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Income Taxes
9 Months Ended
Apr. 30, 2013
Income Tax Disclosure [Abstract]  
Income Taxes
Income Taxes
The benefit from income taxes for the three and nine months ended April 30, 2013 was $1.8 million and $2.4 million, respectively. The provision for income taxes for the three and nine months ended April 30, 2012 was $2.0 million and $6.4 million, respectively. The changes are primarily due to the reinstatement of federal research and development credits of $1.3 million during the second quarter of fiscal 2013, an increased benefit from incentive stock option (ISO) tax deductions, and the decrease in year-to-date income before tax. The effective tax rate of 40.6% and (259.4)% for the three and nine months ended April 30, 2013 differs from the statutory U.S. federal income tax rate of 35% mainly due to the reasons discussed above, as well as permanent differences for stock based compensation, the impact of state income taxes, and the tax rate differences between the United States and foreign countries and foreign tax credits.
The Company provides U.S. income taxes on the earnings of foreign subsidiaries, unless the subsidiaries’ earnings are considered indefinitely reinvested outside the United States. As of April 30, 2013, U.S. income taxes were not provided for on the cumulative total of $12.6 million undistributed earnings from certain foreign subsidiaries. As of April 30, 2013, the unrecognized deferred tax liability for these earnings was approximately $1.1 million.
During the nine months ended April 30, 2013, unrecognized tax benefits increased $1.3 million from the beginning of the period. Accordingly, as of April 30, 2013, the Company had unrecognized tax benefits of $2.9 million that, if recognized, would affect the Company’s effective tax rate.