XML 60 R19.htm IDEA: XBRL DOCUMENT v2.4.0.6
Income Taxes
3 Months Ended
Jan. 31, 2013
Income Tax Disclosure [Abstract]  
Income Taxes
Income Taxes
The provision for income taxes is determined by applying an estimated annual effective income tax rate to income (loss) before income taxes. The rate is based on the most recent annualized forecast of pretax income, permanent book versus tax differences and tax credits. The Company’s estimated annual effective tax rate for the three months ended January 31, 2013 is 41.7% compared to the estimated annual effective tax rate of 39.8% for the three months ended January 31, 2012. The increase in the current year effective tax rate benefit is primarily attributable to the loss of the manufacturer's deduction benefit in the current year.
The Company continues to record a state Net Operating Loss (NOL) valuation allowance in fiscal 2013. In assessing the need for a valuation allowance, the Company considers 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 $1.3 million as of January 31, 2013 and October 31, 2012.
The Company’s unrecognized tax benefit (UTB) is related to the spin-off of the Company in 2008 and state tax items regarding the interpretations of tax laws and regulations. The total UTB as of January 31, 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 $14.7 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 the Company’s 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 the Company’s financial statements. The Company is subject to the effects of these matters occurring in various jurisdictions. The Company believes 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.