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Income Taxes | 12 Months Ended
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Jul. 31, 2015
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes Earnings (loss) from continuing operations consists of the following:
|  | Years Ended July 31,
|  | 2015 |  | 2014 |  | 2013
United States |  | $ | (582 | ) |  | $ | (134,596 | ) |  | $ | (144,941 | )
Other Nations |  | 25,577 |  |  | 81,487 |  |  | 49,267 |
Total |  | $ | 24,995 |  |  | $ | (53,109 | ) |  | $ | (95,674 | )
Income tax expense (benefit) from continuing operations consists of the following:
|  | Years Ended July 31,
|  | 2015 |  | 2014 |  | 2013
Current income tax expense: |  |  |  |  |  |
United States |  | $ | 9,075 |  |  | $ | (1,137 | ) |  | $ | 64 |
Other Nations |  | 18,806 |  |  | 19,513 |  |  | 19,795 |
States (U.S.) |  | (352 | ) |  | 1,090 |  |  | 1,094 |
|  | $ | 27,529 |  |  | $ | 19,466 |  |  | $ | 20,953 |
Deferred income tax expense (benefit): |  |  |  |  |  |
United States |  | $ | (5,906 | ) |  | $ | (22,754 | ) |  | $ | 22,882 |
Other Nations |  | (1,868 | ) |  | (1,803 | ) |  | (806 | )
States (U.S.) |  | 338 |  |  | 128 |  |  | (446 | )
|  | $ | (7,436 | ) |  | $ | (24,429 | ) |  | $ | 21,630 |
Total income tax expense (benefit) |  | $ | 20,093 |  |  | $ | (4,963 | ) |  | $ | 42,583 |
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, 2015
|  | Assets |  | Liabilities |  | Total
Inventories |  | $ | 4,387 |  |  | $ | (197 | ) |  | $ | 4,190 |
Prepaid catalog costs |  | — |  |  | (2,179 | ) |  | (2,179 | )
Employee benefits |  | 1,612 |  |  | — |  |  | 1,612 |
Accounts receivable |  | 1,136 |  |  | (14 | ) |  | 1,122 |
Other, net |  | 8,524 |  |  | (1,510 | ) |  | 7,014 |
Current |  | $ | 15,659 |  |  | $ | (3,900 | ) |  | $ | 11,759 |
Fixed Assets |  | 3,344 |  |  | (3,213 | ) |  | 131 |
Intangible Assets |  | 1,242 |  |  | (26,570 | ) |  | (25,328 | )
Capitalized R&D expenditures |  | 1,140 |  |  | — |  |  | 1,140 |
Deferred compensation |  | 19,549 |  |  | — |  |  | 19,549 |
Postretirement benefits |  | 3,563 |  |  | — |  |  | 3,563 |
Tax credit carry-forwards and net operating losses |  | 66,744 |  |  | — |  |  | 66,744 |
Less valuation allowance |  | (39,922 | ) |  | — |  |  | (39,922 | )
Other, net |  | 1,014 |  |  | (10,965 | ) |  | (9,951 | )
Non-current |  | $ | 56,674 |  |  | $ | (40,748 | ) |  | $ | 15,926 |
Total |  | $ | 72,333 |  |  | $ | (44,648 | ) |  | $ | 27,685 |
|  | 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 |
Tax loss carry-forwards at July 31, 2015 are comprised of:
• | Foreign net operating loss carry-forwards of $126,293, of which $92,250 have no expiration date and the remainder of which expire within the next five to eight years.
• | State net operating loss carry-forwards of $54,731, which expire from 2016 to 2034.
• | Foreign tax credit carry-forwards of $22,812, which expire from 2018 to 2025.
• | State research and development credit carry-forwards of $11,178, which expire from 2016 to 2030.
