Note 13 — Income Taxes

A summary of the provision/(benefit) for income taxes from continuing operations is as follows:


	Year Ended October 31,
In thousands	2013			2012			2011
Current:
Federal	$	(1,921	)	$	(2,322	)	$	(2,860	)
State		(60	)		(105	)		(732	)
Foreign		13,719			15,574			13,067

		11,738			13,147			9,475

Deferred:
Federal	$	(1,490	)	$	152		$	(182	)
State		(259	)		322			(33	)
Foreign		156,231			(9,717	)		(27,728	)

		154,482			(9,243	)		(27,943	)

Provision/(benefit) for income taxes	$	166,220		$	3,904		$	(18,468	)

A reconciliation of the effective income tax rate to a computed “expected” statutory federal income tax rate is as follows:


	Year Ended October 31,
	2013			2012			2011
Computed “expected” statutory federal income tax rate		35.0	%		35.0	%		35.0	%
State income taxes, net of federal income tax benefit		0.1			0.8			1.7
Foreign tax rate differential		(9.2	)		(11.2	)		(12.2	)
Foreign tax exempt income		—			36.8			14.3
Goodwill impairment		—			—			(58.0	)
Stock-based compensation		(2.2	)		(24.9	)		(4.3	)
Uncertain tax positions		1.2			12.5			163.2
Valuation allowance		(250.8	)		(88.0	)		(90.1	)
Other		(1.2	)		9.7			(6.1	)

Effective income tax rate		(227.1	)%		(29.3	)%		43.5	%

The components of net deferred income taxes are as follows:


	October 31,
In thousands	2013			2012
Deferred income tax assets:
Allowance for doubtful accounts		8,082			7,532
Unrealized gains and losses		15,342			5,541
Tax loss carry forwards		385,375			342,529
Accruals and other		82,768			79,090

		491,567			434,692

Deferred income tax liabilities:
Depreciation and amortization		(15,155	)		(12,923	)
Intangibles		(27,244	)		(25,705	)

		(42,399	)		(38,628	)


Deferred income taxes		449,168			396,064
Valuation allowance		(459,068	)		(254,490	)


Net deferred income taxes	$	(9,900	)	$	141,574

Income/(loss) before provision for income taxes from continuing operations includes ($5) million, $32 million, and ($4) million of income/(loss) from foreign jurisdictions for the fiscal years ended October 31, 2013, 2012 and 2011, respectively. The Company does not provide for the U.S. federal, state or additional foreign income tax effects on certain foreign earnings that management intends to permanently reinvest. Determination of the amount of any unrecognized deferred income tax liability on this temporary difference is not practicable.

As of October 31, 2013, the Company has federal net operating loss carry forwards of approximately $210 million and state net operating loss carry forwards of approximately $261 million, which will expire on various dates through 2033. The company has recorded a valuation allowance against the entire amount of these tax loss carry forwards. In addition, the Company has foreign tax loss carry forwards of approximately $925 million as of October 31, 2013. Approximately $860 million will be carried forward until fully utilized, with the remaining $65 million expiring on various dates through 2033. The Company has recorded a valuation allowance against $889 million of the foreign tax loss carry forwards. As of October 31, 2013, the Company has capital loss carry forwards of approximately $42 million which will expire in 2014. The Company has recorded a valuation allowance against the entire amount of the capital loss carry forwards.

Each reporting period, the Company evaluates the realizability of all of its deferred tax assets in each tax jurisdiction. In the fiscal year ended October 31, 2013, the Company concluded that based on all available information and proper weighting of objective and subjective evidence, including a cumulative loss that had been sustained over a three-year period, it is more likely than not that its deferred tax assets primarily in the EMEA segment will not be realized and a full valuation allowance of $157 million was established. Due to sustainable tax losses, the Company maintains a valuation allowance against its net deferred tax assets in certain jurisdictions in the Americas, APAC, and Corporate Operations segments.

The following table summarizes the activity related to the Company’s unrecognized tax benefits (excluding interest and penalties and related tax carry forwards):


	Year Ended October 31,
In thousands	2013			2012
Balance, beginning of year	$	10,787		$	10,401
Gross increases related to current year tax positions		1,255			1,166
Settlements		—			—
Lapse in statute of limitation		(866	)		(598	)
Foreign exchange and other		(174	)		(182	)

Balance, end of year	$	11,002		$	10,787

If the Company’s positions are sustained by the relevant taxing authority, approximately $10 million (excluding interest and penalties) of uncertain tax position liabilities as of October 31, 2013 would favorably impact the Company’s effective tax rate in future periods.

The Company includes interest and penalties related to unrecognized tax benefits in its provision for income taxes in the accompanying consolidated statements of operations, which is included in current tax expense in the summary of income tax provision table shown above. As of October 31, 2013, the Company had recognized a liability for interest and penalties of $7 million.

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 reversed, 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 a reduction of the liability for unrecognized tax benefits of $8 million to an increase of the liability of $2 million, excluding penalties and interest for its existing tax positions.

The Company is generally subject to examination in the United States and its significant foreign tax jurisdictions, including France, Australia and Canada for fiscal 2009 and thereafter.