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Income Taxes
3 Months Ended
Nov. 30, 2012
Income Taxes

Note 9. 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 was 18.5% and 23.1% for the three months ended November 30, 2012 and 2011, respectively. The decrease in the effective tax rate for the three months ended November 30, 2012, relative to the prior year, reflects the benefits of tax minimization planning, increased foreign tax credits and the utilization of net operating losses.

The gross liability for unrecognized tax benefits, excluding interest and penalties, increased from $24.6 million at August 31, 2012 to $25.3 million at November 30, 2012. Substantially all of these unrecognized tax benefits, if recognized, would reduce the effective income tax rate. In addition, as of November 30, 2012 and August 31, 2012, the Company had liabilities totaling $4.8 million and $4.5 million, respectively, for the payment of interest and penalties related to its unrecognized tax benefits.