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Income Taxes | 12 Months Ended
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Apr. 30, 2012
Income Taxes |
8. | Income Taxes
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:
|  | Year Ended April 30, |
|  | 2012 |  |  | 2011 |  |  | 2010 |
|  | (in thousands) |
Current income taxes: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 4,173 |  |  | $ | 7,606 |  |  | $ | 862 |
State |  |  | 1,609 |  |  |  | 5,714 |  |  |  | 2,281 |
Foreign |  |  | 12,670 |  |  |  | 11,826 |  |  |  | 6,738 |
Current provision for income taxes |  |  | 18,452 |  |  |  | 25,146 |  |  |  | 9,881 |
Deferred income taxes: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | 7,281 |  |  |  | (2,442 | ) |  |  | (2,729 | )
State |  |  | 3,508 |  |  |  | 830 |  |  |  | (1,303 | )
Foreign |  |  | (890 | ) |  |  | 9,158 |  |  |  | (6,334 | )
Deferred provision (benefit) for income taxes |  |  | 9,899 |  |  |  | 7,546 |  |  |  | (10,366 | )
Total provision (benefit) for income taxes |  | $ | 28,351 |  |  | $ | 32,692 |  |  | $ | (485 | )
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:
|  | Year Ended April 30, |
|  | 2012 |  |  | 2011 |  |  | 2010 |
|  | (in thousands) |
Domestic |  | $ | 42,375 |  |  | $ | 56,741 |  |  | $ | 10,669 |
Foreign |  |  | 38,429 |  |  |  | 32,963 |  |  |  | (5,947 | )
Income before provision (benefit) for income taxes and equity in earnings of unconsolidated subsidiaries |  | $ | 80,804 |  |  | $ | 89,704 |  |  | $ | 4,722 |
The reconciliation of the statutory federal income tax rate to the effective consolidated tax rate is as follows:
|  | Year Ended April 30, |
|  | 2012 |  |  | 2011 |  |  | 2010 |
U.S. federal statutory income tax rate |  |  | 35.0 | % |  |  | 35.0 | % |  |  | 35.0 | %
Foreign source income, net of credits generated |  |  | 3.0 |  |  |  | 1.9 |  |  |  | 52.9 |
Income subject to net differing foreign tax rates |  |  | (2.9 | ) |  |  | (3.8 | ) |  |  | 52.6 |
COLI increase, net |  |  | (2.7 | ) |  |  | (2.8 | ) |  |  | (69.8 | )
Repatriation of foreign earnings |  |  | (1.7 | ) |  |  | 0.1 |  |  |  | 38.5 |
State income taxes, net of federal benefit |  |  | 4.0 |  |  |  | 4.6 |  |  |  | 13.8 |
Adjustments for valuation allowance |  |  | (0.7 | ) |  |  | 4.8 |  |  |  | 52.7 |
Tax exempt interest income |  |  | — |  |  |  | — |  |  |  | (0.7 | )
Expense disallowances |  |  | 0.8 |  |  |  | 0.5 |  |  |  | 7.5 |
Uncertain tax position reserve reversal |  |  | — |  |  |  | (2.3 | ) |  |  | (208.8 | )
Other |  |  | 0.3 |  |  |  | (1.6 | ) |  |  | 16.0 |
Effective income tax rate |  |  | 35.1 | % |  |  | 36.4 | % |  |  | (10.3 | )%
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:
|  | April 30, |
|  | 2012 |  |  | 2011 |
|  | (in thousands) |
Deferred tax assets: |  |  |  |
Deferred compensation |  | $ | 62,710 |  |  | $ | 64,333 |
Loss and credit carryforwards |  |  | 33,342 |  |  |  | 33,834 |
Allowance for doubtful accounts |  |  | 1,388 |  |  |  | 1,797 |
Property and equipment |  |  | — |  |  |  | 371 |
Deferred rent |  |  | 6,887 |  |  |  | 6,422 |
Other |  |  | 5,623 |  |  |  | 4,664 |
Gross deferred tax assets |  |  | 109,950 |  |  |  | 111,421 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Intangibles |  |  | (11,103 | ) |  |  | (8,228 | )
Unrealized gain |  |  | (1,059 | ) |  |  | (2,393 | )
Property and equipment |  |  | (4,527 | ) |  |  | — |
Other |  |  | (52 | ) |  |  | — |
Gross deferred tax liabilities |  |  | (16,741 | ) |  |  | (10,621 | )
