Income Taxes (Tables)

12 Months Ended

Aug. 31, 2017

Components of Income Tax Expense of Continuing Operations

Components of income tax expense were as follows:

	Years ended August 31,
(In thousands)	2017			2016			2015
Current
Federal	$	22,710		$	66,455		$	92,525
State		305			4,595			6,349
Foreign		35,893			50,299			32,748
		58,908			121,349			131,622
Deferred
Federal		9,418			(6,199	)		(13,565	)
State		(1,467	)		(1,174	)		(1,112	)
Foreign		(2,732	)		(1,644	)		(4,423	)
		5,219			(9,017	)		(19,100	)
Change in valuation allowance		(113	)		(10	)		(362	)
Income tax expense	$	64,014		$	112,322		$	112,160

Reconciliation Between Effective and Statutory Tax Rates on Operations

The reconciliation between effective and statutory tax rates on operations is as follows:

	Years ended August 31,
	2017			2016			2015
Federal statutory rate		35.0%			35.0%			35.0%
State income taxes, net of federal benefit		0.1			0.7			1.0
Impact of foreign operations		(3.4	)		0.1			(0.5	)
Change in valuation allowance		–			–			(0.1	)
Noncontrolling interest in flow-through entity		(6.0	)		(7.4	)		(5.7	)
Permanent differences and other		1.4			–			0.2
Effective tax rate		27.1%			28.4%			29.9%

Tax Effects of Temporary Differences that give rise to Significant Portions of Deferred Tax Assets and Deferred Tax Liabilities

The tax effects of temporary differences that give rise to significant portions of deferred tax assets and deferred tax liabilities were as follows:

	As of August 31,
(In thousands)	2017			2016
Deferred tax assets:
Accrued payroll and related liabilities	$	28,761		$	26,384
Deferred revenue		7,547			18,533
Maintenance and warranty accruals		10,988			10,604
Inventories and other		13,641			7,599
Derivative instruments and translation adjustment		371			1,153
Investment and asset tax credits		1,840			511
Net operating losses		320			429
		63,468			65,213
Deferred tax liabilities:
Fixed assets		110,429			97,490
Investment in GBW Joint Venture		14,066			16,144
Original issue discount		11,086			–
Intangibles		3,605			3,212
Deferred gain on redemption of debt		859			1,718
Other		(1,319	)		(2,344	)
		138,726			116,220
Valuation allowance		533			612
Net deferred tax liability	$	75,791		$	51,619

Unrecognized Tax Benefits

The following is a tabular reconciliation of the total amounts of unrecognized tax benefits:

	Years ended August 31,
(In thousands)	2017			2016			2015
Unrecognized Tax Benefit – Opening Balance	$	942		$	1,019		$	1,030
Gross increases – tax positions in prior period		1,368			–			–
Gross decreases – tax positions in prior period		(53	)		–			–
Settlements		–			–			–
Lapse of statute of limitations		(437	)		(77	)		(11	)
Unrecognized Tax Benefit – Ending Balance	$	1,820		$	942		$	1,019