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Income Taxes | 12 Months Ended
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Jul. 31, 2015
Income Tax Disclosure [Abstract] |
Income Taxes | NOTE J Income Taxes The components of earnings before income taxes are as follows:
|  | 2015 |  |  | 2014 |  |  | 2013 |
|  | (thousands of dollars) |
Earnings before income taxes: |  |  |  |  |  |  |  |  |  |  |  |
United States |  | $ | 92,362 |  |  | $ | 131,396 |  |  | $ | 147,317 |
Foreign |  |  | 196,241 |  |  |  | 229,307 |  |  |  | 200,864 |
Total |  | $ | 288,603 |  |  | $ | 360,703 |  |  | $ | 348,181 |
The components of the provision for income taxes are as follows:
|  | 2015 |  |  | 2014 |  |  | 2013 |
|  | (thousands of dollars) |
Income taxes: |  |  |  |  |  |  |  |  |  |  |  |
Current |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 28,482 |  |  | $ | 48,981 |  |  | $ | 35,820 |
State |  |  | 2,956 |  |  |  | 4,724 |  |  |  | 4,337 |
Foreign |  |  | 54,665 |  |  |  | 54,536 |  |  |  | 52,300 |
|  |  | 86,103 |  |  |  | 108,241 |  |  |  | 92,457 |
Deferred |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | (4,232 | ) |  |  | (9,465 | ) |  |  | 7,071 |
State |  |  | 94 |  |  |  | 365 |  |  |  | 312 |
Foreign |  |  | (1,473 | ) |  |  | 1,338 |  |  |  | 964 |
|  |  | (5,611 | ) |  |  | (7,762 | ) |  |  | 8,347 |
Total |  | $ | 80,492 |  |  | $ | 100,479 |  |  | $ | 100,804 |
The following table reconciles the U.S. statutory income tax rate with the effective income tax rate:
|  | 2015 |  | 2014 |  | 2013
Statutory U.S. federal rate |  |  | 35.0 | % |  |  | 35.0 | % |  |  | 35.0 | %
State income taxes |  |  | 0.9 | % |  |  | 1.1 | % |  |  | 1.2 | %
Foreign operations |  |  | (7.9 | )% |  |  | (6.1 | )% |  |  | (6.3 | )%
Export, manufacturing, and research credits |  |  | (1.1 | )% |  |  | (0.8 | )% |  |  | (1.5 | )%
Change in unrecognized tax benefits |  |  | 1.3 |  |  |  | (1.1 | )% |  |  | 0.5 | %
Other |  |  | (0.3 | )% |  |  | (0.2 | )% |  |  | 0.1 | %
|  |  | 27.9 | % |  |  | 27.9 | % |  |  | 29.0 | %
The tax effects of temporary differences that give rise to deferred tax assets and liabilities are as follows:
|  | 2015 |  |  | 2014 |
|  | (thousands of dollars) |
Deferred tax assets: |  |  |  |  |  |  |  |
Accrued expenses |  | $ | 10,566 |  |  | $ | 11,118 |
Compensation and retirement plans |  |  | 39,090 |  |  |  | 32,317 |
NOL and tax credit carryforwards |  |  | 4,353 |  |  |  | 3,471 |
LIFO and inventory reserves |  |  | 6,891 |  |  |  | 5,482 |
Other |  |  | 4,993 |  |  |  | 4,470 |
Deferred tax assets, gross |  |  | 65,893 |  |  |  | 56,858 |
Valuation allowance |  |  | (2,737 | ) |  |  | (3,471 | )
Net deferred tax assets |  |  | 63,156 |  |  |  | 53,387 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Depreciation and amortization |  |  | (50,628 | ) |  |  | (49,901 | )
Other |  |  | (2,359 | ) |  |  | (1,025 | )
Deferred tax liabilities |  |  | (52,987 | ) |  |  | (50,926 | )
Prepaid tax assets |  |  | 4,421 |  |  |  | 4,392 |
Net tax asset |  | $ | 14,590 |  |  | $ | 6,853 |
Deferred income tax assets on the face of the balance sheet include $4.4 million and $4.4 million of prepaid tax assets related to intercompany transfers of inventory as of July 31, 2015 and 2014, respectively. The effective tax rate for Fiscal 2015 was 27.9 percent compared to 27.9 percent in Fiscal 2014. The effective tax rate in the current year was favorably impacted by the reinstatement of the Research and Experimentation Credit in the U.S., non-recurring tax costs associated with foreign dividend distributions recorded during the prior year, and an increase in tax benefits from international operations. The effective tax rate in the prior year was favorably impacted by the settlement of a