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Income Taxes | 12 Months Ended
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Jul. 31, 2014
Income Tax Disclosure [Abstract] |
Income Taxes | (Loss) earnings from continuing operations consists of the following:
|  | Years Ended July 31,
|  | 2014 |  | 2013 |  | 2012
United States |  | $ | (134,596 | ) |  | $ | (144,941 | ) |  | $ | 44,713 |
Other Nations |  | 81,487 |  |  | 49,267 |  |  | 95,942 |
Total |  | $ | (53,109 | ) |  | $ | (95,674 | ) |  | $ | 140,655 |
Income tax (benefit) expense from continuing operations consists of the following:
|  | Years Ended July 31,
|  | 2014 |  | 2013 |  | 2012
Current income tax expense: |  |  |  |  |  |
United States |  | $ | (1,137 | ) |  | $ | 64 |  |  | $ | 9,606 |
Other Nations |  | 19,513 |  |  | 19,795 |  |  | 34,948 |
States (U.S.) |  | 1,090 |  |  | 1,094 |  |  | 2,287 |
|  | $ | 19,466 |  |  | $ | 20,953 |  |  | $ | 46,841 |
Deferred income tax (benefit) expense: |  |  |  |  |  |
United States |  | $ | (22,754 | ) |  | $ | 22,882 |  |  | $ | (1,480 | )
Other Nations |  | (1,803 | ) |  | (806 | ) |  | (7,325 | )
States (U.S.) |  | 128 |  |  | (446 | ) |  | (874 | )
|  | $ | (24,429 | ) |  | $ | 21,630 |  |  | $ | (9,679 | )
Total |  | $ | (4,963 | ) |  | $ | 42,583 |  |  | $ | 37,162 |
Deferred income taxes result from temporary differences in the recognition of revenues and expenses for financial statement and income tax purposes. The approximate tax effects of temporary differences are as follows:
|  | July 31, 2014
|  | Assets |  | Liabilities |  | Total
Inventories |  | $ | 5,460 |  |  | $ | (126 | ) |  | $ | 5,334 |
Prepaid catalog costs |  | 30 |  |  | (3,180 | ) |  | (3,150 | )
Employee benefits |  | 1,533 |  |  | (27 | ) |  | 1,506 |
Accounts receivable |  | 852 |  |  | (9 | ) |  | 843 |
Other, net |  | 8,700 |  |  | (1,015 | ) |  | 7,685 |
Current |  | $ | 16,575 |  |  | $ | (4,357 | ) |  | $ | 12,218 |
Fixed Assets |  | 2,431 |  |  | (4,587 | ) |  | (2,156 | )
Intangible Assets |  | 1,706 |  |  | (27,381 | ) |  | (25,675 | )
Capitalized R&D expenditures |  | 1,425 |  |  | — |  |  | 1,425 |
Deferred compensation |  | 21,733 |  |  | — |  |  | 21,733 |
Postretirement benefits |  | 5,002 |  |  | (4 | ) |  | 4,998 |
Tax credit carry-forwards and net operating losses |  | 58,870 |  |  | — |  |  | 58,870 |
Less valuation allowance |  | (37,409 | ) |  | — |  |  | (37,409 | )
Other, net |  | 1,411 |  |  | (6,499 | ) |  | (5,088 | )
Non-current |  | $ | 55,169 |  |  | $ | (38,471 | ) |  | $ | 16,698 |
Total |  | $ | 71,744 |  |  | $ | (42,828 | ) |  | $ | 28,916 |
|  | July 31, 2013
|  | Assets |  | Liabilities |  | Total
Inventories |  | $ | 5,880 |  |  | $ | (280 | ) |  | $ | 5,600 |
Prepaid catalog costs |  | 9 |  |  | (2,407 | ) |  | (2,398 | )
Employee benefits |  | 1,973 |  |  | (5 | ) |  | 1,968 |
Accounts receivable |  | 1,292 |  |  | (63 | ) |  | 1,229 |
Other, net |  | 9,721 |  |  | (4,684 | ) |  | 5,037 |
Current |  | $ | 18,875 |  |  | $ | (7,439 | ) |  | $ | 11,436 |
Fixed Assets |  | 2,717 |  |  | (4,811 | ) |  | (2,094 | )
Intangible Assets |  | 1,705 |  |  | (54,008 | ) |  | (52,303 | )
Capitalized R&D expenditures |  | 1,755 |  |  | — |  |  | 1,755 |
Deferred compensation |  | 24,565 |  |  | — |  |  | 24,565 |
Postretirement benefits |  | 7,220 |  |  | — |  |  | 7,220 |
Tax credit carry-forwards and net operating losses |  | 62,199 |  |  | (125 | ) |  | 62,074 |
Less valuation allowance |  | (37,142 | ) |  | — |  |  | (37,142 | )
Other, net |  | 109 |  |  | (8,952 | ) |  | (8,843 | )
Non-current |  | $ | 63,128 |  |  | $ | (67,896 | ) |  | $ | (4,768 | )
Total |  | $ | 82,003 |  |  | $ | (75,335 | ) |  | $ | 6,668 |
Tax loss carry-forwards at July 31, 2014 are comprised of:
• | Foreign net operating loss carry-forwards of $114,219, of which $88,297 have no expiration date and the remainder of which expire within the next five to eight years.
