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Income Taxes
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9 Months Ended |
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Oct. 31, 2011
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| Income Taxes |
12. Income Taxes
For
the three months and nine months ended October 31, 2011, the
Company recorded an income tax benefit of $478,000 and $437,000, on
a loss before tax of $459,000 and $35,000, respectively. During the
third quarter of fiscal 2012, the Company recognized $479,000 of
tax benefits resulting from the expiration of the statute of
limitations for uncertain tax positions. The statute of limitations
varies by the various jurisdictions in which we operate. In any
given year, the statute of limitations in certain jurisdictions may
lapse without examination and any uncertain tax position taken in
those years will result in reduction of the liability for
unrecognized tax benefits for that year. The difference between our
forecasted effective tax rate and the federal statutory rate of 35%
is primarily due to the differential in foreign tax rates and the
utilization of U.S. federal tax credits.
For
the three and nine months ended October 31, 2010, the Company
recorded an income tax provision of $1.9 million on a loss before
tax of $3.2 million and an income tax benefit of $1.7 million on
income before tax of $17.2 million, respectively. For the three
months ended October 31, 2010, the income tax provision was due to
the adjustment during the second quarter of fiscal 2011 to reflect
the lower forecasted profit before tax for the fiscal year 2011.
The Company estimates its annual effective tax rate for the year
and applies that rate to the year to date profit before tax to
determine the quarterly and year to date tax expense or benefit.
The income tax benefit recorded for the nine months ended October
31, 2010 includes the second quarter benefit resulting from the
change in lower forecasted fiscal 2011 profit before tax as well as
the benefit in the first quarter associated with the gain on the
sale of the Company’s equity investment in Casa Systems, Inc.
in the first quarter and the benefit from the decrease of a portion
of the valuation allowance against its deferred tax assets due to
the Company having met the “more likely than not”
realization criteria on its U.S. deferred tax assets as of October
31, 2010.
The
effective income tax rate 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, resolution of tax audits or
other tax contingencies. Our income tax provision or benefit
consists of federal, foreign, and state income taxes.
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