Income Taxes
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9 Months Ended |
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May 31, 2012
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Income Tax Disclosure [Abstract] | |
Income taxes | NOTE 11 — INCOME TAXES The Company’s effective income tax rate for continuing operations for the three and nine months ended May 31, 2012 was 16.1% and (61.1)%, respectively, and for the three and nine months ended May 31, 2011 was 24.5% and 25.6%, respectively. The effective tax rate from discontinued operations for the three and nine months ended May 31, 2012 was 33.4% and 35.6%, respectively, and for the three and nine months ended May 31, 2011 was 6.1% and 0.9%, respectively. The Company recorded a tax benefit of $11.5 million during the three months ended May 31, 2012 related to federal and state research and development tax credits for fiscal years 2008 through 2011. During the nine months ended May 31, 2012, the Company also recognized a tax loss in the amount of $291 million related to its investments in its Croatian subsidiary. As a result, a tax benefit of $102 million was recorded from these losses in continuing operations for the nine month period ended May 31, 2012. The Company will report and disclose the losses on these investments on its U.S. tax return as ordinary worthless stock and bad debt deductions. These tax benefits are the primary reason for the variance from the statutory tax rate of 35%. The Company made net payments of $17.2 million and had net refunds of $72.9 million for income taxes during the nine months ended May 31, 2012 and 2011, respectively. The reserve for unrecognized tax benefits relating to the accounting for uncertainty in income taxes was $20.7 million and $10.8 million, exclusive of interest and penalties, as of May 31, 2012 and August 31, 2011, respectively. The Company’s policy classifies interest recognized on an underpayment of income taxes and any statutory penalties recognized on a tax position as tax expense and the balances at the end of a reporting period are recorded as part of the current or noncurrent reserve for uncertain income tax positions. For the three and nine months ended May 31, 2012, before any tax benefits, the Company recorded immaterial amounts of accrued interest and penalties on unrecognized tax benefits. During the next twelve months, it is reasonably possible that the statute of limitations may lapse pertaining to positions taken by the Company in prior year tax returns or that income tax audits in various taxing jurisdictions could be finalized. As a result, the total amount of unrecognized tax benefits may decrease, which would reduce the provision for taxes on earnings by an immaterial amount. The following is a summary of tax years subject to examination: U.S. Federal - 2009 and forward U.S. States - 2006 and forward Foreign - 2005 and forward The Company is currently under examination by the Internal Revenue Service and several U.S. states. We believe our recorded tax liabilities as of May 31, 2012 sufficiently reflect the anticipated outcome of these examinations. |