Income Taxes
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Apr. 30, 2011
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Income Taxes [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
IncomeTaxes |
The provision (benefit) for income taxes is based on reported
income (loss) before income taxes. Deferred income tax assets
and liabilities reflect the impact of temporary differences
between the amounts of assets and liabilities recognized for
financial reporting purposes and the amounts recognized for tax
purposes, as measured by applying the currently enacted tax laws.
The provision (benefit) for domestic and foreign income taxes
were as follows:
The domestic and foreign components of income (loss) from
continuing operations before domestic and foreign income and
other taxes and equity in earnings of unconsolidated
subsidiaries were as follows:
The reconciliation of the statutory federal income tax rate to
the effective consolidated tax rate is as follows:
Deferred income taxes reflect the net effects of temporary
difference between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts
used for income tax purposes. Components of the deferred tax
assets and liabilities are as follows:
Certain deferred tax amounts and valuation allowances were
reclassified during fiscal 2011 based on differences between
fiscal 2010 provision and related tax return filings. Changes to
the valuation allowance balances are recorded through the
provision for income taxes in the respective year.
The deferred tax amounts have been classified in the
consolidated balance sheets as follows:
Deferred tax assets are reduced by a valuation allowance if it
is more likely than not that some portion or all of the deferred
tax asset will not be realized. Management believes uncertainty
exists regarding the realizability of certain operating and
capital losses and has, therefore, established a valuation
allowance for this portion of the deferred tax asset.
Realization of the deferred income tax asset is dependent on the
Company generating sufficient taxable income of the appropriate
nature in future years. Although realization is not assured,
management believes that it is more likely than not that the net
deferred income tax asset will be realized.
The following details the scheduled expiration dates of the
Company’s net operating loss and tax credit carryforwards:
During fiscal 2011 and 2010, the Company made an accrual to
reflect the Company’s decision to repatriate an additional
portion of its previously undistributed foreign earnings, which
resulted in a tax expense of $0.4 million and
$3.5 million, respectively. No accrual was made in fiscal
2009. Other than these amounts, the Company has not provided for
U.S. deferred income taxes on approximately
$101.1 million of undistributed earnings and associated
withholding taxes of its foreign subsidiaries as the Company has
taken the position that its foreign earnings will be permanently
reinvested offshore. If a distribution of these earnings were to
be made, the Company might be subject to both foreign
withholding taxes and U.S. income taxes, net of any
allowable foreign tax credits or deductions. However, an
estimate of these taxes is not practicable.
The Company’s income tax returns are subject to audit by
the Internal Revenue Service and various state and foreign tax
authorities. Significant disputes may arise with these tax
authorities involving issues of the timing and amount of
deductions and allocations of income among various tax
jurisdictions because of differing interpretations of tax laws
and regulations. The Company periodically evaluates its
exposures associated with tax filing positions.
While management believes its positions comply with applicable
laws, the Company records liabilities based upon estimates of
the ultimate outcomes of these matters. During fiscal 2011 and
2010, the Company reversed a $2.1 million and
$10.3 million reserve for a previous uncertain tax
position, as the state and federal statute of limitations
expired, respectively. As of April 30, 2010 and 2009, the
Company had unrecognized tax benefits of $3.5 million and
$13.4 million, respectively, which are included in the
accompanying consolidated balance sheet — income taxes
payable.
Changes in the unrecognized tax benefits are as follows:
The total liability for unrecognized tax benefits is not
expected to change within the next twelve months. Tax years 2008
through 2010 are subject to examination by the federal and state
taxing authorities.
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