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Income Taxes
6 Months Ended
May 31, 2014
Income Tax Disclosure [Abstract]  
Income Taxes
Income Taxes
The Company recorded income tax expense of $1.5 million and $1.3 million for the second quarters of 2014 and 2013, respectively, and income tax expense of $2.5 million and $1.9 million for the six months ended May 31, 2014 and 2013, respectively. The Company’s first half 2014 effective tax rate of 32.5% was lower than its U.S. federal statutory rate primarily due to income in foreign jurisdictions where the statutory tax rate is less than the U.S. federal statutory rate.
The total unrecognized tax benefits excluding interest and penalties were $0.6 million and $0.8 million at May 31, 2014 and November 30, 2013, respectively . The total amount of penalties and interest recognized in the statement of financial position was $0.4 million as of both May 31, 2014 and November 30, 2013.
Interest and penalties related to unrecognized tax benefits are recorded as a component of income tax expense. During the first halves of 2014 and 2013, the Company did not recognize any expense related to interest or penalties.
During the next twelve months, due to the expiration of open statutes of limitations, the Company’s unrecognized tax benefits, excluding interest and penalties, are expected to decrease by $0.6 million. Of the $0.6 million unrecognized tax benefit that is reasonably expected to decrease during the next twelve months, the entire amount would, if recognized, impact the Company’s effective rate. It is also possible that additional unrecognized tax benefits could arise during the next twelve months that would change such estimate.
As of November 30, 2013, the Company had approximately $113.6 million of U.S. federal net operating loss carryforwards (NOLCs), $108.9 million of state and local NOLCs, $0.4 million of foreign tax credit carryforwards and $0.2 million of AMT credit carryforwards. The majority of the federal, state and local NOLCs expire in the tax years 2022 through 2033 while the foreign tax credit carryforwards expire between tax years 2014 and 2022. The Company has approximately $19.6 million of U.S. capital loss carryforwards, which are expected to expire by the tax year 2017. The Company has provided a valuation allowance against the capital loss carryforwards as the Company does not expect to utilize the carryforwards before the expiration period. As of November 30, 2013, the Company had approximately $32.1 million of foreign NOLCs of which $23.7 million have an indefinite carryforward period. Of the $23.7 million foreign NOLCs which have an indefinite carryforward period, $21.6 million have a valuation allowance provided against them, as the Company does not expect to utilize the carryforwards in the foreseeable future.
With limited exceptions, the Company is no longer open to audit by the Internal Revenue Service and various states and foreign taxing jurisdictions for years prior to 2008.