v2.4.0.6

Income Taxes | 12 Months Ended
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Oct. 31, 2011
Income Taxes [Abstract] |
Income Taxes | Note 10. Income Taxes The domestic and foreign components of the Company's total income before provision for income taxes are as follows:
|  | Year Ended October 31, |
|  | 2011 |  |  | 2010 |  |  | 2009 |
|  | (in thousands) |
United States |  | $ | 40,434 |  |  | $ | 57,795 |  |  | $ | 72,681 |
Foreign |  |  | 178,679 |  |  |  | 140,863 |  |  |  | 160,389 |
|  | $ | 219,113 |  |  | $ | 198,658 |  |  | $ | 233,070 |
The components of the (benefit) provision for income taxes were as follows:
|  | Year Ended October 31, |
|  | 2011 |  |  | 2010 |  |  | 2009 |
|  | (in thousands) |
Current: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | (6,436 | ) |  | $ | (17,097 | ) |  | $ | 1,813 |
State |  |  | (2,197 | ) |  |  | 8 |  |  |  | 8,236 |
Foreign |  |  | 474 |  |  |  | 25,421 |  |  |  | 14,450 |
|  |  | (8,159 | ) |  |  | 8,332 |  |  |  | 24,499 |
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | (7,160 | ) |  |  | (25,156 | ) |  |  | 38,368 |
State |  |  | (2,456 | ) |  |  | (9,309 | ) |  |  | (2,875 | )
Foreign |  |  | 15,524 |  |  |  | (12,272 | ) |  |  | 5,397 |
|  |  | 5,908 |  |  |  | (46,737 | ) |  |  | 40,890 |
(Benefit) provision for income taxes |  | $ | (2,251) |  |  | $ | (38,405 | ) |  | $ | 65,389 |
The (benefit) provision for income taxes differs from the taxes computed with the statutory federal income tax rate as follows:
|  | Year Ended October 31, |
|  | 2011 |  |  | 2010 |  |  | 2009 |
|  | (in thousands) |
Statutory federal tax |  | $ | 76,689 |  |  | $ | 69,530 |  |  | $ | 81,575 |
State tax (benefit), net of federal effect |  |  | (4,988 | ) |  |  | (2,491 | ) |  |  | 2,055 |
Tax credits |  |  | (19,042 | ) |  |  | (7,451 | ) |  |  | (7,326 | )
Tax exempt income |  |  | (354 | ) |  |  | (1,479 | ) |  |  | (2,732 | )
Tax on foreign earnings less than U.S. statutory tax |  |  | (28,968 | ) |  |  | (11,615 | ) |  |  | (23,558 | )
Tax settlements |  |  | (32,782 | ) |  |  | (73,045 | ) |  |  | — |
Stock based compensation |  |  | 7,817 |  |  |  | 5,336 |  |  |  | 13,488 |
Changes in valuation allowance |  |  | 49 |  |  |  | (21,612 | ) |  |  | — |
Other |  |  | (672 | ) |  |  | 4,422 |  |  |  | 1,887 |
|  | $ | (2,251 | ) |  | $ | (38,405 | ) |  | $ | 65,389 |
The significant components of deferred tax assets and liabilities were as follows:
|  | October 31, |
|  | 2011 |  |  | 2010 |
|  | (in thousands) |
Net deferred tax assets: |  |  |  |  |  |  |  |
Deferred tax assets: |  |  |  |  |  |  |  |
Accruals and reserves |  | $ | 16,274 |  |  | $ | 15,375 |
Deferred revenue |  |  | 47,603 |  |  |  | 53,574 |
Deferred compensation |  |  | 36,975 |  |  |  | 32,062 |
Capitalized costs |  |  | 98,420 |  |  |  | 102,706 |
Capitalized research and development costs |  |  | 45,710 |  |  |  | 30,214 |
Stock compensation |  |  | 32,186 |  |  |  | 41,370 |
Tax loss carryovers |  |  | 36,515 |  |  |  | 54,167 |
Foreign tax credit carryovers |  |  | 23,759 |  |  |  | 29,549 |
Research and other tax credit carryovers |  |  | 74,110 |  |  |  | 68,345 |
Capital loss carryovers |  |  | 1,896 |  |  |  | 7,558 |
Other |  |  | 1,349 |  |  |  | 2,357 |
Gross deferred tax assets |  |  | 414,797 |  |  |  | 437,277 |
Valuation allowance |  |  | (13,395 | ) |  |  | (14,684 | )
Total deferred tax assets |  |  | 401,402 |  |  |  | 422,593 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Intangible assets |  |  | 49,948 |  |  |  | 63,276 |
Undistributed earnings of foreign subsidiaries |  |  | 12,631 |  |  |  | 17,331 |
Total deferred tax liabilities |  |  | 62,579 |  |  |  | 80,607 |
Net deferred tax assets |  | $ | 338,823 |  |  | $ | 341,986 |
The valuation allowance decreased by $1.3 million which is related principally to capital loss carryforwards. It is more likely than not that the results of future operations will generate sufficient taxable income to realize the remaining deferred tax assets. The Company has the following tax loss and credit carryforwards available to offset future income tax liabilities:
Carryforward |  | Amount |  |  | Expiration Date |
