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, 2013, 2012 and 2011.



	2013			2012			2011
Unrecognized tax benefits at December 1,	$	2,209		$	3,015		$	2,783
Additions for current period tax positions	668			382			591
Reductions for current period tax positions	—			(37		)	—
Additions for prior period tax positions	—			—			—
Reductions for prior period tax positions	(40		)	(631		)	(193		)
Reductions for lapse of statue of limitations/settlements	(431		)	(460		)	(203		)
Changes in interest and penalties	(251		)	(60		)	37
Unrecognized tax benefits at November 30,	$	2,155		$	2,209		$	3,015

At November 30, 2013 and 2012, the amount of unrecognized tax benefit, that would impact the effective tax rate if recognized, was $1,354 and $1,533, respectively. As of November 30, 2013 and 2012, the Company had $221 and $445, 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, 2013, will decrease by $163 over the next twelve months as a result of expected settlements with taxing authorities. 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 2014; however, the amount cannot be estimated.

The Company is regularly audited by federal, state and foreign tax authorities. The Internal Revenue Service has completed its audits of the Company’s U.S. income tax returns through fiscal year 2009. With few exceptions, the Company is no longer subject to income tax examinations by state or foreign tax jurisdictions for years prior to 2008.

The provision for income taxes consisted of:



	2013			2012			2011
Current:
Federal	$	34,414		$	37,673		$	34,374
State	2,918			2,484			1,558
Foreign	9,096			10,228			11,784
Deferred:
Federal	8,676			8,763			9,196
State	(165		)	805			1,086
Foreign	1,011			(296		)	(1,051		)
	$	55,950		$	59,657		$	56,947

Earnings before income taxes and noncontrolling interests included the following components:



	2013		2012		2011
Domestic income	$	141,224	$	145,433	$	139,840
Foreign income	33,076		37,564		41,468
	$	174,300	$	182,997	$	181,308

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
	2013		2012		2011
Statutory U.S. tax rates	35.0	%	35.0	%	35.0	%
State income taxes, net of federal benefit	1.0		1.4		1.3
Tax credits	(0.6	)	(0.1	)	(0.7	)
Foreign taxes at different rates, net of credits	(1.6	)	(2.0	)	(2.5	)
Domestic production activities deduction	(2.2	)	(2.6	)	(2.4	)
Other, net	0.5		0.9		0.7
	32.1	%	32.6	%	31.4	%

The components of the net deferred tax liability as of November 30, 2013 and 2012 were as follows:



	2013			2012
Deferred tax assets:
Deferred compensation	$	7,945		$	9,925
Loss carryforward and tax credit items	2,529			2,603
Accounts receivable	5,973			5,911
Inventories	5,000			5,062
Pensions	4,781			26,222
Accrued liabilities and other	1,219			1,403
Valuation allowance	(1,102		)	(1,911		)
Total deferred tax assets, net	26,345			49,215
Deferred tax liabilities:
Percentage of completion	(539		)	(366		)
Plant assets	(24,182		)	(25,708		)
Goodwill and acquired intangible assets	(40,380		)	(39,431		)
Other deferred tax liabilities	(345		)	(402		)
Total deferred tax liabilities	(65,446		)	(65,907		)
Deferred tax liability, net	$	(39,101	)	$	(16,692	)

Of the foreign and state loss carryforwards and foreign and state tax credit items, $1,699 expires in 2014 through 2029 and $830 may be carried over indefinitely.

The Company decreased the valuation allowance by $809 and $48, respectively in 2013 and 2012 related to foreign and state net operating losses and foreign and state tax credit carryovers. The state valuation allowance was released due to the large cash payout for prior executive pension plans. The valuation allowance reflects the estimated amount of deferred tax assets due to foreign net operating losses 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 $54, $54, and $21, respectively, of accumulated foreign earnings in 2013, 2012, and 2011 related to one foreign subsidiary paying a dividend to another foreign subsidiary in those years. For the Company’s other foreign subsidiaries, the Company has not provided deferred taxes on unremitted foreign earnings from certain foreign affiliates of approximately $172,450 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.