v3.24.3
INCOME TAXES
 12 Months Ended
Jul. 31, 2024
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
The sources of income before income taxes are as follows:
 For the Fiscal Year Ended July 31,
 202420232022
United States$115,618 $315,939 $1,359,841 
Foreign233,226 183,414 100,023 
Total$348,844 $499,353 $1,459,864 

The components of the provision for income taxes are as follows:
 For the Fiscal Year Ended July 31,
Income Taxes:202420232022
U.S. Federal$52,832 $102,919 $296,716 
U.S. state and local10,372 14,803 55,159 
Foreign48,242 45,174 17,848 
Total current expense111,446 162,896 369,723 
U.S. Federal(22,236)(28,819)(21,317)
U.S. state and local(4,116)(3,447)(2,089)
Foreign(1,650)(5,517)(24,696)
Total deferred expense (benefit)(28,002)(37,783)(48,102)
Total income tax expense$83,444 $125,113 $321,621 

The differences between income tax expense at the federal statutory rate and the actual income tax expense are as follows:

 For the Fiscal Year Ended July 31,
 202420232022
Provision at federal statutory rate$73,257 $104,864 $306,571 
Differences between U.S. Federal statutory and foreign tax rates3,821 (41,300)58,573 
Foreign currency remeasurement (gains) losses(7,621)33,737 (73,914)
U.S. state and local income taxes, net of federal benefit4,840 9,524 38,919 
Nondeductible compensation3,976 4,413 5,438 
Contingent liability accrual and settlement(7,456)— 6,300 
Global Intangible Low-Taxed Income12,068 10,936 2,000 
Other559 2,939 (22,266)
Total income tax expense$83,444 $125,113 $321,621 
A summary of the deferred income tax balances is as follows:
 July 31,
 20242023
Deferred income tax asset (liability):
Inventory basis$10,019 $10,226 
Employee benefits10,146 10,306 
Self-insurance reserves5,021 4,968 
Accrued product warranties62,687 71,800 
Accrued incentives7,335 9,110 
Sales returns and allowances2,544 2,282 
Accrued expenses6,409 5,641 
Property, plant and equipment(45,494)(49,036)
Operating leases10,970 13,086 
Deferred compensation31,359 29,667 
Intangibles(197,012)(212,478)
Net operating loss and other carryforwards30,861 38,064 
Unrealized (gain) loss737 (8,843)
Unrecognized tax benefits2,161 2,965 
Research and development20,237 10,816 
Other8,709 2,395 
Valuation allowance(12,676)(10,867)
Deferred income tax (liability), net$(45,987)$(69,898)

Deferred tax assets are reduced by a valuation allowance if, based upon available evidence, it is more likely than not that some, or all, of the deferred tax assets will not be realized. The valuation allowances recorded at July 31, 2024 and July 31, 2023 relate to certain foreign net operating loss carryforwards, other assets in foreign jurisdictions and certain disallowed state interest carry forwards.

As of July 31, 2024, the Company has $285 of deferred tax assets related to U.S. state tax credit carryforwards that expire in fiscal 2035 of which the Company expects to realize prior to expiration. The Company has $16,303 of deferred tax assets related to NOL carryforwards in certain foreign jurisdictions that will expire from fiscal 2025 or be carried forward indefinitely, of which $11,146 has been fully reserved with a valuation allowance, and the remaining amount the Company expects to realize. In addition, the Company has $739 of tax affected U.S. state tax NOL carryforwards that expire from fiscal 2025 to 2044 of which no deferred tax asset or valuation allowance has been recorded on $323 of these amounts since there is no expectation of future realization. The Company has a deferred tax asset related to disallowed interest carryforwards of $12,779 in foreign jurisdictions, which it expects to fully realize, and $992 of deferred tax assets related to U.S. state disallowed interest carryforwards, on which a full $992 valuation allowance is recorded.

With the exception of foreign subsidiary investment basis differences not attributable to un-repatriated foreign earnings, we consider all of our undistributed earnings of our foreign subsidiaries, as of July 31, 2024, to not be indefinitely reinvested outside of the United States. As of July 31, 2024, the related income tax cost of the repatriation of foreign earnings is not material.

The benefits of tax positions reflected on income tax returns but whose outcome remains uncertain are only recognized for financial accounting purposes if they meet minimum recognition thresholds. The total amount of unrecognized tax benefits that, if recognized, would have impacted the Company’s effective tax rate were $8,614 for fiscal 2024, $11,106 for fiscal 2023 and $14,461 for fiscal 2022.
Changes in the unrecognized tax benefit during fiscal years 2024, 2023 and 2022 were as follows:
 
202420232022
Beginning balance$13,712 $17,998 $17,025 
Tax positions related to prior years:
Additions1,692 649 705 
Reductions(1,977)(1,588)(1,280)
Tax positions related to current year:
Additions386 974 4,660 
Settlements(2,133)(2,531)(2,453)
Lapses in statute of limitations(1,246)(1,790)(3,010)
Tax positions acquired— — 2,351 
Ending balance$10,434 $13,712 $17,998 

It is the Company’s policy to recognize interest and penalties accrued relative to unrecognized tax benefits in income tax expense. The total amount of interest and penalties expense recognized in the Consolidated Statements of Income and Comprehensive Income for the fiscal years ended July 31, 2024, July 31, 2023 and July 31, 2022 were $111, $523 and $134, respectively.

The total unrecognized tax benefits above, along with the related accrued interest and penalties, are reported within the liability section of the Consolidated Balance Sheets. A portion of the unrecognized tax benefits is classified as short-term and is included in the “Income and other taxes” line of the Consolidated Balance Sheets, while the remainder is classified as a long-term liability.

The components of total unrecognized tax benefits are summarized as follows:
 July 31,
 20242023
Unrecognized tax benefits$10,434 $13,712 
Reduction to unrecognized tax benefits which offset tax credit carryforwards(605)(414)
Accrued interest and penalties2,576 2,694 
Total unrecognized tax benefits$12,405 $15,992 
Short-term, included in “Income and other taxes”$— $1,157 
Long-term12,405 14,835 
Total unrecognized tax benefits$12,405 $15,992 

Within the next 12 months, the Company does not anticipate any material changes in its unrecognized tax benefits as of July 31, 2024.

The Company files income tax returns in the U.S. federal jurisdiction and in many U.S. state and foreign jurisdictions. The Company is currently under exam by certain foreign jurisdictions for fiscal years ended 2016 through 2021. The Company believes it has adequately reserved for its exposure to additional payments for uncertain tax positions in its liability for unrecognized tax benefits. 
The major tax jurisdictions we file in, with the years still subject to income tax examinations, are listed below:
 
Major Tax JurisdictionTax Years Subject to Exam
United States – FederalFiscal 2021 – Fiscal 2023
United States – StateFiscal 2021 – Fiscal 2023
GermanyFiscal 2016 – Fiscal 2022
FranceFiscal 2021 – Fiscal 2023
ItalyFiscal 2016– Fiscal 2022
United Kingdom     Fiscal 2023