Income Taxes (Tables)

12 Months Ended

Aug. 31, 2018

Components of Income Tax Expense of Continuing Operations

Components of income tax expense were as follows:

	Years ended August 31,
(In thousands)	2018			2017			2016
Current
Federal	$	28,357		$	22,710		$	66,455
State		3,244			305			4,595
Foreign		38,628			35,893			50,299
		70,229			58,908			121,349
Deferred
Federal		(33,459	)		9,418			(6,199	)
State		(344	)		(1,467	)		(1,174	)
Foreign		(3,690	)		(2,732	)		(1,644	)
		(37,493	)		5,219			(9,017	)
Change in valuation allowance		157			(113	)		(10	)
Income tax expense	$	32,893		$	64,014		$	112,322

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,
	2018			2017			2016
Federal statutory rate		25.7	%		35.0	%		35.0	%
State income taxes, net of federal benefit		0.8			0.1			0.7
Foreign operations, excluding transition tax		1.8			(3.4	)		0.1
Transition tax on foreign earnings		3.1			–			–
Remeasurement of domestic deferred taxes		(15.0	)		–			–
Change in valuation allowance		0.1			–			–
Noncontrolling interest in flow-through entity		(2.4	)		(6.0	)		(7.4	)
Permanent differences and other		0.6			1.4			–
Effective tax rate		14.7	%		27.1	%		28.4	%

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)	2018		2017
Deferred tax assets:
Accrued payroll and related liabilities	$	18,461	$	28,761
Deferred revenue		10,642		7,547
Inventories and other		10,518		13,641
Maintenance and warranty accruals		7,201		10,988
Net operating losses		2,002		320
Investment and asset tax credits		1,439		1,840
		50,263		63,097
Deferred tax liabilities:
Fixed assets		70,942		110,429
Original issue discount		6,099		11,086
Intangibles		2,474		3,605
Other		1,831		(831	)
Investment in GBW Joint Venture		–		14,066
		81,346		138,355
Valuation allowance		657		533
Net deferred tax liability	$	31,740	$	75,791

Unrecognized Tax Benefits

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

	Years ended August 31,
(In thousands)	2018			2017			2016
Unrecognized Tax Benefit – Opening Balance	$	1,820		$	942		$	1,019
Gross increases – tax positions in prior period		237			1,368			–
Gross decreases – tax positions in prior period		(449	)		(53	)		–
Settlements		–			–			–
Lapse of statute of limitations		–			(437	)		(77	)
Unrecognized Tax Benefit – Ending Balance	$	1,608		$	1,820		$	942