In 2005, we applied the intrinsic value based method of accounting for stock options under APB No. 25. Accordingly, no compensation expense was recognized for these stock options since all options granted have an exercise price equal to the market value of the underlying stock on the grant date. If compensation expense had been recognized based on the estimate of the fair value of each option granted in accordance with the provisions of SFAS No. 123 and SFAS No. 148, our net income would have been reduced to the following pro forma amounts:

    Pro forma compensation expense recognized under SFAS No. 123 did not consider potential forfeitures and amortizes the compensation expense for retiree eligible individuals over the vesting period without considering the acceleration of vesting for retirement eligible employees. These computational differences and the differences in the terms and nature of 2007 and 2006 stock-based compensation awards create incomparability between the pro forma stock compensation presented above and the stock compensation recognized in 2007 and 2006.

10. INCOME TAXES
The provision for income taxes consists of the following:

    The components of income from consolidated operations before income taxes follow:

    A reconciliation of the U.S. federal statutory rate with the effective tax rate follows:

    Deferred tax assets and liabilities are comprised of the following:

    At November 30, 2007, our non-U.S. subsidiaries have tax loss carryforwards of $16.3 million. Of these carryforwards, $0.4 million expire through 2011, $6.2 million through 2021 and $9.7 million may be carried forward indefinitely. The current statutory rates in these countries range from 25.5% to 34%.
    At November 30, 2007, our non-U.S. subsidiaries have capital loss carryforwards of $14.8 million. Of these carryforwards, $2.2 million expire in 2009 and $12.6 million