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Income Taxes | 12 Months Ended
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Oct. 31, 2012
Income Tax Disclosure [Abstract] |
Income Tax Disclosure [Text Block] | Income Taxes The following table provides a reconciliation of the Company’s effective tax rate from the federal statutory tax rate for the fiscal years ended October 31, 2012, 2011 and 2010 ($ amounts in thousands).
| 2012 |  | 2011 |  | 2010
| $ |  | %* |  | $ |  | %* |  | $ |  | %*
Federal tax benefit at statutory rate | 39,530 |  |  | 35.0 |  |  | (10,278 | ) |  | 35.0 |  |  | (41,015 | ) |  | 35.0 |
State taxes, net of federal benefit | 4,711 |  |  | 4.2 |  |  | (954 | ) |  | 3.2 |  |  | (3,809 | ) |  | 3.3 |
Reversal of accrual for uncertain tax positions | (34,167 | ) |  | (30.3 | ) |  | (52,306 | ) |  | 178.1 |  |  | (39,485 | ) |  | 33.7 |
Accrued interest on anticipated tax assessments | 5,000 |  |  | 4.4 |  |  | 3,055 |  |  | (10.4 | ) |  | 9,263 |  |  | (7.9 | )
Increase in unrecognized tax benefits | 5,489 |  |  | 4.9 |  |  |  |  |  |  |  | 35,575 |  |  | (30.4 | )
Increase in deferred tax assets, net |  |  |  |  | (25,948 | ) |  | 88.4 |  |  |  |  |
Valuation allowance — recognized |  |  |  |  | 43,876 |  |  | (149.4 | ) |  | 55,492 |  |  | (47.4 | )
Valuation allowance — reversed | (394,718 | ) |  | (349.5 | ) |  | (25,689 | ) |  | 87.5 |  |  | (128,640 | ) |  | 109.8 |
Other | (49 | ) |  | — |  |  | (917 | ) |  | 3.1 |  |  | (1,194 | ) |  | 1.0 |
Tax benefit | (374,204 | ) |  | (331.3 | ) |  | (69,161 | ) |  | 235.5 |  |  | (113,813 | ) |  | 97.1 |
* | 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. Due primarily to a change in the Company’s estimate of the allocation of income or loss, as the case may be, among the various taxing jurisdictions and changes in tax regulations and their impact on the Company’s tax strategies, the Company’s estimated rate for state income taxes was 6.4% in fiscal 2012 and 5.0% for each of fiscal 2011 and 2010. The following table provides information regarding the (benefit) provision for income taxes for each of the fiscal years ended October 31, 2012, 2011 and 2010 (amounts in thousands).
| 2012 |  | 2011 |  | 2010
Federal | $ | (329,277 | ) |  | $ | (21,517 | ) |  | $ | (67,318 | )
State | (44,927 | ) |  | (47,644 | ) |  | (46,495 | )
| $ | (374,204 | ) |  | $ | (69,161 | ) |  | $ | (113,813 | )
Current | $ | (21,296 | ) |  | $ | (43,212 | ) |  | $ | (156,985 | )
Deferred | (352,908 | ) |  | (25,949 | ) |  | 43,172 |
| $ | (374,204 | ) |  | $ | (69,161 | ) |  | $ | (113,813 | )
In November 2009, the Worker, Homeownership, and Business Assistance Act of 2009 was enacted into law which allowed the Company to carry back its fiscal 2010 taxable loss against taxable income reported in fiscal 2006 and receive a federal tax refund in its second quarter of fiscal 2011 of $154.3 million. The tax losses generated in fiscal 2010 were primarily from the recognition for tax purposes of previously recognized book impairments and the recognition of stock option expenses recognized for book purposes in prior years. The following table provides a reconciliation of the change in the unrecognized tax benefits for the years ended October 31, 2012, 2011 and 2010 (amounts in thousands).
| 2012 |  | 2011 |  | 2010
Balance, beginning of year | $ | 104,669 |  |  | $ | 160,446 |  |  | $ | 171,366 |
Increase in benefit as a result of tax positions taken in prior years | 5,000 |  |  | 8,168 |  |  | 14,251 |
Increase in benefit as a result of tax positions taken in current year | 5,489 |  |  |  |  |  | 15,675 |
Decrease in benefit as a result of settlements | — |  |  | (17,954 | ) |  |  |
Decrease in benefit as a result of completion of audits | (1,782 | ) |  | (33,370 | ) |  |
Decrease in benefit as a result of lapse of statute of limitation | (32,385 | ) |  | (12,621 | ) |  | (40,846 | )
Balance, end of year | $ | 80,991 |  |  | $ | 104,669 |  |  | $ | 160,446 |
The Company has reached final settlement of its federal tax returns for fiscal years through 2009. The federal settlements resulted in a reduction in the Company’s unrecognized tax benefits. The state impact of any amended federal return remains subject to examination by various states for a period of up to one year after formal notification of such amendments is made to the states. The Company’s unrecognized tax benefits are included in “Income taxes payable” on the Company’s consolidated balance sheets. If these unrecognized tax benefits reverse in the future, they would have a beneficial impact on the Company’s effective tax rate at that time. During the next twelve months, it is reasonably possible that the amount of unrecognized tax benefits will change but we are not able to provide a range of such change. The anticipated changes will be principally due to the expiration of tax statutes, settlements with taxing jurisdictions, increases due to new tax positions taken and the accrual of estimated interest and penalties. The Company recognizes in its tax benefit, potential interest and penalties. The following table provides information as to the amounts recognized in its tax provision, before reduction for applicable taxes and reversal of previously accrued interest and penalties, of potential interest and penalties in the twelve-month periods ended October 31, 2012, 2011 and 2010, and the amounts accrued for potential interest and penalties at October 31, 2012 and 2011 (amounts in thousands).
