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Income Taxes. The Company evaluates its deferred income taxes on a quarterly basis to determine if valuation allowances are required, in full or in part. This includes considering available positive and negative evidence, such as past operating results, the existence of cumulative losses in the most recent fiscal years and our forecast of future taxable income on a jurisdiction-by-jurisdiction basis. In determining future taxable income, we review the reversal of temporary differences and the implementation of feasible and prudent tax planning strategies. At May 31, 2013, MSC had a valuation allowance relating to certain state net operating losses.

The Company estimates that it is reasonably possible that the total amount of unrecognized tax benefits of $0.5 million at May 31, 2013, will significantly change during the next 12 months. The estimated range is zero to a decrease of $0.2 million.

For the three months ended May 31, 2013, MSC’s effective income tax rate for continuing operations was a benefit of 5.3%, compared with an expense of 35.3% in the same period last year. The lower rate in the period ended May 31, 2013, is primarily due to filing amended tax returns to claim foreign tax credits.