PTCPTC Inc.

The effective tax rate for FY’24 was lower than the effective rate for FY’23. In FY'24, the rate was impacted by a U.S. Tax Court ruling in Varian Medical Systems, Inc. v. Commissioner, issued on August 26, 2024. The ruling related to the U.S. taxation of deemed foreign dividends in the transition year of the Tax Act (our fiscal 2018). As a result, we recorded a $14.4 $14 million benefit for additional foreign tax credits that have become became available to us. Additionally, our rate included a net benefit of $4.4 million for the effects of Internal Revenue Service (IRS) procedural guidance requiring consent for previously automatic changes of accounting method. The IRS procedural guidance change significantly increased our estimated taxable income in the year ended September 30, 2024, resulting in an increase to the estimated tax benefit for the deductions associated with Global Intangible Low-Taxed Income and Foreign-Derived Intangible Income. The benefit from this IRS procedural guidance change will reverse in a future fiscal period if we receive IRS consent for a change in the treatment of these deductions. These benefits were offset by a tax expense of $4.6 $5 million related to a tax reserve in a foreign jurisdiction. FY'23 included tax expense of $21.8 million related to an uncertain tax position regarding transfer pricing in a foreign jurisdiction where we are currently under audit. Our FY'23 rate was also impacted by tax expense of $6.3 million related to non-deductible imputed interest related to the deferred payment on the acquisition of ServiceMax.

As many Many of our customers and potential customers, particularly those in Germany and elsewhere in the European Union, customers are also subject to such these laws and directives, directives. As a result, those companies will increasingly be required to assess our sustainability efforts and impacts; if impacts. If we are unable to satisfactorily address their requests for information or other sustainability related requests, contracting periods sustainability-related requirements or expectations, customers may reduce or terminate their contracts with those companies us and customers and potential customers may be extended or those companies may elect to use other suppliers or switch suppliers, choose alternative software solutions, which could adversely affect our business, financial condition, results of operations, and prospects.