Expense recognized in statements of operations |
Fiscal year |
2012 | $ | 5,000 |
2011 | $ | 4,700 |
2010 | $ | 14,300 |
Accrued at: |
October 31, 2012 | $ | 24,906 |
October 31, 2011 | $ | 29,200 |
The amounts accrued for interest and penalties are included in “Income taxes payable” on the Company’s consolidated balance sheets. Since the beginning of fiscal 2007, the Company recorded significant deferred tax assets as a result of the recognition of inventory impairments and impairments of investments in and advances to unconsolidated entities. In accordance with GAAP, the Company assessed whether a valuation allowance should be established based on its determination of whether it is “more likely than not” that some portion or all of the deferred tax assets would not be realized. In fiscal 2009, the Company recorded valuation allowances against its deferred tax assets. The Company believed that the continued downturn in the housing market, the uncertainty as to its length and magnitude, the Company's continued recognition of impairment charges, and its operating losses were significant negative evidence of the need for a valuation allowance against its net deferred tax assets. At October 31, 2012, the Company considered the need for a valuation allowance against its deferred tax assets considering all available and objectively verifiable positive and negative evidence. That evidence principally consisted of (i) an indication that the events and conditions that gave rise to significant losses in recent years were unlikely to recur in the foreseeable future, (ii) a return to profitability in fiscal 2012 together with expectations of continuing profitability in fiscal 2013, supported by existing backlog, and beyond, and (iii) the term of the statutory operating loss carry-forward periods provide evidence that it is more likely than not that these deferred tax assets will be realized. At October 31, 2012, the Company re-evaluated the 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 fiscal 2012, the Company reversed a valuation allowance in the amount of $394.7 million. This has been reported as a component of income tax benefit in the accompanying Consolidated Statement of Operations. The remaining valuation allowance of $57.0 million relates to deferred tax assets in states that have not met the “more-likely-than-not” realization threshold criteria. The Company will continue to review its deferred tax assets in accordance with ASC 740. The components of net deferred tax assets and liabilities at October 31, 2012 and 2011 are set forth below (amounts in thousands).
| 2012 |  | 2011*
Deferred tax assets: |  |  |
Accrued expenses | $ | 57,734 |  |  | $ | 59,411 |
Impairment charges | 319,818 |  |  | 368,459 |
Inventory valuation differences | 29,288 |  |  | 30,802 |
Stock-based compensation expense | 44,336 |  |  | 38,454 |
Amounts related to unrecognized tax benefits | 36,934 |  |  | 47,387 |
State tax, net operating loss carryforward | 50,006 |  |  | 52,323 |
Federal tax net operating loss carryforward | 25,170 |  |  | 11,232 |
Other | 20,169 |  |  | 11,783 |
Total assets | 583,455 |  |  | 619,851 |
Deferred tax liabilities: |  |  |
Capitalized interest | 102,713 |  |  | 84,915 |
Deferred income | 6,608 |  |  | 7,771 |
Expenses taken for tax purposes not for book | 36,811 |  |  | 58,502 |
Depreciation | 3,994 |  |  | 2,344 |
Deferred marketing | 18,229 |  |  | 14,557 |
Total liabilities | 168,355 |  |  | 168,089 |
Net deferred tax assets before valuation allowances | 415,100 |  |  | 451,762 |
Cumulative valuation allowance - state | (57,044 | ) |  | (89,142 | )
Cumulative valuation allowance - federal |  |  |  | (362,620 | )
Net deferred tax assets | $ | 358,056 |  |  | $ | — |
* | To conform to the current period presentation, the October 31, 2011 amounts reflect adjustments to certain deferred amounts by $24.4 million with a corresponding adjustment to the related valuation allowances.
For federal income tax purposes, the Company is allowed to carry forward tax losses for 20 years and apply such tax losses to future taxable income to realize its federal deferred tax assets. At October 31, 2012, the Company estimates that it will have federal tax loss carryfowards of approximately $106.3 million resulting from losses incurred for federal income tax purposes during fiscal years 2011 and 2012. We file tax returns in the various states in which we do business. Each state has its own statutes regarding the use of tax loss carryforwards. Some of the states in which we do business do not allow for the carryfoward of losses while others allow for carryforwards for 5 years to 20 years.

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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 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 2: 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 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 Reference 4: 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 5: 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 6: 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 7: 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 8: 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. + Details
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