Income Taxes

The components of income from continuing operations before income taxes are as follows (in thousands):



	Fiscal Year Ended
	November 30, 2012		November 30, 2011		November 30, 2010
U.S.	$	31,469	$	84,218	$	82,575
Foreign	18,167		16,504		12,659
Total	$	49,636	$	100,722	$	95,234

The provision for income taxes from continuing operations is comprised of the following (in thousands):



	Fiscal Year Ended
	November 30, 2012			November 30, 2011		November 30, 2010
Current:
Federal	$	5,779		$	20,283	$	17,080
State	883			2,017		2,452
Foreign	5,970			5,131		5,392
Total current	12,632			27,431		24,924
Deferred:
Federal	5,047			6,116		8,329
State	45			277		274
Foreign	(692		)	556		(861		)
Total deferred	4,400			6,949		7,742
Total	$	17,032		$	34,380	$	32,666

A reconciliation of the U.S. Federal statutory rate to the effective tax rate from continuing operations is as follows:



	Fiscal Year Ended
	November 30, 2012		November 30, 2011		November 30, 2010
Tax at U.S. Federal statutory rate	35.0	%	35.0	%	35.0	%
Foreign rate differences	(1.3	)	1.1		(0.7	)
State income taxes, net	(0.2	)	1.6		2.5
Research credits	(0.1	)	(1.4	)	(0.2	)
Domestic production activities deduction	(2.1	)	(2.0	)	(1.5	)
Tax-exempt interest	(0.4	)	(0.2	)	(0.2	)
Nondeductible stock-based compensation	4.5		1.7		1.8
Nonrecurring benefit from change in estimate from earnings and profits	—		—		(3.5	)
Other	(1.1	)	(1.6	)	1.0
Total	34.3	%	34.2	%	34.2	%

The components of deferred tax assets and liabilities are as follows (in thousands):



	November 30, 2012			November 30, 2011
Deferred tax assets:
Accounts receivable	$	768		$	1,230
Other current assets	786			780
Capitalized research costs	231			1,360
Accrued compensation	4,657			3,258
Accrued liabilities and other	10,527			9,018
Deferred revenue	129			1,540
Stock-based compensation	8,122			8,908
Depreciation and amortization	5,533			—
Tax credit and loss carryforwards	39,216			54,350
Gross deferred tax assets	69,969			80,444
Valuation allowance	(14,316		)	(23,734		)
Total deferred tax assets	55,653			56,710
Deferred tax liabilities:
Goodwill	(13,819		)	(10,629		)
Depreciation and amortization	—			(3,795		)
Total deferred tax liabilities	(13,819		)	(14,424		)
Total	$	41,834		$	42,286

The valuation allowance primarily applies to net operating loss carryforwards and unutilized tax credits in jurisdictions or under conditions where realization is not assured. The $9.4 million decrease in the valuation allowance during fiscal year 2012 primarily relates to the partial release of valuation allowances on state credit carryforwards, which will be utilized to offset certain gains on our dispositions.

At November 30, 2012, we have net operating loss carryforwards of $75.1 million expiring on various dates through 2029 and $16.2 million that may be carried forward indefinitely. At November 30, 2012, we have tax credit carryforwards of approximately $12.5 million expiring on various dates through 2031 and $0.2 million that may be carried forward indefinitely.

The calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax regulations in a multitude of jurisdictions across our global operations. We recognize and record potential tax liabilities for anticipated tax audit issues in various tax jurisdictions based on our estimate of whether, and the extent to which, additional taxes will be due. We adjust these reserves in light of changing facts and circumstances; however, due to the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from our current estimate of the tax liabilities. If our estimate of tax liabilities proves to be less than the ultimate assessment, an additional charge to expense would result. If payment of these amounts ultimately proves to be less than the recorded amounts, the reversal of the liabilities would result in income tax benefits being recognized in the period when we determine the liabilities are no longer necessary.

A reconciliation of the balance of our unrecognized tax benefits is as follows (in thousands):



	Fiscal Year Ended
	November 30, 2012			November 30, 2011			November 30, 2010
Balance, beginning of year	$	2,631		$	2,294		$	3,914
Tax positions related to current year	79			445			442
Settlements with tax authorities	—			—			(1,736		)
Tax positions acquired	—			—			200
Lapses due to expiration of the statute of limitations	(518		)	(108		)	(526		)
Balance, end of year	$	2,192		$	2,631		$	2,294

We recognize interest and penalties related to uncertain tax positions as a component of our provision for income taxes. In fiscal year 2012 there was no estimated interest and penalties recorded in the provision for income taxes. In fiscal years 2011 and 2010 there was $0.1 million and $0.1 million, respectively, of estimated interest and penalties in the provision for income taxes. We have accrued $0.3 million of estimated interest and penalties at November 30, 2012 and 2011. We expect unrecognized tax benefits to change over the next 12 months if certain tax matters ultimately settle with the applicable taxing jurisdiction during this time frame, or if the applicable statute of limitations lapses. The impact to our previously recorded unrecognized tax benefits could range from $0.2 million to $1.3 million as a result of these matters.

We have not provided for U.S. income taxes on the undistributed earnings of non-U.S. subsidiaries, as these earnings have been permanently reinvested. The cumulative undistributed foreign earnings were approximately $33.2 million at November 30, 2012. There is no unrecognized deferred tax liability for temporary differences related to these earnings at November 30, 2012 due to foreign tax credits available to offset the liability.

The Internal Revenue Service is currently examining our U.S. Federal income tax returns for fiscal years 2009 and 2010. Our U.S. Federal income tax returns have been examined or are closed by statute for all years prior to fiscal year 2009, and we are no longer subject to audit for those periods. State taxing authorities are currently examining our income tax returns for years through fiscal year 2010. Our state income tax returns have been examined or are closed by statute for all years prior to fiscal year 2005, and we are no longer subject to audit for those periods.

Tax authorities for certain non-U.S. jurisdictions are also examining returns affecting unrecognized tax benefits, none of which are material to our consolidated balance sheets, cash flows or statements of income. With some exceptions, we are generally no longer subject to tax examinations in non-U.S. jurisdictions for years prior to fiscal year 2007.