tax audit and the remeasurement of certain deferred tax assets due to a change in tax rates in certain foreign jurisdictions. The Company has not provided for U.S. income taxes on additional undistributed earnings of non-U.S. subsidiaries of approximately $938.0 million. The Company currently intends to indefinitely reinvest these undistributed earnings as there are significant investment opportunities outside the U.S. or to repatriate the earnings only when it is tax effective to do so. If any portion were to be distributed, the related U.S. tax liability may be reduced by foreign income taxes paid on those earnings plus any available foreign tax credit carryovers. Determination of the unrecognized deferred tax liability related to these undistributed earnings is not practicable. In Fiscal 2015, the Company repatriated $125.0 million of cash held by its foreign subsidiaries in the form of a cash dividend, which represented total planned dividends for the current year. The Company maintains a reserve for uncertain tax benefits. The accounting standard defines the threshold for recognizing the benefits of tax return positions in the financial statements as “more-likely-than-not” to be sustained by the taxing authorities based solely on the technical merits of the position. If the recognition threshold is met, the tax benefit is measured and recognized as the largest amount of tax benefit that in the Company’s judgment is greater than 50 percent likely to be realized. A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows:
|  | 2015 |  |  | 2014 |  |  | 2013 |
|  | (thousands of dollars) |
Gross unrecognized tax benefits at beginning of fiscal year |  | $ | 15,005 |  |  | $ | 18,419 |  |  | $ | 16,514 |
Additions for tax positions of the current year |  |  | 4,660 |  |  |  | 2,959 |  |  |  | 5,453 |
Additions for tax positions of prior years |  |  | 100 |  |  |  | 1,706 |  |  |  | 407 |
Reductions for tax positions of prior years |  |  | (608 | ) |  |  | (7,113 | ) |  |  | (1,640 | )
Settlements |  |  | — |  |  |  | (240 | ) |  |  | (277 | )
Reductions due to lapse of applicable statute of limitations |  |  | (970 | ) |  |  | (726 | ) |  |  | (2,038 | )
Gross unrecognized tax benefits at end of fiscal year |  | $ | 18,187 |  |  | $ | 15,005 |  |  | $ | 18,419 |
The Company recognizes interest and penalties accrued related to unrecognized tax benefits in income tax expense. During the fiscal year ended July 31, 2015, the Company recognized interest expense, net of tax benefit, of approximately $0.4 million. At July 31, 2015, and July 31, 2014, accrued interest and penalties on a gross basis were $1.8 million and $1.7 million, respectively. The Company files income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. With few exceptions, the Company is no longer subject to state and foreign income tax examinations by tax authorities for years before 2008. The IRS has completed examinations of the Company’s U.S. federal income tax returns through 2012. If the Company were to prevail on all unrecognized tax benefits recorded, substantially all of the unrecognized tax benefits would benefit the effective tax rate. With an average statute of limitations of about 5 years, up to $1.1 million of the unrecognized tax benefits could potentially expire in the next 12 month period, unless extended by audit. It is possible that quicker than expected settlement of either current, or future audits and disputes would cause additional reversals of previously recorded reserves in the next 12 month period. Quantification of an estimated range and timing of future audit settlements cannot be made at this time.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 + Details
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