• | State net operating loss carry-forwards of $59,349, which expire from 2015 to 2033.
• | Foreign tax credit carry-forwards of $14,812, which expire from 2018 to 2024.
• | State research and development credit carry-forwards of $10,731, which expire from 2015 to 2029.
The valuation allowance increased by $267 during the fiscal year ended July 31, 2014 mainly due to increased valuation allowances against state tax credit carry-forwards and increased valuation allowances in certain jurisdictions, including Brazil, Shenzhen, and Langfang. These increases were primarily offset by reductions in the tax rates applied to valuation allowances in Sweden and the United Kingdom. The valuation allowance increased by $11,295 during the fiscal year ended July 31, 2013 mainly due to additional valuation allowances for Wuxi, Shenzhen, and Brazil. If realized or reversed in future periods, substantially all of the valuation allowance would impact the income tax rate. Rate Reconciliation A reconciliation of the tax computed by applying the statutory U.S. federal income tax rate to earnings (loss) from continuing operations before income taxes to the total income tax expense is as follows:
|  | Years Ended July 31,
|  | 2014 |  | 2013 |  | 2012
Tax at statutory rate |  | 35.0 | % |  | 35.0 | % |  | 35.0 | %
Goodwill impairment (1) |  | (40.3 | )% |  | (53.4 | )% |  | — | %
State income taxes, net of federal tax benefit (2) |  | (1.1 | )% |  | (0.2 | )% |  | 0.1 | %
International rate differential |  | (1.3 | )% |  | (4.6 | )% |  | (6.6 | )%
Non-creditable withholding taxes |  | — | % |  | (1.5 | )% |  | 2.3 | %
Rate variances arising from foreign subsidiary distributions |  | (7.5 | )% |  | (25.3 | )% |  | (6.5 | )%
Adjustments to tax accruals and reserves (3) |  | 25.5 | % |  | 1.0 | % |  | 7.5 | %
Research and development tax credits and section 199 manufacturer’s deduction |  | 3.6 | % |  | 3.1 | % |  | (1.0 | )%
Non-deductible divestiture fees and account write-offs |  | (5.2 | )% |  | — | % |  | — | %
Deferred tax and other adjustments |  | 0.7 | % |  | 2.4 | % |  | (3.4 | )%
Other, net |  | (0.1 | )% |  | (1.0 | )% |  | (1.0 | )%
Effective tax rate |  | 9.3 | % |  | (44.5 | )% |  | 26.4 | %
(1) | $61.1 million of the total goodwill impairment of $100.4 million recorded during the year ended July 31, 2014 is nondeductible for income tax purposes. $168.9 million of the total goodwill impairment of $190.5 million recorded during the year ended July 31, 2013 is nondeductible for income tax purposes.
(2) | Includes a $3.1 million increase in valuation allowances against certain state tax credit carry-forwards during the year ended July 31, 2014.
(3) | Includes the reduction of uncertain tax positions resulting from the settlement of certain domestic and foreign income tax audits during the year ended July 31, 2014.
