NOTE 10 – INCOME TAXES

Income (loss) before income taxes consisted of the following:


	2011			2010			2009
Domestic	$	(109,281	)	$	170,505		$	163,737
Foreign		6,127			148,692			74,591
Total Income (Loss) Before Income Taxes	$	(103,154	)	$	319,197		$	238,328

Significant components of the provision for income taxes are as follows:

		2011			2010			2009
Current
Federal	$	39,274		$	50,698		$	34,038
State		6,803			(934	)		3,682
Foreign		25,276			44,137			22,058
Total Current		71,353			93,901			59,778
Deferred
Federal		(19,681	)		1,646			12,618
State		(3,822	)		561			2,576
Foreign		(12,403	)		1,033			3,203
Total Deferred		(35,906	)		3,240			18,397
Total Income Taxes	$	35,447		$	97,141		$	78,175


Significant components of our deferred tax assets and liabilities are as follows:

		2011			2010			2009
Deferred tax assets:
Insurance	$	8,781		$	7,271		$	9,492
Compensation		36,082			31,891			24,836
Deferred revenue		10,400			9,772			11,226
Pension		15,001			17,734			24,909
Accrued expenses		28,960			26,629			8,867
Tax credits and carryforwards		18,308			15,242			21,261
Other		9,821			11,957			19,756
Total Deferred Tax Assets		127,353			120,496			120,347
Deferred tax liabilities:
Tax in excess of book depreciation		(55,157	)		(50,582	)		(42,872	)
Amortization		(223,091	)		(261,584	)		(259,319	)
Other		(13,348	)		(13,136	)		(16,449	)
Total Deferred Tax Liabilities		(291,596	)		(325,302	)		(318,640	)
Net Deferred Tax Liabilities	$	(164,243	)	$	(204,806	)	$	(198,293	)

A reconciliation of income tax computed at the U.S. federal statutory tax rate to the effective income tax rate is as follows:


	2011			2010			2009
Tax (benefit) at U.S. statutory rate		(35.0	%)		35.0	%		35.0	%
State income taxes, net of federal benefit		5.7	%		(1.0	%)		1.7	%
Non-U.S. taxes		(18.0	%)		(2.1	%)		(1.2	%)
Non-deductible impairment charges		94.2	%		—			—
Other		(12.5	%)		(1.5	%)		(2.7	%)
Total Effective Income Tax Rate		34.4	%		30.4	%		32.8	%

The tax rate for fiscal 2011 reflects the impact of goodwill and intangible asset impairment charges, the majority of which are nondeductible for income tax purposes. Excluding the impact of the impairment charges, our fiscal 2011 effective tax rate was 26.7%.

No provision has been made for U.S. federal income taxes on certain undistributed earnings of foreign subsidiaries that we intend to permanently invest or that may be remitted substantially tax-free. The total of undistributed earnings that would be subject to federal income tax if remitted under existing law is approximately $330,658 at October 28, 2011. Determination of the unrecognized deferred tax liability related to these earnings is not practicable because of the complexities with its hypothetical calculation. Upon distribution of these earnings, we will be subject to U.S. taxes and withholding taxes payable to various foreign governments. A credit for foreign taxes already paid would be available to reduce the U.S. tax liability.

Income taxes paid during 2011, 2010 and 2009 were $83,051, $74,882 and $78,946, respectively.

At each period end, it is necessary for us to make certain estimates and assumptions to compute the provision for income taxes including, but not limited to the expected operating income (or loss) for the year, projections of the proportion of income (or loss) earned and taxed in the foreign jurisdictions and the extent to which this income (or loss) may also be taxed in the United States, permanent and temporary differences, the likelihood of deferred tax assets being realized and the outcome of uncertain tax positions. Our income tax returns, like those of most companies, are periodically audited by domestic and foreign tax authorities. These audits include questions regarding our tax filing positions, including the timing and amount of deductions and the allocation of income among various tax jurisdictions. At any one time, multiple tax years are subject to audit by the various tax authorities. We record an accrual for uncertain tax positions after evaluating the positions associated with our various income tax filings. A number of years may elapse before a particular matter for which we have established an accrual is audited and fully resolved or clarified. We adjust our tax contingencies accrual and income tax provision in the period in which matters are effectively settled with tax authorities at amounts different from our established accrual, the statute of limitations expires for the relevant taxing authority to examine the tax position or when more information becomes available.

Table of Contents

A reconciliation of the beginning and ending amount of gross unrecognized tax benefits (excluding interest and penalties) for fiscal year 2009 through 2011 is as follows:


Gross unrecognized tax benefits at October 31, 2008	$	44,797
Increases in tax positions for prior years		170
Decreases in tax positions for prior years		(7,176	)
Increases in tax positions for current year		2,649
Settlements		(388	)
Lapse in statute of limitations		(6,655	)
Gross unrecognized tax benefits at October 30, 2009	$	33,397
Increases in tax positions for prior years		211
Increases in tax positions for current year		2,857
Settlements		(11,424	)
Lapse in statute of limitations		(7,224	)
Gross unrecognized tax benefits at October 29, 2010	$	17,817
Increases in tax positions for prior years		323
Decreases in tax positions for prior years		(505	)
Increases in tax positions for current year		2,164
Settlements		(171	)
Lapse in statute of limitations		(6,680	)
Gross unrecognized tax benefits at October 28, 2011	$	12,948

We recognize interest and penalties related to unrecognized tax benefits in income tax expense. We had recognized accrued interest and penalties relating to unrecognized tax benefits of $4,620 and $5,907 as of October 28, 2011 and October 29, 2010, respectively. The gross amount of interest and penalties included in tax expense for the year ended October 28, 2011, October 29, 2010 and October 30, 2009 was $(1,287), $(7,289) and $799, respectively.

The total amount of unrecognized tax benefits that would affect our effective tax rate if recognized was $12,203 and $15,646 as of October 28, 2011 and October 29, 2010, respectively.

The company and its subsidiaries file income tax returns in the U.S. federal jurisdiction, and numerous state and foreign jurisdictions. With few exceptions, we are no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years before 2006. The IRS has notified us that our fiscal 2010 U.S. federal tax return will be audited. We are currently under audit in several state and foreign jurisdictions. We also expect various statutes of limitation to expire during the next 12 months. Due to the uncertain response of taxing authorities, a range of outcomes cannot be reasonably estimated at this time.