(Loss) earnings from continuing operations consists of the following:



	Years Ended July 31,
	2013			2012		2011
United States	$	(144,941	)	$	44,713	$	27,742
Other Nations	46,195			94,711		99,882
Total	$	(98,746	)	$	139,424	$	127,624

Income taxes consist of the following:



	Years Ended July 31,
	2013			2012			2011
Current income tax expense:
United States	$	64		$	9,606		$	4,937
Other Nations	19,282			34,739			24,492
States (U.S.)	1,094			2,287			399
	$	20,440		$	46,632		$	29,828
Deferred income tax (benefit) expense:
United States	22,882			(1,480		)	(6,058		)
Other Nations	(806		)	(7,325		)	(2,849		)
States (U.S.)	(446		)	(874		)	746
	$	21,630		$	(9,679	)	$	(8,161	)
Total	$	42,070		$	36,953		$	21,667

Deferred income taxes result from temporary differences in the recognition of revenues and expenses for financial statement and income tax purposes.

The approximate tax effects of temporary differences are as follows:



	July 31, 2013
	Assets			Liabilities			Total
Inventories	$	5,880		$	(280	)	$	5,600
Prepaid catalog costs	9			(2,407		)	(2,398		)
Employee benefits	1,973			(5		)	1,968
Accounts receivable	1,292			(63		)	1,229
Other, net	9,721			(4,684		)	5,037
Current	$	18,875		$	(7,439	)	$	11,436
Fixed Assets	2,717			(4,811		)	(2,094		)
Intangible Assets	1,705			(54,008		)	(52,303		)
Capitalized R&D expenditures	1,755			—			1,755
Deferred compensation	24,565			—			24,565
Postretirement benefits	7,220			—			7,220
Tax credit carry-forwards and net operating losses	62,199			(125		)	62,074
Less valuation allowance	(37,142		)	—			(37,142		)
Other, net	109			(8,952		)	(8,843		)
Noncurrent	$	63,128		$	(67,896	)	$	(4,768	)
Total	$	82,003		$	(75,335	)	$	6,668



	July 31, 2012
	Assets			Liabilities			Total
Inventories	$	4,984		$	(4	)	$	4,980
Prepaid catalog costs	13			(3,520		)	(3,507		)
Employee benefits	2,980			(4		)	2,976
Accounts receivable	1,370			(11		)	1,359
Other, net	7,267			(3,221		)	4,046
Current	$	16,614		$	(6,760	)	$	9,854
Fixed Assets	2,146			(5,703		)	(3,557		)
Intangible Assets	1,885			(39,561		)	(37,676		)
Capitalized R&D expenditures	2,047			—			2,047
Deferred compensation	27,122			—			27,122
Postretirement benefits	7,429			—			7,429
Tax credit carry-forwards and net operating losses	68,148			—			68,148
Less valuation allowance	(25,847		)	—			(25,847		)
Other, net	156			(7,146		)	(6,990		)
Noncurrent	$	83,086		$	(52,410	)	$	30,676
Total	$	99,700		$	(59,170	)	$	40,530

Tax loss carry-forwards at July 31, 2013 are comprised of:


•	Foreign net operating loss carry-forwards of $124,325, of which $99,666 have no expiration date and the remainder of which expire within the next five to eight years.


•	State net operating loss carry-forwards of $58,827, which expire from 2014 to 2033.


•	Foreign tax credit carry-forwards of $12,486, which expire from 2021 to 2023.


•	State research and development credit carry-forwards of $8,531, which expire from 2014 to 2028.

The valuation allowance increased by $11,295 during the fiscal year ended July 31, 2013 mainly due to additional valuation allowances for Wuxi, Shenzhen, and Brazil. The valuation allowance decreased by $1,629 during the fiscal year ended July 31, 2012. If realized or reversed in future periods, substantially all of the valuation allowance would impact the income tax rate.

Rate Reconciliation

A reconciliation of the tax computed by applying the statutory U.S. federal income tax rate to earnings (loss) from continuing operations before income taxes to the total income tax expense is as follows:



	Years Ended July 31,
	2013		2012		2011
Tax at statutory rate	35.0	%	35.0	%	35.0	%
Goodwill impairment	(53.4	)%	—	%	—	%
State income taxes, net of federal tax benefit	(0.2	)%	0.1	%	—	%
International rate differential	(2.7	)%	(6.5	)%	(13.3	)%
Non-creditable withholding taxes	(1.5	)%	2.3	%	0.9	%
Rate variances arising from foreign subsidiary distributions	(25.3	)%	(6.5	)%	(7.4	)%
Adjustments to tax accruals and reserves	1.0	%	7.5	%	4.3	%
Research and development tax credits and section 199 manufacturer’s deduction	3.1	%	(1.0	)%	(1.2	)%
Foreign tax credit carryforward adjustments	2.4	%	(3.4	)%	—	%
Other, net	(1.0	)%	(1.0	)%	(1.3	)%
Effective tax rate	(42.6	)%	26.5	%	17.0	%

The Company is eligible for tax holidays on the earnings of certain subsidiaries. The benefits realized as a result of these tax holidays reduced the consolidated effective tax rate by approximately 0.7%, 0.7%, and 0.9% during the years ended July 31, 2013, 2012, and 2011, respectively. These tax holidays are fully expired as of July 31, 2013.

