Income Taxes (Tables)

12 Months Ended

Oct. 31, 2017

Domestic and Foreign Components of Total Income Before Provision for Income Tax

The domestic and foreign components of the Company’s total income (loss) before provision for income taxes are as follows:



	Year Ended October 31,
	2017			2016		2015
	(in thousands)
United States	$	(2,702	)	$	22,134	$	42,571
Foreign	385,800			307,414		239,039
Total income (loss) before provision for income taxes	$	383,098		$	329,548	$	281,610

Components of (Benefit) Provision for Income Taxes

The components of the provision (benefit) for income taxes were as follows:



	Year Ended October 31,
	2017		2016			2015
	(in thousands)
Current:
Federal	$	25,420	$	(6,106	)	$	(21,911	)
State	5,565		2,670			1,385
Foreign	92,498		80,195			39,319
	123,483		76,759			18,793
Deferred:
Federal	95,003		(23,510		)	44,462
State	24,440		11,950			(2,282		)
Foreign	3,609		(2,477		)	(5,297		)
	123,052		(14,037		)	36,883
Provision (benefit) for income taxes	$	246,535	$	62,722		$	55,676

Rate Reconciliation Between Provision for Income Taxes and Taxes Computed at Statutory Federal Rate

The provision (benefit) for income taxes differs from the taxes computed with the statutory federal income tax rate as follows:



	Year Ended October 31,
	2017			2016			2015
	(in thousands)
Statutory federal tax	$	134,084		$	115,343		$	98,564
State tax (benefit), net of federal effect	(20,071		)	(14,492		)	(7,186		)
Tax credits (1)	(24,365		)	(36,979		)	(13,301		)
Tax on foreign earnings less than U.S. statutory tax	(52,413		)	(68,246		)	(56,536		)
Tax settlements	(7,057		)	(16,479		)	(6,251		)
Stock-based compensation	(26,205		)	5,709			5,406
Changes in valuation allowance	47,745			25,590			2,206
Integration of acquired technologies	36,443			37,525			33,015
Undistributed earnings of foreign subsidiaries	(9,610		)	9,940			—
Tax impact of repatriation	166,152			—			—
Other	1,832			4,811			(241		)
Provision (benefit) for income taxes	$	246,535		$	62,722		$	55,676

(1)

Tax credits include benefits from the retroactive reinstatement of the U.S. federal research tax credit. The U.S. federal research tax credit was reinstated in fiscal 2015, resulting in a tax benefit of approximately $12.4 million in the above amount for the period January 1 through December 31, 2014. The credit was permanently reinstated in fiscal 2016, resulting in a tax benefit of approximately $37.1 million in the above amount for the period January 1, 2015 through October 31, 2016.

Components of Deferred Tax Assets and Liabilities

The significant components of deferred tax assets and liabilities were as follows:



	October 31,
	2017			2016
	(in thousands)
Net deferred tax assets:
Deferred tax assets:
Accruals and reserves	$	36,906		$	34,324
Deferred revenue	42,420			42,497
Deferred compensation	67,145			64,321
Capitalized costs	51,679			54,123
Capitalized research and development costs	12,508			18,896
Stock-based compensation	23,679			22,298
Tax loss carryovers	23,623			31,748
Foreign tax credit carryovers	7,662			10,369
Research and other tax credit carryovers	157,817			136,690
Other	—			5,161
Gross deferred tax assets	423,439			420,427
Valuation allowance	(121,770		)	(73,909		)
Total deferred tax assets	301,669			346,518
Deferred tax liabilities:
Intangible assets	62,299			54,604
Undistributed earnings of foreign subsidiaries	1,300			10,888
Other	1,758			—
Total deferred tax liabilities	65,357			65,492
Net deferred tax assets	$	236,312		$	281,026

Tax Loss and Credit Carryforwards Available to Offset Future Income Tax Liabilities

The Company has the following tax loss and credit carryforwards available to offset future income tax liabilities:



Carryforward	Amount		Expiration Date
	(in thousands)
Federal net operating loss carryforward	$	57,265	2018-2034
Federal research credit carryforward	78,599		2019-2036
Federal foreign tax credit carryforward	2,081		2019-2022
International foreign tax credit carryforward	13,351		Indefinite
California research credit carryforward	169,038		Indefinite
Other state research credit carryforward	7,482		2023-2032
State net operating loss carryforward	33,201		2024-2035

Summary of Reconciliation of Beginning and Ending Balance of Gross Unrecognized Tax Benefit

A reconciliation of the beginning and ending balance of gross unrecognized tax benefits is summarized as follows:



	As of October 31, 2017			As of October 31, 2016
	(in thousands)
Beginning balance	$	106,542		$	132,054
Increases in unrecognized tax benefits related to prior year tax positions	3,117			7,205
Decreases in unrecognized tax benefits related to prior year tax positions	(49,456		)	(43,944		)
Increases in unrecognized tax benefits related to current year tax positions	31,007			13,880
Decreases in unrecognized tax benefits related to settlements with taxing authorities	(784		)	(333		)
Reductions in unrecognized tax benefits due to lapse of applicable statute of limitations	(2,635		)	(2,659		)
Increases in unrecognized tax benefits acquired	1,934			49
Changes in unrecognized tax benefits due to foreign currency translation	1,912			290
Ending balance	$	91,637		$	106,542

Subsidiaries Remain Subject to Tax Examination

The Company and/or its subsidiaries remain subject to tax examination in the following jurisdictions:




Jurisdiction	Year(s) Subject to Examination
United States	Fiscal 2017
California	Fiscal years after 2014
Hungary and Ireland	Fiscal years after 2010
Japan and Taiwan	Fiscal years after 2011