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Income Tax
9 Months Ended
May 31, 2013
Income Tax Disclosure [Abstract]  
Income tax
NOTE 11. INCOME TAX

The Company's effective income tax rate from continuing operations for the three and nine months ended May 31, 2013 was 48.3% and 38.1%, respectively, compared with 16.1% and (61.1)% for the three and nine months ended May 31, 2012, respectively. The Company's effective tax rate from discontinued operations for the three and nine months ended May 31, 2013 was 0.0% and 35.0%, respectively, compared with 33.4% and 35.6% for the three and nine months ended May 31, 2012, respectively.

The increase in the effective tax rate to 48.3% for the three months ended May 31, 2013 compared to 16.1% for the three months ended May 31, 2012 is due to a change in the mix and amount of pre-tax income in the jurisdictions in which the Company operates. Additionally, during the three and nine months ended May 31, 2012 the Company recorded a tax benefit of $11.5 million related to federal and state research and development tax credits for fiscal years 2008 through 2011.

During the first quarter of fiscal 2012, the Company recognized a tax loss in the amount of $291 million related to its investment in its former Croatian subsidiary. As a result of this loss, a tax benefit of $102.1 million was recorded in continuing operations in the first quarter of 2012. The Company reported and disclosed the investment loss on its U.S. tax return as ordinary worthless stock and bad debt deductions. This tax benefit was the primary reason for the variance from the statutory tax rate of 35%.

The Company received net refunds of $561 thousand and made net payments of $17.2 million for income taxes during the nine months ended May 31, 2013 and 2012, respectively.

The reserve for unrecognized tax benefits related to the accounting for uncertainty in income taxes was $27.4 million and $20.7 million, exclusive of interest and penalties, as of May 31, 2013 and 2012, 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, 2013, 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 by approximately $17.8 million, which would reduce the provision for taxes on earnings by an immaterial amount.

The Company files income tax returns in the United States and multiple foreign jurisdictions with varying statutes of limitations. In the normal course of business, the Company and its subsidiaries are subject to examination by various taxing authorities. The following is a summary of tax years subject to examination:

US Federal — 2008 and forward
US States — 2008 and forward
Foreign — 2005 and forward

The Company is currently under examination by the Internal Revenue Service and state revenue authorities from 2009 to 2011. Management believes the Company's recorded tax liabilities as of May 31, 2013 sufficiently reflect the anticipated outcome of these examinations.