Quarterly report pursuant to Section 13 or 15(d)

Income Taxes

v3.7.0.1
Income Taxes
 6 Months Ended
Feb. 28, 2017
Income Tax Disclosure [Abstract]  
Income Taxes
Income Taxes
The Company's income tax expense or benefit is impacted by a number of factors, including the amount of taxable earnings generated in foreign jurisdictions with tax rates that are lower than the U.S. federal statutory rate, permanent items, state tax rates and the ability to utilize various tax credits and net operating loss carryforwards. The Company's global operations, acquisition activity and specific tax attributes provide opportunities for continuous global tax planning initiatives to maximize tax credits and deductions. Both the current and prior year include the benefits of tax planning initiatives. Comparative earnings (loss) before income taxes, income tax expense (benefit) and effective income tax rates are as follows (amounts in thousands):
 
Three Months Ended
 
Six Months Ended
 
February 28,
2017
 
February 29,
2016
 
February 28,
2017
 
February 29,
2016
Earnings (loss) before income taxes
$
5,274

 
$
(179,216
)
 
$
7,241

 
$
(161,581
)
Income tax expense (benefit)
200

 
(20,026
)
 
(2,798
)
 
(17,839
)
Effective income tax rate
3.8
%
 
11.2
 %
 
(38.6
)%
 
11.0
 %
Adjusted effective income tax rate (1)
3.8
%
 
(35.6
)%
 
(38.6
)%
 
(1.6
)%

(1) Adjusted effective income tax rate excludes the impairment charge of $186.5 million ($169.1 million after tax) in fiscal 2016.
Both the current and prior year effective income tax rates were impacted by the proportion of earnings in foreign jurisdictions with income tax rates lower than the U.S. federal income tax rate and the amount of income tax benefits from tax planning initiatives. The Company's earnings (loss) before income taxes, excluding impairment charges, were made up of 85% of earnings from foreign jurisdictions in both fiscal 2017 and 2016. This foreign income tax rate differential had the effect of reducing the effective income tax rate from the 35% U.S. statutory tax rate by 21.2% and by 19.6%, in fiscal 2017 and 2016, respectively, excluding the second quarter fiscal 2016 impairment charge. In addition, the recognition of income tax planning benefits resulting from certain losses from prior years for which no benefit was previously recognized resulted in a 19.4% reduction from the 35% U.S. statutory tax rate for fiscal 2017. Income tax planning benefits related to certain foreign currency gains and losses recognized for tax purposes resulted in a 10.1% reduction from the 35% U.S. statutory tax rate for fiscal 2016, excluding the impairment charge. The tax benefits related to these tax planning initiatives are not expected to repeat in future periods due to certain tax attributes that are no longer available and subsequent changes in relevant tax laws.