Income tax provision

9 Months Ended

Jul. 31, 2016

Note 11 - 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 (benefit) 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 (benefit) for income taxes was 6% and (211)% of income (loss) before income taxes for the three months ended July 31, 2016 and 2015, respectively, and (25)% and 11% of income (loss) from before income taxes for the nine months ended July 31, 2016 and 2015, respectively. The change in the effective income tax rate from period to period was primarily driven by an increase in the ratio of book-tax differences which have a rate impact compared to forecasted book income for the year.

Deductions related to the exercise and disposition of equity-based incentive awards during the periods presented are, in general, available to offset taxable income on the Company’s consolidated tax returns. Accordingly, the excess tax benefit related to the exercise and disposition of equity-based incentive awards for the periods presented was credited to additional paid-in capital, not taxes payable. For the period ended July 31, 2016, the Company incurred approximately $159,000 of windfalls from the exercise and disposition of equity-based incentive awards, of which $159,000 was recorded against its additional paid-in capital.

The Company recorded income from discontinued operations, net of tax, as disclosed in Note 3. The total amount of unrecognized tax benefits was $0 as of July 31, 2016 and October 31, 2015.

The total balance of accrued interest and penalties related to uncertain tax positions was $0 as of July 31, 2016 and October 31, 2015. The Company recognizes interest and penalties related to uncertain tax positions, if any, as a component of income tax expense and the accrued interest and penalties, if any, 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 the three months ended July 31, 2016.