
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	2013		2012		2011

Statutory federal income tax rate	35.0	%	35.0	%	35.0	%
Increase (reduction) in income taxes resulting from:
Domestic manufacturer's deduction	(2.0	)	(2.0	)	(1.8	)
State and local income taxes, net of federal income tax benefit	1.5		1.5		1.4
Effect of foreign source income	(0.3	)	0.2		0.2
Domestic research tax credit	(2.4	)	(0.2	)	(2.4	)
Other, net	(0.1	)	(0.5	)	0.3

Consolidated effective tax rate	31.7	%	34.0	%	32.7	%

Components of the provision for income taxes were as follows:



Fiscal years ended October 31		2013			2012			2011

Provision for income taxes:
Current –
Federal	$	61,388		$	59,405		$	47,922
State		5,108			4,609			3,963
Non-U.S.		5,734			3,854			7,103

Current provision	$	72,230		$	67,868		$	58,988

Deferred –
Federal	$	824		$	(685	)	$	(31	)
State		91			(132	)		(211	)
Non-U.S.		(1,277	)		(330	)		(1,578	)

Deferred benefit		(362	)		(1,147	)		(1,820	)

Total provision for income taxes	$	71,868		$	66,721		$	57,168

Earnings before income taxes were as follows:



Fiscal years ended October 31		2013		2012		2011

Earnings before income taxes:
U.S.	$	213,509	$	189,206	$	160,444
Non-U.S.		13,204		7,056		14,382

Total	$	226,713	$	196,262	$	174,826

During the fiscal years ended October 31, 2013, 2012, and 2011, respectively, $6,134, $9,017, and $2,988 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		2013			2012

Deferred tax assets (liabilities):
Allowance for doubtful accounts	$	1,635		$	1,959
Inventory items		3,969			4,595
Warranty reserves and other accruals		38,168			39,559
Employee benefits		18,315			16,466
Depreciation		(2,467	)		(4,389	)
Other		5,550			9,625

Deferred tax assets	$	65,170		$	67,815
Valuation allowance		(5,572	)		(6,781	)

Net deferred tax assets	$	59,598		$	61,034

The valuation allowance as of October 31, 2013 and 2012 principally applies to capital loss carryforwards and foreign net operating loss carryforwards that are expected to expire prior to utilization.

As of October 31, 2013, the company had net operating loss carryforwards of approximately $16,679 in foreign jurisdictions. The carryforward periods on the company's foreign loss carryforwards are as follows: $10,477 that do not expire; none that expire in fiscal years 2014 thru 2017; and $6,202 that expire between fiscal years 2018 and 2021.

As of October 31, 2013, the company had approximately $52,587 of accumulated undistributed earnings from subsidiaries outside the U.S. 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, 2012	$	4,421
Decrease as a result of tax positions taken during a prior period		(626	)
Increase as a result of tax positions taken during the current period		940
Decrease relating to settlements with taxing authorities		(214	)
Reduction as a result of a lapse of the applicable statute of limitations		(15	)

Balance as of October 31, 2013	$	4,506

Included in the balance of unrecognized tax benefits as of October 31, 2013 are potential benefits of $3,276 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 $4,506 for unrecognized tax benefits as of October 31, 2013 was an amount of approximately $66 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 2010 and with limited exceptions, state and foreign income tax examinations for fiscal years before 2008.