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Provision For Income Taxes
 9 Months Ended
Apr. 30, 2012
Provision For Income Taxes [Abstract]  
Provision For Income Taxes
12. Provision for Income Taxes

The objectives of accounting for income taxes are to recognize the amount of taxes payable or refundable for the current period and deferred tax liabilities and assets for the future tax consequences of events that have been recognized in the Company's financial statements or tax returns. We recognize liabilities for uncertain tax positions based on a two-step process. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step requires us to estimate and measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement. It is inherently difficult and subjective to estimate such amounts, as we have to determine the probability of various possible outcomes. We re-evaluate these uncertain tax positions on a quarterly basis. This evaluation is based on factors including, but not limited to, changes in facts or circumstances, changes in tax law, effectively settled issues under audit, and new audit activity. Such a change in recognition or measurement would result in the recognition of a tax benefit or an additional charge to the tax provision.

It is the Company's policy to recognize interest and penalties accrued relative to unrecognized tax benefits in income tax expense. For the nine month period ended April 30, 2012, the Company released approximately $800 of uncertain tax benefit reserve and related interest and penalties recorded at July 31, 2011 related to the settlement of uncertain tax benefits as a result of statute of limitation expirations. The Company accrued $1,100 in interest and penalties related to the remaining uncertain tax benefits recorded at July 31, 2011, and accrued additional uncertain tax benefit reserves of $650 related to previous tax periods. For the three month period ended April 30, 2012, the Company released $800 of uncertain tax benefit reserves and related interest and penalties recorded at July 31, 2011, recorded $650 of additional uncertain tax benefit reserves related to previous tax periods and accrued $370 in interest and penalties.

The Company and its subsidiaries file a consolidated U.S. federal income tax return, multiple U.S. state income tax returns and multiple Canadian income tax returns. The Federal statute is closed for tax years through fiscal 2008. Periodically, various state and local jurisdictions conduct audits and therefore a variety of other years are subject to state and local review. The Company is currently being audited by the state of California for the tax years ended July 31, 2007 and July 31, 2008 and by the state of Indiana for the tax years ended July 31, 2008, 2009 and 2010. The Company has reserved for its exposure to additional payments for uncertain tax positions on its California and Indiana income tax returns in its liability for unrecognized tax benefits. In addition, the Company paid approximately $100 in tax and interest in the three months ended April 30, 2012 to finalize the state of Oregon tax audit for the tax years ended July 31, 2006 through 2008.

The overall effective income tax rate for the three months ended April 30, 2012 was 32.5% compared with 30.2% for the three months ended April 30, 2011. The increase in the overall effective income tax rate was primarily attributable to a larger benefit from state return to provision adjustment that occurred for the three months ended April 30, 2011 as compared to the three months ended April 30, 2012. This was partially offset by the benefit realized related to the settlement of certain uncertain tax benefits due to statute of limitation expirations that occurred in the three month period ended April 30, 2012.

The overall effective income tax rate for the nine months ended April 30, 2012 was 34.1% compared with 29.6% for the nine months ended April 30, 2011. The primary reason for the increase in the overall effective income tax rate was the larger favorable settlement of certain uncertain tax positions that occurred in the nine month period ended April 30, 2011 compared to the nine month period ended April 30, 2012. Additional tax benefit was also recorded in the nine month period ended April 30, 2011 due to the retroactive reinstatement of the federal research and development tax credit that was enacted on December 17, 2010 as well as a larger benefit from state return to provision adjustments. The April 30, 2012 effective tax rate was favorably impacted by the additional benefit related to the settlement of certain uncertain tax benefits due to statute of limitation expirations that occurred in the nine month period ended April 30, 2012.

The Company anticipates a decrease of approximately $4,700 in unrecognized tax benefits, and $1,200 in accrued interest and penalties related to these unrecognized tax benefits, within the next 12 months from (1) expected settlements or payments of uncertain tax positions, and (2) lapses of the applicable statutes of limitations. Actual results may differ materially from this estimate.