Taxes

3 Months Ended

Oct. 31, 2012

Taxes

10. Taxes:

The following table presents the provision for income taxes and the effective income tax rates for the three months ended October 31, 2012 and 2011:

	Three Months  Ended October 31,
	2012				2011
Provision for income taxes		$	2,148			$	1,869
Effective tax rate			33	%			32	%

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 rate for the three months ended October 31, 2012 was lower than the federal statutory rate due primarily to lower foreign tax rates. The effective tax rate was higher in the current period than in the quarter ended October 31, 2011 due to the expiration of the federal research and experimentation credit on December 31, 2011.

The effective tax rate for the three months ended October 31, 2011 was lower than the federal statutory rate due primarily to lower foreign tax rates and the federal research and experimentation credit.

The total amounts of gross unrecognized tax benefits, which excludes interest and penalties discussed below, as of October 31, 2012 and July 31, 2012 were as follows:

October 31, 2012	July 31, 2012
$6,833	$6,756

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

We are subject to U.S. Federal income tax as well as the income tax of multiple state and foreign jurisdictions. As of October 31, 2012, we have concluded all U.S. Federal income tax matters through the year ended July 31, 2008.

We accrue 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 October 31, 2012 and July 31, 2012, we had approximately $674 and $640, respectively, accrued for interest and penalties on unrecognized tax benefits.