|
Income Taxes
|
6 Months Ended |
|---|---|
|
Apr. 30, 2013
|
|
| Income Tax Disclosure [Abstract] | |
| Income Taxes | 11. Income Taxes For interim periods, accounting standards require that income tax expense be determined by applying the estimated annual effective income tax rate to year-to-date results unless this method does not result in a reliable estimate of year-to-date income tax expense. For the second quarter of 2013, we used the discrete or cut-off method, which allows for the application of year-to-date results of the effective income tax rate that would actually apply to such results. This approach is appropriate where a small change in estimated income could produce a large change in the estimated annual effective tax rate. Our estimated annual effective tax rate for the six months ended April 30, 2013 is 34.1% compared to the estimated annual effective tax rate of 30.7% for the six months ended April 30, 2012. We continue to record a state Net Operating Loss (NOL) valuation allowance in fiscal 2013. In assessing the need for a valuation allowance, we consider both positive and negative evidence related to the likelihood of realization of the deferred tax assets. Prepaid and other current assets on the Condensed Consolidated Balance Sheets include an income tax receivable of four thousand dollars as of April 30, 2013 and $1.3 million as of October 31, 2012. Our unrecognized tax benefit (UTB) is related to the spin-off in 2008 and state tax items regarding the interpretations of tax laws and regulations. The total UTB as of April 30, 2013 is $15.8 million. Of this, $6.8 million is recorded in Liability for uncertain tax positions and $9.0 million is recorded in Deferred income taxes (non-current assets) on the Condensed Consolidated Balance Sheets. The UTB includes $14.8 million for which the disallowance of such items would not affect the annual effective tax rate. Judgment is required in assessing the future tax consequences of events that have been recognized in our financial statements or income tax returns. The final outcome of the future tax consequences of legal proceedings, if any, as well as the outcome of competent authority proceedings, changes in regulatory tax laws, or interpretation of those tax laws could impact our financial statements. We are subject to the effects of these matters occurring in various jurisdictions. We believe it is reasonably possible that a decrease of approximately $2.7 million in the UTB may be recognized within the next twelve months as a result of a lapse in the statute of limitations. |