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Income Taxes
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9 Months Ended |
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May 31, 2013
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| Income Tax Disclosure [Abstract] | |
| Income Taxes |
Income Taxes
The Company's income tax expense is impacted by a number of factors, including the amount of taxable earnings derived in foreign jurisdictions with tax rates that are higher or lower than the U.S. Federal statutory rate, permanent items, tax reserve adjustments, state tax rates and the ability to utilize various tax credits and net operating loss carryforwards.
The Company adjusts the quarterly provision for income taxes based on the estimated annual effective income tax rate and facts and circumstances known at each interim reporting period. The effective income tax rate from continuing operations was 7.7% and 12.5% for the three and nine months ended May 31, 2013, respectively, and 13.8% and 19.8% for the comparable prior year periods. The decrease in the effective tax rate relative to the prior year, reflects the benefits of tax minimization planning, the utilization of net operating losses and discrete items. Income tax expense for the third quarter of fiscal 2013 included discrete period income tax benefits related to provision to income tax return adjustments of $0.7 million and a $9.3 million reversal of tax reserves established in prior years (as a result of the lapsing of non-U.S. income tax statues of limitations), while the prior year period included a $6.3 million discrete income tax benefit associated with the debt refinancing charge (see Note 7, "Debt").
The gross liability for unrecognized tax benefits, excluding interest and penalties, decreased from $24.6 million at August 31, 2012 to $18.2 million at May 31, 2013. Substantially all of these unrecognized tax benefits, if recognized, would reduce the effective income tax rate. In addition, as of May 31, 2013 and August 31, 2012, the Company had liabilities totaling $2.8 million and $4.5 million, respectively, for the payment of interest and penalties related to its unrecognized income tax benefits.
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