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Income tax provision
 6 Months Ended
Apr. 30, 2012
Income tax provision

Note 9 - Income tax provision

 

The Company uses an estimated annual effective tax rate, which is based on expected annual income, statutory tax rates and tax planning opportunities available in the various jurisdictions in which the Company operates, to determine its quarterly provision for income taxes. Certain significant or unusual items are separately recognized in the quarter in which they occur and can be a source of variability in the effective tax rates from quarter to quarter.

  

The provision for income taxes was 33.4% and 35.7% of income before income taxes for the three months ended April 30, 2012 and April 30, 2011, respectively, and 36.2% and 35.3% of income before income taxes for the six months ended April 30, 2012 and April 30, 2011, respectively. The decrease in the effective income tax rate from period to period for the three months and the increase in the effective income tax rate from period to period for the six months was primarily driven by the following: a decrease in the rate relating to a $66,152 adjustment of deductible acquisition costs treated as a discrete item in the three months ended April 30, 2012; an increase in the rate due to a decrease in the amount of research credits resulting from the expiration of the credits on December 31, 2011; and an increase in the rate due to research credits treated as a discrete item in the three months ended April 30, 2011. The estimated effective tax rate for fiscal 2012 is 41.9%.

 

The total amount of unrecognized tax benefits was $79,223 as of both April 30, 2012 and October 31, 2011, all of which would impact the effective tax rate if recognized. The gross liability for income taxes related to unrecognized tax benefits is included in other long-term liabilities in the Company's condensed consolidated balance sheets.

 

The total balance of accrued interest and penalties related to uncertain tax positions was $21,106 as of both April 30, 2012 and October 31, 2011. The Company recognizes interest and penalties related to uncertain tax positions as a component of income tax expense and the accrued interest and penalties are included in deferred and other long-term liabilities in the Company's condensed consolidated balance sheets. There were no material interest or penalties included in income tax expense for each of the three and six months ended April 30, 2012 and April 30, 2011.