INCOME TAXES

12 Months Ended

Oct. 31, 2012

INCOME TAXES

INCOME TAXES

9 INCOME TAXES

A reconciliation of the statutory federal income tax rate to the company's consolidated effective tax rate is summarized as follows:

Fiscal years ended October 31	2012		2011		2010
Statutory federal income tax rate	35.0	%	35.0	%	35.0	%
Increase (reduction) in income taxes resulting from:
Domestic manufacturer's deduction	(2.0	)	(1.8	)	(1.1	)
State and local income taxes, net of federal income tax benefit	1.5		1.4		1.4
Effect of foreign source income	0.2		0.2		0.2
Domestic research tax credit	(0.2	)	(2.4	)	(0.2	)
Other, net	(0.5	)	0.3		(1.3	)
Consolidated effective tax rate	34.0	%	32.7	%	34.0	%

   Components of the provision for income taxes were as follows:

Fiscal years ended October 31		2012			2011			2010
Provision for income taxes:
Current –
Federal	$	59,405		$	47,922		$	34,582
State		4,609			3,963			2,918
Non-U.S.		3,854			7,103			4,436
Current provision	$	67,868		$	58,988		$	41,936
Deferred –
Federal	$	(685	)	$	(31	)	$	5,305
State		(132	)		(211	)		198
Non-U.S.		(330	)		(1,578	)		592
Deferred benefit		(1,147	)		(1,820	)		6,095
Total provision for income taxes	$	66,721		$	57,168		$	48,031

   As of October 31, 2012, the company had net operating loss carryforwards of approximately $15,386 in foreign jurisdictions with unlimited expiration.

   Earnings before income taxes were as follows:

Fiscal years ended October 31		2012		2011		2010
Earnings before income taxes:
U.S.	$	189,206	$	160,444	$	127,508
Non-U.S.		7,056		14,382		13,760
Total	$	196,262	$	174,826	$	141,268

   During the fiscal years ended October 31, 2012, 2011, and 2010, respectively, $9,017, $2,988, and $3,396 was added to stockholders' equity reflecting the permanent book to tax difference in accounting for tax benefits related to employee stock-based award transactions.

   The tax effects of temporary differences that give rise to the net deferred income tax assets are presented below:

October 31		2012			2011
Deferred tax assets (liabilities):
Allowance for doubtful accounts	$	1,959		$	1,156
Inventory items		4,595			5,121
Warranty reserves and other accruals		39,559			38,370
Employee benefits		16,466			16,831
Depreciation		(4,389	)		(3,909	)
Other		9,625			8,514
Deferred tax assets	$	67,815		$	66,083
Valuation allowance		(6,781	)		(4,928	)
Net deferred tax assets	$	61,034		$	61,155

   The valuation allowance as of October 31, 2012 and 2011 principally applies to capital loss carryforwards and foreign net operating loss carryforwards that are expected to expire prior to utilization.

   As of October 31, 2012, the company had approximately $45,635 of accumulated undistributed earnings from subsidiaries outside the United States that are considered to be reinvested indefinitely. No deferred tax liability has been provided for such earnings.

   A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

Balance as of October 31, 2011	$	5,329
Decrease as a result of tax positions taken during a prior period		(52	)
Increase as a result of tax positions taken during the current period		753
Decrease relating to settlements with taxing authorities		(261	)
Reduction as a result of a lapse of the applicable statute of limitations		(1,348	)
Balance as of October 31, 2012	$	4,421

   Included in the balance of unrecognized tax benefits as of October 31, 2012 are potential benefits of $3,122 that, if recognized, would affect the effective tax rate from continuing operations.

   The company recognizes potential accrued interest and penalties related to unrecognized tax benefits as a component of the provision for income taxes. In addition to the liability of $4,421 for unrecognized tax benefits as of October 31, 2012 was an amount of approximately $219 for accrued interest and penalties. To the extent interest and penalties are not assessed with respect to uncertain tax positions, the amounts accrued will be revised and reflected as an adjustment to the provision for income taxes.

   The company anticipates that total unrecognized tax benefits will not change significantly within the next 12 months.

   The company is subject to U.S. federal income tax as well as income tax of numerous state and foreign jurisdictions. The company is generally no longer subject to U.S. federal tax examinations for taxable years before fiscal 2009 and with limited exceptions, state and foreign income tax examinations for fiscal years before 2007.