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, 2014, 2013 and 2012.



	2014			2013			2012
Unrecognized tax benefits at December 1,	$	2,155		$	2,209		$	3,015
Additions for current period tax positions	465			668			382
Reductions for current period tax positions	—			—			(37		)
Additions for prior period tax positions	40			—			—
Reductions for prior period tax positions	—			(40		)	(631		)
Reductions for lapse of statute of limitations/settlements	(240		)	(431		)	(460		)
Changes in interest and penalties	67			(251		)	(60		)
Unrecognized tax benefits at November 30,	$	2,487		$	2,155		$	2,209

At November 30, 2014 and 2013, the amount of unrecognized tax benefit, that would impact the effective tax rate if recognized, was $1,555 and $1,354, respectively. As of November 30, 2014 and 2013, the Company had $273 and $221, 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, 2014, will decrease by $253 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 2015; 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 2010 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 2009 and earlier.

The provision for income taxes consisted of:



	2014			2013			2012
Current:
Federal	$	56,764		$	34,414		$	37,673
State	4,760			2,918			2,484
Foreign	10,112			9,096			10,228
Deferred:
Federal	(4,102		)	8,676			8,763
State	(359		)	(165		)	805
Foreign	205			1,011			(296		)
	$	67,380		$	55,950		$	59,657

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



	2014		2013		2012
Domestic income	$	166,101	$	141,224	$	145,433
Foreign income	45,462		33,076		37,564
	$	211,563	$	174,300	$	182,997

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
	2014		2013		2012
Statutory U.S. tax rates	35.0	%	35.0	%	35.0	%
State income taxes, net of federal benefit	1.3		1.0		1.4
Tax credits	(0.2	)	(0.6	)	(0.1	)
Foreign taxes at different rates, net of credits	(2.3	)	(1.6	)	(2.0	)
Domestic production activities deduction	(2.7	)	(2.2	)	(2.6	)
Other, net	0.7		0.5		0.9
	31.8	%	32.1	%	32.6	%

The components of the net deferred tax liability as of November 30, 2014 and 2013 were as follows:



	2014			2013
Deferred tax assets:
Deferred compensation	$	9,074		$	7,945
Loss carryforward and tax credit items	19,620			2,529
Accounts receivable	6,538			5,973
Inventories	5,484			5,000
Pensions	10,019			4,781
Accrued liabilities and other	6,999			1,219
Valuation allowance	(1,268		)	(1,102		)
Total deferred tax assets, net	56,466			26,345
Deferred tax liabilities:
Percentage of completion	(740		)	(539		)
Plant assets	(24,818		)	(24,182		)
Goodwill and acquired intangible assets	(97,179		)	(40,380		)
Other deferred tax liabilities	(230		)	(345		)
Total deferred tax liabilities	(122,967		)	(65,446		)
Deferred tax liability, net	$	(66,501	)	$	(39,101	)

The Company acquired approximately $45,500 of federal net operating loss carryforwards and $1,700 of general business credit carryforwards with the acquisitions of the Stanadyne Business on May 1, 2014. These acquired balances are estimated pending completion and filing of the federal tax returns of Stanadyne Corporation with respect to the pre-acquisition period. Such filings are expected to be completed in January 2015. The utilization of the acquired federal loss carryforwards are subject to annual limitations of approximately $20,000 based on restrictions under Section 382 of the Internal Revenue Code. As such, the Company has approximately $33,833 of federal loss carryforwards and all of the federal credit carryforwards remaining as of November 30, 2014, which will expire in 2031 through 2033. The remaining balance of deferred tax asset for loss carryforwards and tax credits available as of November 30, 2014 consists of foreign and state amounts, of which $1,319 expires in 2015 through 2029 and $4,748 may be carried over indefinitely.

The Company increased the valuation allowance by $166 in 2014 and decreased the valuation allowance by $809 in 2013 related to the generation and utilization of foreign and state net operating losses and tax credit carryovers respectively. The valuation allowance release in 2013 included a state valuation release due to cash contributions related to pension benefits paid in 2013 under the Company's U.S. combined nonqualified pension plan to our former Executive Chairman, who retired from the Company at the end of 2012. The valuation allowance reflects the estimated amount of deferred tax assets due to 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 $17, $54, and $54, respectively, of accumulated foreign earnings in 2014, 2013, and 2012 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 $203,656 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.