Income Taxes

The tables below provide, for the periods indicated, reconciliations of the Company’s effective tax rate from the federal statutory tax rate (amounts in thousands):



	Nine months ended July 31,
	2013				2012
	$		%*		$		%*
Federal tax provision at statutory rate	41,141		35.0		18,268		35.0
State tax provision, net of federal benefit	4,890		4.2		2,205		4.2
Reversal of state tax provisions – finalization of audits					(1,782	)	(3.4	)
Reversal of accrual for uncertain tax positions	(3,885	)	(3.3	)	(18,073	)	(34.6	)
Valuation allowance – recognized					1,400		2.7
Valuation allowance – reversed	(3,133	)	(2.7	)	(31,164	)	(59.7	)
Accrued interest on anticipated tax assessments	2,837		2.4		2,600		5.0
Other	(4	)			3,010		5.7
Income tax provision (benefit)	41,846		35.6		(23,536	)	(45.1	)



	Three months ended July 31,
	2013				2012
	$		%*		$		%*
Federal tax provision at statutory rate	23,888		35.0		15,034		35.0
State tax provision, net of federal benefit	2,839		4.2		1,815		4.2
Decrease in unrecognized tax benefits					(277	)	(0.6	)
Reversal of state tax provisions – finalization of audits					(1,782	)	(4.2	)
Reversal of accrual for uncertain tax positions	(3,885	)	(5.7	)	(12,794	)	(29.8	)
Valuation allowance – recognized					3,500		8.1
Valuation allowance – reversed	(1,856	)	(2.7	)	(27,847	)	(64.8	)
Accrued interest on anticipated tax assessments	854		1.3		650		1.5
Other	(182	)	(0.3	)	3,010		7.1
Income tax provision (benefit)	21,658		31.7		(18,691	)	(43.5	)

* Due to rounding, amounts may not add.

The Company currently operates in 19 states and is subject to various state tax jurisdictions. The Company estimates its state tax liability based upon the individual taxing authorities’ regulations, estimates of income by taxing jurisdiction and the Company’s ability to utilize certain tax-saving strategies. Based on the Company’s estimate of the allocation of income or loss among the various taxing jurisdictions and changes in tax regulations and their impact on the Company’s tax strategies, the Company estimated its rate for state income taxes at 6.4% and 6.5% for fiscal 2013 and 2012, respectively.

At October 31, 2012, the Company evaluated evidence related to the need for its deferred tax asset valuation allowances and determined that the valuation allowance on its federal deferred tax assets and certain state valuation allowances were no longer needed. Accordingly, in the fourth quarter of fiscal 2012, the Company reversed a valuation allowance in the amount of $394.7 million.

For state tax purposes, due to past and projected losses in certain jurisdictions where the Company does not have carryback potential and/or cannot sufficiently forecast future taxable income, the Company has recognized net cumulative valuation allowances against its state deferred tax assets of $53.9 million and $57.0 million as of July 31, 2013 and October 31, 2012, respectively.