Uncertain Tax Positions

On August 1, 2007, the Company adopted guidance regarding uncertain tax positions. The guidance requires application of a “more likely than not” threshold to the recognition and de-recognition of tax positions.

A reconciliation of unrecognized tax benefits (excluding interest and penalties) is as follows:



Balance at July 31, 2010	$	17,668

Additions based on tax positions related to the current year	5,147
Additions for tax positions of prior years	2,387
Reductions for tax positions of prior years	(291		)
Lapse of statute of limitations	(2,803		)
Settlements with tax authorities	(728		)
Cumulative Translation Adjustments and other	963

Balance at July 31, 2011	$	22,343

Additions based on tax positions related to the current year	6,983
Additions for tax positions of prior years	9,460
Reductions for tax positions of prior years	—
Lapse of statute of limitations	(949		)
Settlements with tax authorities	—
Cumulative Translation Adjustments and other	(1,305		)

Balance at July 31, 2012	$	36,532

Additions based on tax positions related to the current year	4,015
Additions for tax positions of prior years (1)	2,809
Reductions for tax positions of prior years	—
Lapse of statute of limitations	(5,613		)
Settlements with tax authorities	(590		)
Cumulative Translation Adjustments and other	422

Balance at July 31, 2013	$	37,575


(1)	Includes acquisitions

Approximately $32,339 of unrecognized tax benefits, if recognized, would affect the Company's effective income tax rate. The Company has classified $32,759 and $29,765, excluding interest and penalties, of the reserve for uncertain tax positions in Other Liabilities on the Consolidated Balance Sheet as of July 31, 2013 and 2012, respectively. The Company has classified $4,815, excluding interest and penalties, as a reduction of long-term deferred income tax assets on the Consolidated Balance Sheet as of July 31, 2013.

The Company recognizes interest and penalties related to unrecognized tax benefits within the provision for income taxes on the consolidated statements of income.

Interest expense is recognized on the amount of potentially underpaid taxes associated with the Company's tax positions, beginning in the first period in which interest starts accruing under the respective tax law and continuing until the tax positions are settled. During the years ended July 31, 2013, 2012, and 2011, the Company recognized a $200, and $539 increase in interest expense, and a $990 decrease in interest expense, as well as $313, $855 and $500 of penalties, respectively, related to the reserve for uncertain tax positions. These amounts are net of reversals due to reductions for tax positions of prior years, statute of limitations, and settlements. At July 31, 2013 and 2012, the Company had $2,265 and $1,986, respectively, accrued for interest on unrecognized tax benefits. Penalties are accrued if the tax position does not meet the minimum statutory threshold to avoid the payment of a penalty.

At July 31, 2013 and 2012, the Company had $2,689 and $2,840, respectively, accrued for penalties on unrecognized tax benefits.

The Company estimates that it is reasonably possible that the unrecognized tax benefits may be reduced by $13,934 within twelve months as a result of the resolution of worldwide tax matters, tax audit settlements, amended tax filings, and/or statute expirations. The maximum amount that would be recognized through the consolidated statements of earnings as expense is $3,978.

During the year ended July 31, 2013, the Company recognized tax benefits associated with the lapse of statutes of limitations.

The Company and its subsidiaries file income tax returns in the U.S., various state, and foreign jurisdictions. The following table summarizes the open tax years for the Company's major jurisdictions:



Jurisdiction		Open Tax Years
United States — Federal		F’10 — F’13
France		F’12 — F’13
Germany		F’06 — F’13
United Kingdom		F’10 — F’13

Unremitted Earnings

The Company does not provide for U.S. deferred taxes on cumulative earnings of non-U.S. affiliates and associated companies that have been reinvested indefinitely. These earnings relate to ongoing operations and at July 31, 2013, were approximately $425,743. These earnings have been reinvested in non-U.S. business operations, and the Company does not intend to repatriate these earnings to fund U.S. operations. It is impracticable to determine the income tax liability that would be payable if such earnings were not indefinitely reinvested.