Income Taxes

9 Months Ended

May 31, 2022

Income Tax Disclosure [Abstract]

Income Taxes

INCOME TAXES

Income 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						Nine Months Ended
	May 31,						May 31,
(in thousands)	2022			2021			2022			2021
Income before income taxes	$	85,280		$	114,276		$	327,166		$	349,174
Provision for income taxes	$	10,370		$	13,597		$	34,671		$	50,646
Effective tax rate	12.2		%	11.9		%	10.6		%	14.5		%

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 nine months ended May 31, 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 nine months ended May 31, 2022 is further reduced by windfall tax benefits associated with the employee exercise of stock options.

For the three months ended May 31, 2022, the provision for income taxes was $10.4 million, compared with $13.6 million for the same period a year ago. The provision decreased mainly due to lower pretax income for the three months ended May 31, 2022, compared with the prior year period.

For the nine months ended May 31, 2022, the provision for income taxes was $34.7 million, compared with $50.6 million for the same period a year ago. The provision decreased mainly due to lower pretax income and $12.0 million in higher windfall tax benefits for the nine months ended May 31, 2022, compared with the prior year period.