Income Taxes

3 Months Ended

Nov. 30, 2011

Income Taxes [Abstract]

INCOME TAXES

NOTE 11 — INCOME TAXES

The Company’s effective income tax rate for continuing operations for the three months ended November 30, 2011 and 2010 was (320.7)% and 31.1%, respectively. The effective tax rate from discontinued operations for the three months ended November 30, 2011 and 2010 was 35.9% and (1.9)%, respectively.

During the three months ended November 30, 2011, the Company recognized a tax loss in the amount of $291 million related to its investments in its Croatian company. As a result, a tax benefit of $102 million was recorded from these losses in the first quarter of 2012 in continuing operations which is the primary reason for the variance in the tax rate from continuing operations in first quarter of 2011. 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.

The Company made net payments of $12.5 million and had net refunds of $1.9 million for income taxes during the three months ended November 30, 2011 and 2010, respectively.

The reserve for unrecognized tax benefits relating to the accounting for uncertainty in income taxes was $10.0 million and $20.4 million, exclusive of interest and penalties, as of November 30, 2011 and 2010, 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 months ended November 30, 2011, 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 November 30, 2011 sufficiently reflect the anticipated outcome of these examinations.