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Income Taxes
6 Months Ended
Feb. 29, 2016
Income Taxes [Abstract]  
Income Taxes

Note 12.  Income Taxes

 

The Company uses an estimated annual effective tax rate, which is based on expected annual income, statutory tax rates and tax planning opportunities available in the various jurisdictions in which the Company operates, to determine its quarterly provision for income taxes. Certain significant or unusual items are separately recognized in the quarter in which they occur and can be a source of variability in the effective tax rates from quarter to quarter.

 

The provision for income taxes was 28.0% and 29.6% of income before income taxes for the three months ended February 29, 2016 and February 28, 2015, respectively, and 28.3% and 30.1% of income before income taxes for the six months ended February 29, 2016 and February 28, 2015, respectively. The decrease in the effective income tax rate for both the three and six months ended February 29, 2016, as compared to the same periods ended February 28, 2015 was driven by an increase in taxable earnings from foreign operations, particularly those in the U.K., which are taxed at lower tax rates and the benefit received from the permanent extension of the research and experimentation tax credit. In December 2015, legislation was enacted which retroactively extends the research and experimentation tax credit on a permanent basis. As a result of this U.S. law change, the Company recorded a one-time tax benefit of $0.1 million in the second quarter of fiscal year 2016, related to research activities incurred during fiscal year 2015. The ongoing benefit from this credit is reflected in the Company's estimated annual effective tax rate commencing in the second quarter of fiscal year 2016

 

The Company is subject to taxation in the U.S. and in various state and foreign jurisdictions. Due to expired statutes, the Company’s federal income tax returns for years prior to fiscal year 2013 are not subject to examination by the U.S. Internal Revenue Service. Generally, for the majority of state and foreign jurisdictions where the Company does business, periods prior to fiscal year 2012 are no longer subject to examination. The Company has estimated that up to $0.4 million of unrecognized tax benefits related to income tax positions may be affected by the resolution of tax examinations or expiring statutes of limitation within the next twelve months. Audit outcomes and the timing of settlements are subject to significant uncertainty.