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Income Taxes
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9 Months Ended |
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May 31, 2012
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| Income Taxes |
Note 10. 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, state tax rates and our 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 was 16.1% and 20.9% for the three and nine months ended May 31, 2012, respectively, and 23.0% and 22.0% for the comparable prior year periods. The decrease in the effective tax rate for the three and nine months ended May 31, 2012, relative to the prior year, reflects the benefit of foreign tax credits, favorable tax reserve adjustments as a result of the lapsing of various tax statutes of limitations, the utilization of net operating losses and the tax benefit on the debt refinancing charges (Note 7, “Debt”) being recognized at the U.S. statutory rates (which are higher than the Company’s consolidated global effective tax rate). The gross liability for unrecognized tax benefits, excluding interest and penalties, decreased from $26.2 million at August 31, 2011 to $24.2 million at May 31, 2012. Substantially all of these unrecognized tax benefits, if recognized, would reduce the effective income tax rate. In addition, as of August 31, 2011 and May 31, 2012, the Company had liabilities totaling $5.1 million and $4.4 million, respectively, for estimated interest and penalties related to its unrecognized tax benefits. |