|  | (in thousands) |  |  |  |
Federal net operating loss carryforward |  | $ | 89,349 |  |  |  | 2018-2030 |
Federal research credit carryforward |  |  | 74,388 |  |  |  | 2018-2031 |
Foreign tax credit carryforward |  |  | 25,662 |  |  |  | 2012-2021 |
State research credit carryforward |  |  | 67,757 |  |  |  | Indefinite |
The federal net operating loss carryforward is from acquired companies and the annual use of such loss is subject to significant limitations under Internal Revenue Code Section 382. Foreign tax credits may only be used to offset tax attributable to foreign source income. The fiscal year 2010 federal research tax credit that expired as of December 31, 2009 was reinstated through December 31, 2011. The Company has unrecognized deferred tax assets of approximately $36.8 million as of October 31, 2011 attributable to excess tax deductions related to stock options, the benefit of which will be credited to equity when realized. The Company has not provided taxes for undistributed earnings of its foreign subsidiaries except to the extent that the Company does not plan to reinvest such earnings indefinitely outside the United States. If the cumulative foreign earnings exceed the amount the Company intends to reinvest in foreign countries in the future, the Company would provide for taxes on such excess amount. As of October 31, 2011, there was approximately $530 million of earnings upon which U.S. income taxes of approximately $114 million have not been provided for. The gross unrecognized tax benefits decreased by approximately $36.0 million during fiscal 2011, resulting in gross unrecognized tax benefits of $177.9 million as of October 31, 2011. A reconciliation of the beginning and ending balance of gross unrecognized tax benefits is summarized as follows:
|  | 2011 |  |  | 2010 |
|  | (in thousands) |
Beginning balance |  | $ | 213,923 |  |  | $ | 253,861 |
Increases in unrecognized tax benefits related to prior year tax positions |  |  | 4,188 |  |  |  | 9,243 |
Decreases in unrecognized tax benefits related to prior year tax positions |  |  | (44,061 | ) |  |  | (78,464 | )
Increases in unrecognized tax benefits related to current year tax positions |  |  | 19,922 |  |  |  | 38,505 |
Decreases in unrecognized tax benefits related to settlements with taxing authorities |  |  | (1,258 | ) |  |  | (14,962 | )
Reductions in unrecognized tax benefits due to lapse of applicable statute of limitations |  |  | (15,200 | ) |  |  | (12,686 | )
Increases in unrecognized tax benefits acquired |  |  | 350 |  |  |  | 15,966 |
Changes in unrecognized tax benefits due to foreign currency translation |  |  | 29 |  |  |  | 2,460 |
Balance as of October 31 |  | $ | 177,893 |  |  | $ | 213,923 |
As of October 31, 2011 and 2010, approximately $177 million and $202 million, respectively, of the unrecognized tax benefits would affect our effective tax rate if recognized upon resolution of the uncertain tax positions. Interest and penalties related to estimated obligations for tax positions taken in the Company's tax returns are recognized as a component of income tax expense in the consolidated statements of operations and totaled approximately $2.8 million, $3.4 million and $2.0 million for fiscal 2011, 2010 and 2009, respectively. As of October 31, 2011 and 2010, the combined amount of accrued interest and penalties related to tax positions taken on the Company's tax returns was approximately $7.4 million and $7.3 million, respectively. In March 2010, in a case between Xilinx, Inc. and the IRS, the U.S. Court of Appeals for the Ninth Circuit issued a decision affirming an earlier U.S. Tax Court ruling that stock option compensation does not need to be included in the costs shared under a cost sharing arrangement. In July 2010, the IRS announced that it would acquiesce to the result of the Xilinx decision and issued an Action on Decision (AOD) in August 2010. As a result of this announcement, in fiscal year 2010, the Company reversed certain tax liabilities which were originally recorded in fiscal year 2009 and recorded a credit to additional paid-in capital. The Company files income tax returns in the United States and various state