v3.6.0.2

Income Taxes | 12 Months Ended
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Dec. 03, 2016
Income Tax Disclosure [Abstract] |
Income Taxes | INCOME TAXES The following is a reconciliation of the beginning and ending amount of gross unrecognized tax benefits for uncertain tax positions, including positions which impact only the timing of tax benefits for the years ended November 30, 2016, 2015 and 2014.
| 2016 |  | 2015 |  | 2014
Unrecognized tax benefits at December 1, | $ | 3,859 |  |  | $ | 2,487 |  |  | $ | 2,155 |
Additions for current period tax positions | 571 |  |  | 388 |  |  | 465 |
Additions related to acquired tax positions | — |  |  | 1,052 |  |  | — |
Additions for prior period tax positions | — |  |  | 321 |  |  | 40 |
Reductions for prior period tax positions | — |  |  | — |  |  | — |
Reductions for lapse of statute of limitations/settlements | (420 | ) |  | (401 | ) |  | (240 | )
Changes in interest and penalties | 64 |  |  | 12 |  |  | 67 |
Unrecognized tax benefits at November 30, | $ | 4,074 |  |  | $ | 3,859 |  |  | $ | 2,487 |
At November 30, 2016 and 2015, the amount of unrecognized tax benefit, that would impact the effective tax rate if recognized, was $3,117 and $2,797, respectively. As of November 30, 2016 and 2015, the Company had $323 and $281, respectively, accrued for the payment of interest and penalties. The Company believes it is reasonably possible that the total amount of unrecognized tax benefits as of November 30, 2016, will decrease by $286 over the next twelve months as a result of expected settlements with taxing authorities or the lapse of the statute of limitations in certain jurisdictions. Due to the various jurisdictions in which the Company files tax returns and the uncertainty regarding the timing of settlements it is possible that there could be other significant changes in the amount of unrecognized tax benefits in fiscal year 2017; however, the amount cannot be estimated. The Company is regularly audited by federal, state and foreign tax authorities. The Company's Federal tax returns for fiscal years 2013 and later remain open to examination by the Internal Revenue Service. With few exceptions, the Company is no longer subject to income tax examinations by state or foreign tax jurisdictions for fiscal years 2011 and earlier. The provision for income taxes consisted of:
| 2016 |  | 2015 |  | 2014
Current: |  |  |  |  |
Federal | $ | 34,323 |  |  | $ | 51,116 |  |  | $ | 56,764 |
State | 4,070 |  |  | 5,515 |  |  | 4,760 |
Foreign | 9,780 |  |  | 10,209 |  |  | 10,112 |
Deferred: |  |  |  |  |  |  |  |
Federal | 11,965 |  |  | (1,923 | ) |  | (4,102 | )
State | (1,283 | ) |  | (1,051 | ) |  | (359 | )
Foreign | 3,361 |  |  | (814 | ) |  | 205 |
| $ | 62,216 |  |  | $ | 63,052 |  |  | $ | 67,380 |
Earnings before income taxes and noncontrolling interests included the following components:
| 2016 |  | 2015 |  | 2014
Domestic income | $ | 151,921 |  |  | $ | 160,287 |  |  | $ | 166,101 |
Foreign income | 49,685 |  |  | 37,678 |  |  | 45,462 |
| $ | 201,606 |  |  | $ | 197,965 |  |  | $ | 211,563 |
The provision for income taxes resulted in effective tax rates that differ from the statutory federal income tax rates. The reasons for these differences are as follows:
| Percent of Pre-Tax Earnings
| 2016 |  | 2015 |  | 2014
Statutory U.S. tax rates | 35.0 | % |  | 35.0 | % |  | 35.0 | %
State income taxes, net of federal benefit | 0.7 |  |  | 1.3 |  |  | 1.3 |
Tax credits | (1.0 | ) |  | (0.7 | ) |  | (0.2 | )
Foreign taxes at different rates, net of credits | (2.4 | ) |  | (1.9 | ) |  | (2.3 | )
Domestic production activities deduction | (2.1 | ) |  | (2.8 | ) |  | (2.7 | )
Other, net | 0.7 |  |  | 1.0 |  |  | 0.7 |
| 30.9 | % |  | 31.9 | % |  | 31.8 | %
Our effective tax rate in 2016 was 30.9% compared with 31.9% in 2015. This decrease was primarily driven by a change in assertion on the permanent reinvestment of foreign earnings in the current year as well as the favorable impact of the renewed research and development tax credit during the current year, partially offset by the non-deductibility of certain transaction costs related to the pending Parker-Hannifin transaction. The components of the net deferred tax liability as of November 30, 2016 and 2015 were as follows:
| 2016 |  | 2015 |  | 2014
Deferred tax assets: |  |  |  |  |
Deferred compensation | $ | 8,335 |  |  | $ | 11,294 |  |  | $ | 9,074 |
Loss carryforward and tax credit items | 22,834 |  |  | 30,507 |  |  | 19,620 |
Accounts receivable | 6,245 |  |  | 7,842 |  |  | 6,538 |
Inventories | 6,397 |  |  | 6,390 |  |  | 5,484 |
Pensions | 11,604 |  |  | 9,619 |  |  | 10,019 |
Accrued liabilities and other | 6,665 |  |  | 7,427 |  |  | 6,999 |
Valuation allowance | (10,497 | ) |  | (10,855 | ) |  | (1,268 | )
Total deferred tax assets, net | 51,583 |  |  | 62,224 |  |  | 56,466 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Percentage of completion | (524 | ) |  | (1,866 | ) |  | (740 | )
Plant assets | (28,845 | ) |  | (22,615 | ) |  | (24,818 | )
Goodwill and acquired intangible assets | (93,907 | ) |  | (98,713 | ) |  | (97,179 | )
Other deferred tax liabilities | (297 | ) |  | (287 | ) |  | (230 | )
