11. Taxes:

The following table presents the provision for income taxes and the effective income tax rates for the three and nine months ended April 30, 2013 and 2012:


	Three Months Ended April 30,						Nine Months Ended April 30,
	2013			2012			2013			2012
Provision for (benefit from) income taxes	$	1,678		$	2,966		$	7,418		$	(4,034	)
Effective tax rate		24	%		29	%		28	%		(15	%)

The effective income tax rates on continuing operations is based upon the estimated income for the year, the composition of the income in different countries, and adjustments, if any, in the applicable quarterly periods for the potential tax consequences, benefits, resolutions of tax audits or other tax contingencies. Our effective tax rate for the fiscal year ended July 31, 2013 is expected to be between 29%-30%.

The effective tax rates for the three and nine months ended April 30, 2013 were lower than the statutory rate of 35% due primarily to the reversal of tax reserves on U.S. federal and state tax returns due to expiration of statute of limitations, and due to deductions available in the U.S. for manufacturing activity, U.S. R&D credits, and lower foreign tax rates as compared to the U.S. statutory rate of 35%.

The effective tax rate for the three months ended April 30, 2012 of 29% was due primarily to lower foreign tax rates as compared to the statutory tax rate of 35%, and the reversal of a valuation allowance on our China operations. The effective tax rate for the nine months ended April 30, 2012 of (15%) was due primarily to a discrete benefit of $10,025 from the receipt of a tax refund, including the related interest, and reversal and re-measurement of related tax reserves of $2,308. We received a refund of $12,007 in the second quarter of fiscal year 2012 as the result of the completion of an IRS audit of federal income tax returns for the fiscal years ended July 31, 2003, 2005, and 2008. The refund was largely the result of Federal research and experimentation credits that carryover from the fiscal years 1991 through 2000 into the audited returns. We recorded a tax benefit for this refund, including the related interest, in the unaudited consolidated statement of operations of $10,025 in the nine months ended April 30, 2012. Related to the refund and interest were contingent professional fees of $2,714 that were recorded in general and administrative expenses in the unaudited consolidated statement of operations in the nine months ended April 30, 2012. In connection with the conclusion of the IRS audit, we recorded a benefit from the reversal and re-measurement of related tax reserves of $2,308 in the unaudited consolidated statement of operations in the nine months ended April 30, 2012.

The total amounts of gross unrecognized tax benefits, which excludes interest and penalties discussed below were as follows:

As of

April 30, 2013

As of

July 31, 2012

$ 6,898

$6,756

If these unrecognized tax benefits are recognized in a future period, it would favorably impact our effective tax rate. In the next four quarters, the statute of limitations for our fiscal year ended July 31, 2010 may expire for U.S. Federal and state incomes taxes and for our fiscal year ended July 31, 2007 for foreign subsidiaries, respectively. It is reasonably expected that net unrecognized benefits, including interest, of approximately $1,072 may be recognized.

We are subject to U.S. federal income tax as well as the income tax of multiple state and foreign jurisdictions. As of April 30, 2013, we have concluded all U.S. federal income tax matters through the year ended July 31, 2008.

We accrue interest and, if applicable, penalties for any uncertain tax positions. This interest and penalty expense is treated as a component of income tax expense. At April 30, 2013 and July 31, 2012, we had approximately $664 and $640, respectively, accrued for interest and penalties on unrecognized tax benefits.