and local jurisdictions. Its subsidiaries file tax returns in various foreign jurisdictions, including Ireland, Hungary, Taiwan and Japan. The Company remains subject to income tax examinations in the United States for fiscal years after 2009. In Ireland, Hungary, Taiwan and Japan, the Company's subsidiaries remain subject to tax examinations for fiscal years after 2005. See IRS Examinations below for the status of our current federal income tax audits. The timing of the resolution of income tax examinations is highly uncertain as well as the amounts and timing of various tax payments that are part of the settlement process. This could cause large fluctuations in the balance sheet classification of current and non-current assets and liabilities. The Company believes that in the coming 12 months, it is reasonably possible that the statute of limitations on certain state and foreign income and withholding taxes will expire. Given the uncertainty as to ultimate settlement terms, the timing of payment and the impact of such settlements on other uncertain tax positions, the range of the estimated potential decrease in underlying unrecognized tax benefits is between $0 and $110 million. IRS Examinations The Company is regularly audited by the IRS. In fiscal 2011, the Company reached a final settlement with the Examination Division of the IRS for its audits of fiscal years 2006 through 2009. As a result of the settlement, the Company's unrecognized tax benefits decreased by $35.9 million and the impact to other balance sheet tax accounts was not material. The net tax benefit resulting from the settlement was $32.8 million. The audit of certain returns filed by Synplicity, Inc. prior to its acquisition by the Company in May 2008 was finalized in the first quarter of fiscal 2011, which resulted in a decrease in unrecognized tax benefits of $4.0 million. In fiscal 2010, the Company reached a settlement with the IRS that resolved certain disputes related to the Company's acquisition of Avant! Corporation in 2002 that arose in the audit of its fiscal years 2002 through 2004. This settlement resulted in a decrease in the Company's tax expense for fiscal 2010 of approximately $94.3 million, which is primarily due to the release of previously established tax liabilities of $67.8 million, as well as a release of a valuation allowance of $21.6 million for foreign tax credits which were utilized in connection with the settlement. In fiscal 2010, as a result of the IRS settlement of fiscal years 2002 through 2004, the Company's net deferred tax assets increased by $55.4 million. The change is due primarily to increases in its deferred tax assets of $72.3 million for certain costs that have been capitalized for tax purposes and will be amortized in future periods, partially offset by a decrease to deferred tax assets of $25.2 million, due to the use of the Company's foreign tax credit carryover, net of the reversal of a valuation allowance. Non-U.S. Examinations The Company's subsidiaries are being audited in a number of jurisdictions, including Taiwan (for fiscal 2008 and 2010) and Hungary (for fiscal 2007 and fiscal 2008). The Company believes that it has adequately provided for potential tax adjustments in both jurisdictions, including interest. The Hungarian tax authorities have disallowed the Company's claim to tax benefits with respect to certain intercompany charges, which would result in additional tax and interest for the years under examination and for subsequent years. In addition, Hungarian tax rules provide for penalties of up to 50% of the amount of additional tax which may be abated if certain requirements are met, and are subject to further administrative appeal. The Company believes that it has meritorious defenses against the imposition of significant penalties and accordingly has not provided for such penalties in its financial statements.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 136, 172 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 43, 44, 45, 46, 47, 48, 49 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=6881521&loc=d3e23780-122690 + Details
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