13. Taxes:

The following table presents the provision for (benefit from) income taxes and the effective income tax rates for the three and six months ended January 31, 2012 and 2011:


	Three Months Ended January 31,								Six Months Ended January 31,
	2012				2011				2012				2011
Provision for (benefit from) income taxes		$	(8,869	)		$	930			$	(7,000	)		$	1,689
Effective tax rate			-83	%			15	%			-42	%			20	%

The Company received a refund of $12,007 in the second quarter of fiscal year 2012 as the result of the completion of an Internal Revenue Service (“IRS”) audit of federal income tax returns for the fiscal years ended July 31, 2003, 2005, and 2008. The refund was largely the result of Federal research and experimentation credits that carryover from the fiscal years 1991 through 2000 into the audited returns. The Company recorded a tax benefit for this refund, including the related interest, in the unaudited Consolidated Statement of Operations of $10,025 in the three and six months ended January 31, 2012. Related to the refund and interest were contingent professional fees of $2,714 that were recorded in general and administrative expenses in the unaudited Consolidated Statement of Operations in the three and six months ended January 31, 2012. In connection with the conclusion of the IRS audit, the Company recorded a benefit from the reversal and re-measurement of related tax reserves of $2,308 in the unaudited Consolidated Statement of Operations in the three and six months ended January 31, 2012.

The effective income tax rate on continuing operations is based upon the estimated income for the year, the composition of the income in different countries, and adjustments, if any, in the applicable quarterly periods for the potential tax consequences, benefits, resolutions of tax audits or other tax contingencies.

The effective tax rates for the three and six months ended January 31, 2011 of 15% and 20%, respectively, were due primarily to a discrete tax benefit of $536 for the reinstatement of the federal research and experimentation credit back to January 1, 2010 and the lower foreign tax rates as compared to the statutory rate of 35%. In addition, taxes related to the bargain purchase gain of $621 from the acquisition of an ultrasound transducer and probe business were recorded as part of income from operations.

The total amounts of gross unrecognized tax benefits, which excludes interest and penalties discussed below, were as follows for the dates indicated:


January 31, 2012		July 31, 2011
$ 6,608		$16,250

These unrecognized tax benefits, if recognized in a future period, the timing of which is not estimable, would impact the Company’s effective tax rate.

The Company is subject to U.S. Federal income tax as well as the income tax of multiple state and foreign jurisdictions. As of January 31, 2012, the Company has concluded all U.S. Federal income tax matters through the year ended July 31, 2008. In the next four quarters, the statute of limitations for the Company’s fiscal year ended July 31, 2006 may be completed for foreign subsidiaries and it is reasonably expected that net unrecognized benefits, including interest, of $203 may be recognized. During the three and six months ended January 31, 2012, the Company reduced its uncertain tax benefits and accrued interest by $11,030 as a result of the completion of the audits of fiscal years 2003, 2005 and 2008 and the re-measurement of uncertain tax benefits in open years.

The Company accrues interest and, if applicable, penalties for any uncertain tax positions. This interest and penalty expense is treated as a component of income tax expense. At January 31, 2012 and July 31, 2011, the Company had approximately $566 and $1,485, respectively, accrued for interest and penalties on unrecognized tax benefits. The decrease was due primarily to the completion of the IRS audit.