Income Taxes

9 Months Ended

Jul. 31, 2011

Income Taxes [Abstract]

Income Taxes

10. Income Taxes

During the nine months ended July 31, 2011, the Company evaluated the realizability of all of its deferred tax assets in each tax jurisdiction. The Company has evaluated the need for a valuation allowance under ASC 740 with respect to its Australian consolidated tax group, the Company’s operations in Japan, and the Company’s operations in New Zealand, which includes a portion of the Asia/Pacific operating segment as well as the Australian entities included in the corporate operations segment.

Accordingly, the Company has concluded that based on all available information and proper weighting of objective and subjective evidence as of July 31, 2011, including a cumulative loss that had been sustained over a three-year period, it is more likely than not that its deferred tax assets in certain jurisdictions in the Asia/Pacific segment will not be realized and a full valuation allowance of $26.0 million was established. As of July 31, 2011, the Company also continued to maintain a full valuation allowance against its net deferred tax assets in the United States. As a result of the valuation allowances recorded in the U.S. and certain jurisdictions in the Asia/Pacific segment, no tax benefits have been recognized for losses incurred in those tax jurisdictions.

On July 31, 2011, the Company’s liability for uncertain tax positions was approximately $143.8 million resulting from unrecognized tax benefits, excluding interest and penalties. During the nine months ended July 31, 2011, the Company decreased its liability for uncertain tax positions, exclusive of interest and penalties, by $1.1 million. The Company decreased its liability by $5.2 million due to settlements with taxing authorities, which was partially offset by an increase of $0.3 million for positions taken in the current period, by $0.2 million for positions taken in prior periods and by $3.6 million due to foreign exchange rate fluctuations.

If the Company’s positions are favorably sustained by the relevant taxing authority, approximately $138.8 million (excluding interest and penalties) of uncertain tax position liabilities would favorably impact the Company’s effective tax rate in future periods.

During the next 12 months, it is reasonably possible that the Company’s liability for uncertain tax positions may change by a significant amount as a result of the resolution or payment of uncertain tax positions related to intercompany transactions between foreign affiliates and certain foreign withholding tax exposures. Conclusion of these matters could result in settlement for different amounts than the Company has accrued as uncertain tax benefits. If a position that the Company concluded was more likely than not is subsequently not upheld, then the Company would need to accrue and ultimately pay an additional amount. Conversely, the Company could settle positions with the tax authorities for amounts lower than have been accrued or extinguish a position through payment. The Company believes the outcomes which are reasonably possible within the next 12 months range from an increase of the liability for unrecognized tax benefits of up to $2.0 million to a reduction of the liability for unrecognized tax benefits of up to $130.0 million, excluding penalties, interest and foreign exchange rate fluctuations.