Income Taxes

6 Months Ended

Feb. 28, 2022

Income Tax Disclosure [Abstract]

Income Taxes

INCOME TAXESIncome tax expense is based on taxable income determined in accordance with current enacted laws and tax rates. Deferred income taxes are recorded for the temporary differences between the financial statement and the tax bases of assets and liabilities using currently enacted tax rates.

Provision for Income Taxes

The provision for income taxes is as follows:

	Three Months Ended						Six Months Ended
	February 28,						February 28,
(in thousands)	2022			2021			2022			2021
Income before income taxes	$	121,956		$	114,666		$	241,886		$	234,898
Provision for income taxes	$	12,018		$	18,023		$	24,301		$	37,049
Effective tax rate	9.9		%	15.7		%	10.0		%	15.8		%

Our effective tax rate is based on recurring factors and non-recurring events, including the taxation of foreign income. Our effective tax rate will vary based on, among other things, changes in levels of foreign income, as well as discrete and other non-recurring events that may not be predictable. Our effective tax rate is lower than the applicable U.S. corporate income tax rate for the three and six months ended February 28, 2022, driven mainly by research and development ("R&D") tax credits and a foreign derived intangible income ("FDII") deduction. The effective tax rate for the three and six months ended February 28, 2022 is further reduced by windfall tax benefits associated with the employee exercise of stock options.

For the three months ended February 28, 2022, the provision for income taxes was $12.0 million, compared with $18.0 million for the same period a year ago. The provision decreased mainly due to lower projected levels of income before income taxes, a lower effective tax rate compared to the prior year period and a $4.2 million reduction from higher windfall tax benefits, partially offset by higher income before income taxes during the three months ended February 28, 2022, compared with the prior year period.

For the six months ended February 28, 2022, the provision for income taxes was $24.3 million, compared with $37.0 million for the same period a year ago. The provision decreased mainly due to lower projected levels of income before income taxes, a lower effective tax rate compared to the prior year period and a $11.2 million in higher windfall tax benefits, partially offset by higher income before income taxes during the six months ended February 28, 2022, compared with the prior year period.