INCOME TAXES (Tables)

12 Months Ended

Jul. 31, 2013

Schedule of reconciliation of effective income tax rate from continuing operations

The effective income tax rate from continuing operations varies from the federal statutory rate of 35 percent as follows (in thousands):

	Year Ended July 31,

	2013			2012			2011
Federal income tax expense (benefit) at statutory rate	$	4,177		$	(8,936	)	$	(38,750	)
State income taxes, net of federal benefit		858			(2,767	)		(4,250	)
Tax on repatriation of foreign earnings		3,954			5,950			14,099
Foreign tax rate changes and differential(a)		577			225			(1,274	)
Change in valuation allowance		(6,977	)		2,285			44,406
Depreciation and amortization adjustment(b)		—			—			(8,512	)
Other		(665	)		4,608			(4,162	)

Income tax expense	$	1,924		$	1,365		$	1,557

Effective income tax rate		16.1	%		(5.3	)%		(1.4	)%

(a): For the past three years, Canada has reduced both its federal statutory and provincial tax rates. In fiscal year 2012, Puerto Rico reduced its federal statutory tax rate. Foreign tax rate differential represents the difference between the statutory tax rate in the U.S. and the statutory tax rates in Canada and Puerto Rico.
(b): The $8.5 million adjustment in fiscal year 2011 was fully offset with a valuation allowance, resulting in no impact to the consolidated statement of operations.

Schedule of provision for income tax from continuing operations

The provision for income taxes from continuing operations consists of the following (in thousands):

	Year Ended July 31,

	2013			2012			2011
Current income tax expense (benefit):
Federal	$	232		$	349		$	(9,628	)
Foreign		1,131			664			5,003
State		(604	)		(1,206	)		910

Total current income tax expense (benefit)		759			(193	)		(3,715	)

Deferred income tax expense:
Federal		102			(166	)		5,114
Foreign		986			1,675			159
State		77			49			(1	)

Total deferred income tax expense		1,165			1,558			5,272

	$	1,924		$	1,365		$	1,557

Schedule of significant components of the deferred tax assets and deferred tax liabilities

Tax effects of temporary differences that give rise to significant components of the deferred tax assets and deferred tax liabilities at July 31, 2013 and 2012, respectively, are as follows (in thousands):

	Year Ended July 31,

	2013			2012
Assets:
Accrued liabilities	$	78,754		$	84,515
Inventory reserves		7,220			7,083
Deferred income		14,033			—
Net operating loss carryforward		100,407			120,277
Stock-based compensation		7,067			7,160
Investments in subsidiaries		3,177			1,752
Foreign tax credits		13,978			12,609
Property and equipment		9,355			9,326
Other		2,854			5,986

Total deferred tax assets		236,845			248,708
Valuation allowances		(92,149	)		(98,995	)

Total deferred tax assets, net	$	144,696		$	149,713

Liabilities:
Merchandise inventories, principally due to LIFO reserve	$	(129,273	)	$	(119,256	)
Undistributed earnings		—			(13,973	)
Goodwill		(13,869	)		(13,941	)
Other		(3,963	)		(3,853	)

Total deferred tax liabilities		(147,105	)		(151,023	)

Deferred tax liabilities, net	$	(2,409	)	$	(1,310	)

Deferred tax assets and liabilities in the accompanying consolidated balance sheets

Deferred tax assets and liabilities in the accompanying consolidated balance sheets are as follows (in thousands):

	Year Ended July 31,

	2013			2012
Other current assets	$	3,495		$	4,150
Deferred tax asset		107,110			96,929
Deferred tax liability		(107,016	)		(96,662	)
Other liabilities		(5,998	)		(5,727	)

Deferred tax liabilities, net	$	(2,409	)	$	(1,310	)

Schedule of reconciliation of the beginning and ending balance of unrecognized tax benefits

A reconciliation of the fiscal year 2013 beginning and ending balance of unrecognized tax benefits is as follows (in thousands):

	Unrecognized Tax Benefits

Balance at July 31, 2012	$	3,631
Additions based on tax positions related to prior years		555
Settlements with tax authorities		(341	)
Expiration of statute of limitations		(331	)

Balance at July 31, 2013	$	3,514