The valuation allowance increased by $2,513 during the fiscal year ended July 31, 2015 mainly due to increased valuation allowances against state tax credit carry-forwards and increased valuation allowances in certain jurisdictions, including Brazil, China, Sweden, and the United Kingdom. These increases were primarily offset by reductions in the tax rates applied to valuation allowances in the United Kingdom. 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. 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,
|  | 2015 |  | 2014 |  | 2013
Tax at statutory rate |  | 35.0 | % |  | 35.0 | % |  | 35.0 | %
Impairment charges (1) |  | 55.8 | % |  | (40.3 | )% |  | (53.4 | )%
State income taxes, net of federal tax benefit (2) |  | 1.6 | % |  | (1.1 | )% |  | (0.2 | )%
International rate differential |  | (2.2 | )% |  | (1.3 | )% |  | (4.6 | )%
Non-creditable withholding taxes |  | — | % |  | — | % |  | (1.5 | )%
Rate variances arising from foreign subsidiary distributions |  | (0.3 | )% |  | (7.5 | )% |  | (25.3 | )%
Adjustments to tax accruals and reserves (3) |  | 17.8 | % |  | 25.5 | % |  | 1.0 | %
Research and development tax credits and section 199 manufacturer’s deduction |  | (3.9 | )% |  | 3.6 | % |  | 3.1 | %
Non-deductible divestiture fees and account write-offs |  | (4.8 | )% |  | (5.2 | )% |  | — | %
Deferred tax and other adjustments (4) |  | (21.1 | )% |  | 0.7 | % |  | 2.4 | %
Other, net |  | 2.5 | % |  | (0.1 | )% |  | (1.0 | )%
Effective tax rate |  | 80.4 | % |  | 9.3 | % |  | (44.5 | )%
(1) | $39.8 million of the total impairment charge of $46.9 million recorded during the year ended July 31, 2015 is nondeductible for income tax purposes. $61.1 million of the total impairment charge of $148.6 million million recorded during the year ended July 31, 2014 is nondeductible for income tax purposes. $168.9 million of the total impairment charge of $204.4 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 $4.5 million of current year uncertain tax positions and the reduction of uncertain tax positions resulting from the settlement of certain domestic and foreign income tax audits and lapses in statutes of limitations during the years ended July 31, 2015, 2014, and 2013.
(4) | Includes an additional $1.0 million of federal research and development credit carry-forwards due to re-enacted law and an additional $5.0 million foreign tax credit carryforward included on the fiscal 2014 U.S. tax return.
In fiscal 2013, 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 income tax rate by approximately 0.7% in fiscal 2013. The Company did not benefit from any significant tax holidays in fiscal 2015 or fiscal 2014. 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, 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 |
Additions based on tax positions related to the current year | 5,862 |
Additions for tax positions of prior years | — |
Reductions for tax positions of prior years | (280 | )
Lapse of statute of limitations | (805 | )
Settlements with tax authorities | (221 | )
Cumulative Translation Adjustments and other | (1,272 | )
Balance as of July 31, 2015 | $ | 21,133 |
(1) | Includes acquisitions
The $21,133 of unrecognized tax benefits, if recognized, would affect the Company's effective income tax rate. The Company has classified $15,402 and $11,357, excluding interest and penalties, of the reserve for uncertain tax positions in Other Liabilities on the Consolidated Balance Sheets as of July 31, 2015 and 2014, respectively. The Company has classified $5,731 and $6,492, excluding interest and penalties, as a reduction of long-term deferred income tax assets on the Consolidated Balance Sheets as of July 31, 2015 and 2014, 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 decreases of $157 and $498, and an increase of $200 in interest expense during the years ended July 31, 2015, 2014, and 2013, respectively. There was no change to the reserve for uncertain tax positions for penalties during the year ended July 31, 2015 and there were increases of $25 and $313 of penalties related to the reserve during the years ended July 31, 2014, and 2013, respectively. These amounts are net of reversals due to reductions for tax positions of prior years, statute of limitations, and settlements. At July 31, 2015 and 2014, the Company had $1,531 and $1,739, 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, 2015 and 2014, the Company had $2,664 accrued for penalties on unrecognized tax benefits. The Company estimates that it is reasonably possible that the unrecognized tax benefits may be reduced by $6,809 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 $6,809. During the year ended July 31, 2015, the Company recognized $905 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’15
France |  | F’12 — F’15
Germany |  | F’09 — F’15
United Kingdom |  | F’14 — F’15
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, 2015, were approximately $353,300. 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 not practicable to determine the income tax liability that would be payable if such earnings were not indefinitely reinvested. At July 31, 2015, $95,983 of the total $114,492 in cash and cash equivalents was held outside of the U.S.

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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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