporation's securities over a rolling three year period.

On August 16, 2022, the Inflation Reduction Act (“IRA”) was signed into law in the United States. Among other provisions, the IRA includes a 15% corporate minimum tax rate applied to certain large corporations and a 1% excise tax on corporate stock repurchases made after December 31, 2022. We do not expect the IRA to have a material impact on our consolidated financial statements.

The Company has estimated its fiscal year 2024 global intangible low-taxed income ("GILTI") inclusion based on its current year foreign activity. The foreign entities have minor earnings and profit adjustments that will be factored in as part of the tax return filing. These amounts are not material and will not have a significant impact on the overall tax provision or disclosure. Due to the net operating losses available in the U.S., the Company is not entitled to a Section 250 deduction, which is why the total income amount has been recorded as the GILTI inclusion. The Company has made an accounting policy
election, as allowed by the SEC and FASB, to recognize the impact of GILTI within the period incurred. Therefore, no U.S. deferred taxes are provided in GILTI inclusions of future foreign subsidiary earnings.

The Company has net operating loss carryforwards for federal and state tax purposes of approximately $321.6 million and $116.1 million, respectively, at July 31, 2024. As of July 31, 2024, approximately $30.8 million of net operating loss carryforwards for federal and state tax purposes expired. $225.0 million of the company's federal net operating losses will expire from the fiscal year ending July 31, 2027 through the fiscal year ended July 31, 2038 and the remainder federal net operating losses of $96.6 million has an indefinite carryforward period. The state net operating losses will expire from the fiscal year ended July 31, 2026 through the fiscal year ended July 31, 2042. The Company has a foreign net operating loss carryforward of approximately $71.3 million, of which $68.8 million has an indefinite carryforward period.

Income tax (benefit) expense attributable to income differs from the expense computed by applying the U.S. federal income tax rate of 21.0% to income before income taxes as a result of the following:
SuccessorPredecessor
Fiscal Year Ended July 31,May 1 to July 31,August 1, 2022 to April 30,
202420232023
(In thousands)
Computed "expected" income tax expense (benefit)$4,401 $1,627 $1,909 
Increase (decrease) in income tax expense resulting from:
Change in valuation allowance(77,845)(350,469)(424)
Foreign tax rate differential(166)(255)(50)
Nondeductible expenses29 459 — 
Foreign withholding taxes(157)245 147 
Foreign other adjustments167 (246)— 
GILTI944 1,141 — 
Change in uncertain tax position reserves(259)(430)11 
Section 78 gross-up270 — — 
State income taxes, net of federal benefit869 (1,916)37 
Expiration of net operating loss5,027 347,462 — 
Deferred true-up(361)1,786 — 
Other58 198 — 
Actual income tax (benefit) expense$(67,023)$(398)$1,630 

The calculation of the Company's income tax liabilities involves dealing with uncertainties in the application of complex tax regulations in several tax jurisdictions. The Company is periodically reviewed by domestic and foreign tax authorities regarding the amount of taxes due. These reviews include questions regarding the timing and amount of deductions and the allocation of income among various tax jurisdictions. In evaluating the exposure associated with various filing positions, the Company records estimated reserves when necessary. Based on the evaluation of current tax positions, the Company believes it has appropriately accrued for exposures.

The Company operates in multiple taxing jurisdictions, both within and outside of the United States. As of July 31, 2024 and 2023, the total amount of the liability for unrecognized tax benefits, including interest, related to federal, state and foreign taxes was approximately $0.1 million and $0.4 million, respectively. To the extent the unrecognized tax benefits are recognized, the entire amount would impact income tax expense. The Company expects that there will be a $0.1 million reduction of the unrecognized tax benefits in the next twelve months related to the U.S. state income tax exposure as a result of a lapse in the applicable statute of limitations.

The Company files income tax returns in the U.S., various states and in foreign jurisdictions. The federal and state income tax returns are generally subject to tax examinations for the tax years ended July 31, 2021 through July 31, 2024. To the extent the Company has tax attribute carryforwards, the tax year in which the attribute was generated may still be adjusted upon examination by the Internal Revenue Service or state tax authorities to the extent utilized in a future period. In addition, a number of tax years remain subject to examination by the appropriate government agencies for certain countries in the Europe
and Asia regions. In Europe, the Company's 2016 through 2023 tax years remain subject to examination in most locations while the Company's 2012 through 2023 tax years remain subject to examination in most Asia locations.

A reconciliation of the beginning and ending balances of the total amounts of gross unrecognized tax benefits is as follows:
Successor
July 31, 2024July 31, 2023
(In thousands)
Balance as of beginning of year$274 $571 
Reductions for lapses in statute of limitations(189)(297)
Balance as of end of year$85 $274 

In accordance with the Company's accounting policy, interest related to income taxes is included in the provision for income taxes line of the consolidated statements of operations. For the fiscal years ended July 31, 2024 and 2023, the Company has not recognized any material interest expense related to uncertain tax positions. As of July 31, 2024 and 2023, the Company had recorded liabilities for increases in interest expense related to uncertain tax positions for an immaterial amount. The Company expects $0.1 million of unrecognized tax benefits and related interest will reverse in the next twelve months.