Income Taxes

12 Months Ended

Oct. 31, 2012

Income Tax Disclosure [Abstract]

Income Taxes

17. Income Taxes

The provision for income taxes for the years ended October 31, 2012, 2011 and 2010 consists of the following:

(in thousands)		2012		2011		2010
Current:
Federal	$	134,027	$	88,051	$	124,526
State		19,836		13,925		18,241
Deferred:
Federal		(9,861)		48,091		(13,981)
State		(1,617)		6,777		(2,523)
Total	$	142,385	$	156,844	$	126,263

Deferred income taxes reflect the expected future tax consequences of temporary differences between the carrying amounts and tax bases of the Company's assets and liabilities. The significant components of deferred income taxes are as follows:

(in thousands)			2012		2011
Deferred tax assets:
	Stock-based compensation	$	73,467	$	67,190
	Deferred rent		4,807		4,874
	Compensation and benefit expense		3,800		3,077
	Federal benefit of unrecognized state tax benefits		3,545		3,554
	Unrealized losses on derivative instruments		772		929
	Differences between book and tax bases of investments		-		5,763
	Other		192		403
Total deferred tax asset		$	86,583	$	85,790
Deferred tax liabilities:
	Deferred sales commissions	$	(7,376)	$	(10,624)
	Compensation and benefit expense		(5,560)		(10,909)
	Differences between book and tax bases of goodwill
	and intangibles		(15,818)		(16,075)
	Unrealized net holding gains on investments		(3,303)		(1,873)
	Differences between book and tax bases of property		(3,268)		(4,966)
	Differences between book and tax bases of investments		(24)		-
Total deferred tax liability		$	(35,349)	$	(44,447)
Net deferred tax asset		$	51,234	$	41,343

No valuation allowance has been recorded for deferred tax assets reflecting management's belief that all deferred tax assets will be utilized.

The following table reconciles the Company's effective tax rate from the U.S. federal statutory tax rate to such amount for each of the years ended October 31, 2012, 2011 and 2010:

	2012		2011		2010
Federal statutory rate	35.0	%	35.0	%	35.0	%
State and local income tax, net of
federal income tax benefit	3.0		3.6		3.4
Non-controlling interest	(3.6)		1.6		(0.9)
Stock-based compensation	0.5		0.6		0.9
Release of liabilities associated with
uncertain tax positions	-		-		(0.1)
Other	0.4		0.3		0.3
Effective income tax rate	35.3	%	41.1	%	38.6	%

The exercise of non-qualified stock options resulted in a reduction of taxes payable of approximately $8.6 million, $7.0million and $10.8million for the years ended October 31, 2012, 2011 and 2010, respectively. Such benefit has been reflected as a component of shareholders' equity.

During fiscal 2011, the Company received approval from the Internal Revenue Service to change the Company's tax accounting for certain closed-end fund expenses. This change in tax accounting allows for the immediate tax deduction of current year closed-end fund expenses, as well as a tax deduction in the Company's fiscal 2010 tax return for previously deferred expenses. This change in accounting resulted in a decrease of deferred tax assets and a corresponding decrease in taxes payable of $94.7 million. In conjunction with the approval of the change in tax accounting, the Company filed for and received a refund of $85.0 million infiscal 2011.

The changes in gross unrecognized tax benefits for the years ended October 31, 2012, 2011 and 2010 are as follows:

(in thousands)			2012		2011		2010
Beginning Balance		$	9,474	$	9,474	$	9,975
	Additions for tax provisions of prior years		31		-		245
	Reductions for tax provisions of prior years		-		-		(771)
	Additions based on tax provisions related to current year		33		-		30
	Reductions for settlements with taxing authorities		-		-		(5)
Ending Balance		$	9,538	$	9,474	$	9,474

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