Income Taxes

The components of income (loss) from continuing operations before income taxes are as follows:



	Years Ended November 30,
	2016		2015			2014
	(Dollars in millions)
Income (Loss) from Continuing Operations Before Income Taxes
U.S.	$	1.5	$	(11.2	)	$	(1.7	)
Foreign	8.4		(9.9		)	13.4
	$	9.9	$	(21.1	)	$	11.7

Note E—Income Taxes (Continued)



	Years Ended November 30,
	2016			2015			2014
	(Dollars in millions)
Income Tax (Expense) Benefit
Current
U.S. Federal	$	(.6	)	$	(.6	)	$	—
U.S. State and Local	(.2		)	(.2		)	(.2		)
Foreign	(4.3		)	(2.7		)	(4.5		)
	(5.1		)	(3.5		)	(4.7		)
Deferred
U.S. Federal	(2.4		)	4.0			5.6
U.S. State and Local	(.5		)	(.2		)	(.3		)
Foreign	(2.3		)	2.1			(.2		)
	(5.2		)	5.9			5.1
Income Tax (Expense) Benefit	$	(10.3	)	$	2.4		$	0.4



	Years Ended November 30,
	2016		2015		2014
Effective Income Tax Rate
Tax at Federal statutory rate	35.0	%	35.0	%	35.0	%
Valuation allowance (reversal)	18.8		(2.6	)	(49.7	)
Foreign taxes at different rates	(10.5	)	14.8		(22.5	)
Permanent items	(2.7	)	.9		4.3
U.S. tax on foreign dividends	22.2		—		10.8
Non-deductible executive compensation	.2		(1.0	)	2.4
Changes in deferred taxes	(.5	)	.1		6.6
Uncertain tax positions	1.5		4.3		—
State and local taxes	7.0		(2.0	)	4.2
Foreign withholding tax	6.5		(3.3	)	5.5
Non-deductible impairment	—		(29.3	)	—
Tax credits	—		—		(3.0	)
Foreign non-deductible interest	6.6		(4.4	)	2.4
French business tax	4.6		(2.0	)	(2.5	)
French Legislation change	16.1		—		—
Other, net	(.8	)	.9		3.1
Effective Income Tax Rate	104.0	%	11.4	%	(3.4	)%

As of November 30, 2016, the Company’s effective tax rate was an expense of 104.0% on global pretax income of $9.9 million. The 2016 effective tax rate was higher than the statutory income tax rate of 35% primarily as a result of a 22.2% tax expense related to the payment of an intercompany dividend and a 16.1% tax expense related to a newly enacted French deemed distribution tax. The intercompany dividend and the enactment of the French deemed distribution tax were both fourth quarter events. Neither item had a current year cash tax impact. It is also expected that the $1.6 million tax expense related to the French deemed distribution tax legislation will reverse in the first quarter of 2017 as the law was repealed in late December of 2016. An 18.8% tax expense was also recorded for foreign valuation allowances on deferred tax assets in which no benefit can be realized. In addition, the Company realized a 10.5% tax benefit related to foreign taxes in jurisdictions in which the tax rate is lower than the US federal statutory rate.

Note E—Income Taxes (Continued)

Deferred Taxes



	November 30,
	2016					2015
(Dollars in millions)	Assets			Liabilities		Assets			Liabilities
Accrued estimated costs	$	10.6		$	—	$	9.2		$	—
Goodwill and intangible assets	—			21.6		—			22.6
Depreciation	—			12.0		—			14.0
Pension	30.2			—		30.8			—
NOLC’s and other carryforwards	51.7			—		56.6			—
Post-retirement employee benefits	4.3			—		4.5			—
Other	6.2			—		4.0			—
Valuation allowance	(14.1		)	—		(10.2		)	—
Deferred Taxes	$	88.9		$	33.6	$	94.9		$	36.6

As of November 30, 2016, the Company had approximately $92.0 million of U.S. federal net operating loss carryforwards (NOLCs), $108.7 million of state and local NOLCs, $0.1 million of foreign tax credit carryforwards, and $0.7 million of AMT credit carryforwards. The $108.7 million of state and local NOLCs have a realizable deferred tax asset value of $3.8 million. The Company utilized approximately $15.5 million and $7.8 million of federal net operating loss carryforwards for the years ended November 30, 2016 and 2015, respectively. The majority of the federal, state and local NOLCs will expire in tax years 2021 through 2034 while the foreign tax credit carryforwards will expire in the tax years 2017 through 2022. As of November 30, 2016, the Company had approximately $49.2 million of foreign NOLCs of which $39.9 million have an indefinite carryforward period. Of the $39.9 million foreign NOLCs which have an indefinite carryforward period, $32.0 million have a valuation allowance provided against them as the Company does not anticipate utilizing these carryforwards. Cash paid for income taxes in 2016, 2015, and 2014 was $4.2 million, $3.8 million and $3.9 million, respectively, and related primarily to state and foreign income taxes.

The total unrecognized tax benefits are $0.3 million at November 30, 2016. There were no unrecognized tax positions at November 30, 2015. There were minimal interest and penalties recognized in the statement of financial position at November 30, 2016 and none recognized during November 30, 2015. Of the total $0.3 million of unrecognized tax benefits at November 30, 2016, $0.1 million would, if recognized, impact the Company's effective tax rate. The amount of unrecognized tax benefits which impacted the Company's effective tax rate in 2015 was $0.6 million and there were no unrecognized tax benefits that impacted the Company's effective tax rate in 2014.

A reconciliation of the beginning and ending amounts of unrecognized tax benefits, excluding interest and penalties is as follows:



	Years Ended November 30,
	2016		2015			2014
	(Dollars in millions)
Opening balance December 1	$	—	$	.6		$	.8
Increase based on tax positions related to current year	.3		—			—
Reduction due to lapse of statute of limitations	—		(.6		)	(.2		)
Ending balance November 30	$	.3	$	—		$	.6

Interest and penalties related to unrecognized tax benefits are recognized as a component of income tax expense. For the year 2016, the Company recognized minimal income tax expense related to interest and penalties. The Company recognized a $0.4 million income tax benefit related to interest and penalties in 2015 and no income tax expense related to interest and penalties in 2014.

With limited exceptions, the Company is no longer open to audit under the statutes of limitation by the Internal Revenue Service and various states and foreign taxing jurisdictions for years prior to 2011.