Total deferred tax liabilities | (123,573 | ) |  | (123,481 | ) |  | (122,967 | )
Deferred tax liability, net | $ | (71,990 | ) |  | $ | (61,257 | ) |  | $ | (66,501 | )
The Company acquired approximately $70,220 of federal net operating loss carryforwards and $2,365 of general business credit carryforwards with the acquisition of the Stanadyne Business on May 1, 2014. The utilization of the acquired federal loss carryforwards is subject to annual limitations of approximately $21,000 based on restrictions under Section 382 of the Internal Revenue Code. As such, the Company has approximately $16,151 of federal loss carryforwards and all of the federal credit carryforwards remaining as of November 30, 2016, which will expire in 2031 through 2033. The Company also acquired approximately $26,685 of capital loss carryforwards, of which $25,071 are remaining as of November 30, 2016 and which are subject to a full valuation allowance as the Company does not anticipate that such carryforwards will be utilized prior to their expiration in 2018. The remaining balance of deferred tax asset for loss carryforwards and tax credits available as of November 30, 2016 consists of U.S. foreign tax credit carryforwards as well as foreign and state loss and credit carryforward amounts, of which $2,268 expires in 2017 through 2029 and $3,802 may be carried over indefinitely. The Company decreased the valuation allowance by $358 in 2016 and increased the valuation allowance by $9,587 in 2015 and by $166 in 2014. The decrease during the current year reflects partial utilization of federal capital loss carryforwards, partially offset by the generation of foreign loss carryforwards that are not expected to be utilized. This net decrease during 2016 was all recorded through income tax expense during the year. The valuation allowance increase in 2015 was primarily generated by the capital loss carryforwards acquired and finalized from the pre-acquisition filings of the Stanadyne Business. As such, $9,340 of the increase in the valuation allowance in 2015 was recorded as part of the finalization of purchase accounting for the Stanadyne business, with the remainder of the change in valuation allowance during 2015 recorded through income tax expense. The valuation allowance reflects the estimated amount of deferred tax assets due to federal capital loss carryforwards, foreign net operating losses and other foreign and state temporary differences that may not be realized. The Company expects to realize the remaining deferred tax assets through the reversal of taxable temporary differences and future earnings. The Company repatriated $23,100, $26, and $17, respectively, of accumulated foreign earnings in 2016, 2015, and 2014. In June of 2016, management reversed its permanent reinvestment assertion with respect to the amount of foreign earnings that have already been subject to U.S. tax under the Subpart F rules of the Internal Revenue Code. This reconsideration was based on a number of factors, including the receipt of foreign withholding tax exemptions based on legal entity restructuring that the Company had undertaken in the prior year, the potential impact that recently finalized debt-equity tax regulations in the U.S. may have on the ability to repatriate earnings in the future, and consideration of the uncertainty with respect to the volatility of foreign currencies, particularly with the vote by the United Kingdom to leave the European Union. Based on this analysis, the Company repatriated $23,100 of previously taxed foreign earnings during the current year and has approximately $4,500 of previously taxed earnings remaining in foreign jurisdictions which may be repatriated in the future. The change in assertion for these foreign earnings resulted in a tax benefit of approximately $1,176 that was recorded in 2016 based on the cumulative foreign exchange movement for these earnings in prior periods. All current and future tax impacts of foreign exchange adjustments to these earnings will be recorded as a cumulative translation adjustment on an ongoing basis. The Company continues to reinvest its remaining foreign earnings that have not been subject to US taxation in overseas operations for an indefinite duration and utilizes such earnings for continued growth and expansion in existing or new markets. As such, the Company has not provided deferred taxes on unremitted foreign earnings from certain foreign affiliates of approximately $227,805 that are intended to be indefinitely reinvested to finance operations and expansion outside the United States. If such earnings were distributed beyond the amount for which taxes have been provided, foreign tax credits could offset in part any incremental U.S. tax liability. Determination of the unrecognized deferred taxes related to these undistributed earnings is not practicable.

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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=65882285&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=65882285&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=65882285&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=65882285&loc=d3e32537-109319 + Details
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