Valuation allowances |  |  | (25,089 | ) |  |  | (26,168 | )
Net deferred tax asset |  | $ | 68,120 |  |  | $ | 74,632 |
Certain deferred tax amounts and valuation allowances were reclassified during fiscal 2012 based on differences between fiscal 2011 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:
|  | April 30, |
|  | 2012 |  |  | 2011 |
|  | (in thousands) |
Current: |  |  |  |
Deferred tax assets |  | $ | 15,357 |  |  | $ | 10,214 |
Deferred tax liabilities |  |  | (4,527 | ) |  |  | — |
Current deferred tax asset |  |  | 10,830 |  |  |  | 10,214 |
Non-current: |  |  |  |  |  |  |  |
Deferred tax asset |  |  | 94,593 |  |  |  | 101,207 |
Deferred tax liabilities |  |  | (12,214 | ) |  |  | (10,621 | )
Non-current deferred tax asset |  |  | 82,379 |  |  |  | 90,586 |
Valuation allowance |  |  | (25,089 | ) |  |  | (26,168 | )
Non-current deferred tax asset, net |  |  | 57,290 |  |  |  | 64,418 |
Net deferred tax assets |  | $ | 68,120 |  |  | $ | 74,632 |
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 (net tax effected) and tax credit carryforwards:
|  | April 30, 2012 |
|  | 2012 through 2016 |  |  | 2017 through 2026 |  |  | Indefinite |  |  | Total |
|  | (in thousands) |
Foreign net operating loss carryforwards |  | $ | 6,148 |  |  | $ | 30,440 |  |  | $ | 56,429 |  |  | $ | 93,017 |
State taxing jurisdiction net operating loss carryforwards |  |  | 63 |  |  |  | 11,444 |  |  |  | — |  |  |  | 11,507 |
Foreign tax credit |  |  | — |  |  |  | 3,333 |  |  |  | — |  |  |  | 3,333 |
Federal capital loss carryforwards |  |  | 5,776 |  |  |  | — |  |  |  | — |  |  |  | 5,776 |
The Company continues to execute on its decision to repatriate an additional portion of previously undistributed foreign earnings. The Company has provided U.S. deferred income taxes on future distributions to be made pursuant to this repatriation plan. Other than these amounts, the Company has not provided for U.S. deferred income taxes on approximately $113.6 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. An estimate of these taxes; however, 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 fiscal 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. Changes in the unrecognized tax benefits are as follows:
|  | Year Ended April 30, |
|  | 2012 |  |  | 2011 |  |  | 2010 |
|  | (in thousands) |
Unrecognized tax benefits, beginning of year |  | $ | — |  |  | $ | 3,532 |  |  | $ | 13,392 |
Settlement with tax authority |  |  | — |  |  |  | (1,473 | ) |  |  | — |
Additions based on tax positions related to the current year |  |  | — |  |  |  | — |  |  |  | — |
Estimated interest for the year |  |  | — |  |  |  | 72 |  |  |  | 469 |
Recognized tax benefits |  |  | — |  |  |  | (2,131 | ) |  |  | (10,329 | )
Unrecognized tax benefits, end of year |  | $ | — |  |  | $ | — |  |  | $ | 3,532 |
The total liability for unrecognized tax benefits is not expected to change within the next twelve months. During fiscal 2012, the Internal Revenue Service concluded its examination of the Company’s federal income tax returns for tax years ended April 30, 2008 and 2009. Subsequent years remain subject to examination by the Internal Revenue Service. The Company is subject to state and foreign tax examinations for tax years 2008 through 2011. The Company is not presently under examination in any major tax jurisdiction.

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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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