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 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 is as follows:



	Three Months Ended May 31,				Nine Months Ended May 31,
	2014		2013		2014		2013
Effective income tax rate	3.2	%	7.7	%	11.3	%	12.5	%

Income tax expense for the three months ended May 31, 2014 includes a $10.5 million benefit from a discrete income tax adjustment (tax minimization planning that was completed in the quarter) and a $6.8 million net reduction in the reserve for uncertain tax positions (as a result of the lapsing of non-U.S. income tax statues of limitations). Similarly the prior year third quarter income tax expense included a $9.3 million benefit due to a net reduction in reserves for uncertain tax positions. Effective income tax rates for the nine months ended May 31, 2014 and 2013 reflect the benefits of tax minimization planning, increased foreign tax credits, the generation of net operating losses (from the liquidation of foreign legal entities) and discrete tax items.

The gross liability for unrecognized tax benefits, excluding interest and penalties, increased from $18.0 million at August 31, 2013 to $31.6 million at May 31, 2014. Substantially all of these unrecognized tax benefits, if recognized, would reduce the effective income tax rate. In addition, as of May 31, 2014 and August 31, 2013, the Company had liabilities totaling $1.7 million and $2.9 million, respectively, for the payment of interest and penalties related to its unrecognized income tax benefits.