Note O – Income Taxes

The effective tax rate for the three months and six months ended January 31, 2012 was 29.6 percent and 27.3 percent, respectively. The effective tax rate for the three months and six months ended January 31, 2011 was 34.4 percent and 30.2 percent, respectively. The three months ended January 31, 2011, included a $4.0 million charge related to the reorganization of the Company's subsidiary holdings to improve the its global business and legal entity structure, partially offset by $0.9 million in tax benefits primarily from the retroactive reinstatement of the Research and Experimentation Credit in the United States. Both the current year and prior year's six month period include tax benefits due to favorable settlements of tax audits of $4.3 million and $2.7 million, respectively. Without consideration of discrete items, the estimated annual effective tax rate of 30.3 percent is higher than the prior year rate of 29.9 percent mainly due to the mix of earnings between tax jurisdictions.

The Company's uncertain tax positions are affected by the tax years that are under audit or remain subject to examination by the relevant taxing authorities. The following tax years, in addition to the current year, remain subject to examination, at least for certain issues, by the major tax jurisdictions indicated:


Major Jurisdictions		Open Tax Years
Belgium		2010 through 2011
China		2001 through 2010
France		2009 through 2011
Germany		2009 through 2011
Italy		2003 through 2011
Japan		2009 through 2011
Mexico		2006 through 2010
Thailand		2005 through 2011
United Kingdom		2010 through 2011
United States		2008, 2011

At January 31, 2012, the total unrecognized tax benefits were $17.3 million, and accrued interest and penalties on these unrecognized tax benefits were $1.4 million. The Company recognizes interest accrued related to unrecognized tax benefits in income tax expense. If the Company were to prevail on all unrecognized tax benefits recorded, substantially all of the unrecognized tax benefits would benefit the effective tax rate. With an average statute of limitations of about 5 years, up to $3.4 million of the unrecognized tax benefits could potentially reverse in the next 12 month period, unless extended by audit. It is possible that quicker than expected settlement of either current or future audits and disputes would cause additional reversals of previously recorded reserves in the next 12 month period. Currently, the Company has approximately $0.2 million of unrecognized tax benefits that are in dispute with various taxing authorities related to transfer pricing and deductibility of expenses. Quantification of an estimated range and timing of future audit settlements cannot be made at this time.