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Income Taxes
3 Months Ended
Oct. 31, 2013
Income Tax Disclosure [Abstract]  
Income Taxes
Income Taxes
The benefit from income taxes for the three months ended October 31, 2013 was $7.2 million and the benefit for income taxes for the three months ended October 31, 2012 was $0.3 million. The change is primarily due to a decrease in profitability in the current period. The effective tax rate of 40.3% for the three months ended October 31, 2013 differs from the statutory U.S. federal income tax rate of 35% mainly due to the benefit for the ISO tax deduction, permanent differences for stock-based compensation, the impact of state income taxes, the tax rate differences between the United States and foreign countries, research tax credits, and foreign tax credits.
The Company provides U.S. income taxes on the earnings of foreign subsidiaries, unless the subsidiaries’ earnings are considered indefinitely reinvested outside the United States. As of October 31, 2013, U.S. income taxes were not provided for on the cumulative total of $13.5 million undistributed earnings from certain foreign subsidiaries. As of October 31, 2012, the unrecognized deferred tax liability for these earnings was approximately $1.3 million.
During the three months ended October 31, 2013, the change in unrecognized tax benefits from the beginning of the period was $0.6 million. Accordingly, as of October 31, 2013, the Company had unrecognized tax benefits of $3.7 million that, if recognized, would affect the Company’s effective tax rate.