Income Taxes

The effective tax rate for the Company’s continuing operations for the three months ended November 30, 2016 was a benefit of 8.6%, compared to a benefit of 10.5% for the three months ended November 30, 2015.

A reconciliation of the difference between the federal statutory rate and the Company’s effective rate is as follows:



	Three Months Ended November 30,
	2016		2015
Federal statutory rate	35.0	%	35.0	%
State taxes, net of credits	2.1		0.8
Foreign income taxed at different rates	(3.4	)	(9.1	)
Non-deductible officers’ compensation	2.7		1.5
Noncontrolling interests	(4.4	)	(3.9	)
Research and development credits	(1.4	)	(0.2	)
Valuation allowance on deferred tax assets	(25.0	)	(16.4	)
Unrecognized tax benefits	1.9		1.2
Other non-deductible expenses	1.3		2.1
Other	(0.2	)	(0.5	)
Effective tax rate	8.6	%	10.5	%

The effective tax rate from continuing operations for the first quarter of fiscal 2017 and 2016 was lower than the federal statutory rate of 35% primarily due to the low projected annual effective tax rate applied to the quarterly results. The low projected annual effective tax rate is the result of the Company’s full valuation allowance positions partially offset by increases in deferred tax liabilities from indefinite-lived assets in all jurisdictions.

The Company files federal and state income tax returns in the U.S. and foreign tax returns in Puerto Rico and Canada. For U.S. federal income tax returns, fiscal years 2012 to 2016 remain subject to examination under the statute of limitations. The Company's U.S. federal income tax return for fiscal 2015 is currently under examination.