In fiscal 2013 and 2012, the Company was eligible for tax holidays on the earnings of certain subsidiaries. The benefits realized as a result of these tax holidays reduced the consolidated effective tax rate by approximately 0.7% in both fiscal 2013 and 2012. Remaining tax holidays as of July 31, 2014 are not significant. Uncertain Tax Positions The Company follows the guidance in ASC 740, "Income Taxes" regarding uncertain tax positions. The guidance requires application of a “more likely than not” threshold to the recognition and de-recognition of tax positions. A reconciliation of unrecognized tax benefits (excluding interest and penalties) is as follows:
Balance at July 31, 2011 | $ | 22,343 |
Additions based on tax positions related to the current year | 6,983 |
Additions for tax positions of prior years | 9,460 |
Reductions for tax positions of prior years | — |
Lapse of statute of limitations | (949 | )
Settlements with tax authorities | — |
Cumulative Translation Adjustments and other | (1,305 | )
Balance as of July 31, 2012 | $ | 36,532 |
Additions based on tax positions related to the current year | 4,015 |
Additions for tax positions of prior years (1) | 2,809 |
Reductions for tax positions of prior years | — |
Lapse of statute of limitations | (5,613 | )
Settlements with tax authorities | (590 | )
Cumulative Translation Adjustments and other | 422 |
Balance as of July 31, 2013 | $ | 37,575 |
Additions based on tax positions related to the current year | 4,596 |
Additions for tax positions of prior years | — |
Reductions for tax positions of prior years | (14,569 | )
Lapse of statute of limitations | (3,711 | )
Settlements with tax authorities | (5,832 | )
Cumulative Translation Adjustments and other | (210 | )
Balance as of July 31, 2014 | $ | 17,849 |
(1) | Includes acquisitions
The $17,849 of unrecognized tax benefits, if recognized, would affect the Company's effective income tax rate. The Company has classified $11,357 and $32,759, excluding interest and penalties, of the reserve for uncertain tax positions in Other Liabilities on the Consolidated Balance Sheets as of July 31, 2014 and 2013, respectively. The Company has classified $6,492 and $4,816, excluding interest and penalties, as a reduction of long-term deferred income tax assets on the Consolidated Balance Sheets as of July 31, 2014 and 2013, respectively. The Company recognizes interest and penalties related to unrecognized tax benefits within the provision for income taxes on the consolidated statements of earnings. Interest expense is recognized on the amount of potentially underpaid taxes associated with the Company's tax positions, beginning in the first period in which interest starts accruing under the respective tax law and continuing until the tax positions are settled. The Company recognized a decrease of $498, and an increase of $200 and $539 in interest expense during the years ended July 31, 2014, 2013, and 2012, respectively. There were increases of $25, $313 and $855 of penalties related to the reserve for uncertain tax positions during the yeas ended July 31, 2014, 2013 and 2012, respectively. These amounts are net of reversals due to reductions for tax positions of prior years, statute of limitations, and settlements. At July 31, 2014 and 2013, the Company had $1,739 and $2,265, respectively, accrued for interest on unrecognized tax benefits. Penalties are accrued if the tax position does not meet the minimum statutory threshold to avoid the payment of a penalty. At July 31, 2014 and 2013, the Company had $2,664 and $2,689, respectively, accrued for penalties on unrecognized tax benefits. The Company estimates that it is reasonably possible that the unrecognized tax benefits may be reduced by $688 within twelve months as a result of the resolution of worldwide tax matters, tax audit settlements, amended tax filings, and/or statute expirations. The maximum amount that would be recognized through the consolidated statements of earnings as an income tax benefit is $688. During the year ended July 31, 2014, the Company recognized $4,111 of tax benefits (including interest and penalties) associated with the lapse of statutes of limitations. The Company and its subsidiaries file income tax returns in the U.S., various state, and foreign jurisdictions. The following table summarizes the open tax years for the Company's major jurisdictions:
Jurisdiction |  | Open Tax Years
United States — Federal |  | F’13 — F’14
France |  | F’13 — F’14
Germany |  | F’09 — F’14
United Kingdom |  | F’11 — F’14
Unremitted Earnings The Company does not provide for U.S. deferred taxes on cumulative earnings of non-U.S. affiliates and associated companies that have been reinvested indefinitely. These earnings relate to ongoing operations and at July 31, 2014, were approximately $433,382. These earnings have been reinvested in non-U.S. business operations, and the Company does not intend to repatriate these earnings to fund U.S. operations. It is impracticable to determine the income tax liability that would be payable if such earnings were not indefinitely reinvested.

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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 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 2: 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 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 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 FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319 + Details
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