Income Taxes (Tables)
|
12 Months Ended |
Aug. 31, 2023 |
|---|
| Income Tax Disclosure [Abstract] |
|
| Income Tax Expense from Continuing Operations |
Income tax expense from continuing operations is summarized as follows (in thousands):
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Year ended August 31, |
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2023 |
|
2022 |
|
2021 |
| Currently payable: |
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|
|
|
| Federal |
$ |
5,181 |
|
|
$ |
1,765 |
|
|
$ |
(18,243) |
|
| Foreign |
9,240 |
|
|
7,824 |
|
|
12,441 |
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| State |
319 |
|
|
164 |
|
|
539 |
|
|
14,740 |
|
|
9,753 |
|
|
(5,263) |
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| Deferred: |
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|
|
|
|
| Federal |
(2,935) |
|
|
1,580 |
|
|
9,677 |
|
| Foreign |
3,806 |
|
|
(7,538) |
|
|
185 |
|
| State |
(362) |
|
|
606 |
|
|
(836) |
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|
509 |
|
|
(5,352) |
|
|
9,026 |
|
| Income tax expense |
$ |
15,249 |
|
|
$ |
4,401 |
|
|
$ |
3,763 |
|
|
| Reconciliation of Income Taxes at Federal Statutory Rate to Effective Tax Rate |
A reconciliation of income taxes at the federal statutory rate to the effective tax rate is summarized in the following table:
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Year ended August 31, |
| |
2023 |
|
2022 |
|
2021 |
| Federal statutory rate |
21.0 |
% |
|
21.0 |
% |
|
21.0 |
% |
| State income taxes, net of Federal effect |
0.7 |
|
|
2.3 |
|
|
(0.2) |
|
Tax on foreign earnings (1)
|
6.0 |
|
|
1.3 |
|
|
2.8 |
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| Foreign derived intangible income deduction |
(3.1) |
|
|
(4.5) |
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|
(3.2) |
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| Compensation adjustment |
1.5 |
|
|
6.6 |
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|
3.1 |
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| Impairment and other divestiture charges |
— |
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|
1.1 |
|
|
1.6 |
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| Valuation allowance additions and releases |
(0.8) |
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|
2.1 |
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|
7.1 |
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| Changes in liability for unrecognized tax benefits |
(0.1) |
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3.4 |
|
|
(18.5) |
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| U.S. legislative changes, net impact |
— |
|
|
— |
|
|
(9.8) |
|
Taxable liquidation of subsidiaries (2)
|
0.1 |
|
|
(11.4) |
|
|
— |
|
| Foreign non-deductible expenses |
1.7 |
|
|
8.5 |
|
|
1.2 |
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| Changes in tax rates |
(2.0) |
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|
(3.6) |
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|
(3.4) |
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Audits and adjustments (3)
|
(2.9) |
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|
(6.7) |
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|
8.0 |
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| Research and development tax credit |
(0.7) |
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|
(2.5) |
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|
(1.8) |
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| Other items |
0.7 |
|
|
0.7 |
|
|
0.7 |
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| Effective income tax rate |
22.1 |
% |
|
18.3 |
% |
|
8.6 |
% |
(1) The Company generated $1.6 million, $0.2 million and $1.1 million of U.S. tax on non-U.S. earnings, net of foreign tax credits for fiscal 2023, 2022 and 2021, respectively.
(2) During fiscal 2022, the Company generated a net benefit of $2.7 million as a result of taxable liquidations of subsidiaries.
(3) During fiscal 2023 and fiscal 2022, the Company generated $2.0 million and $1.6 million of tax benefit related to audits and adjustments as compared to a tax expense of $3.5 million in fiscal 2021.
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| Temporary Differences and Carryforwards of Deferred Tax Assets and Liabilities |
Temporary differences and carryforwards that gave rise to deferred tax assets and liabilities include the following items (in thousands):
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August 31, |
| |
2023 |
|
2022 |
| Deferred income tax assets: |
|
|
|
| Operating loss and tax credit carryforwards |
$ |
70,933 |
|
|
$ |
78,717 |
|
| Compensation related liabilities |
7,372 |
|
|
6,002 |
|
| Postretirement benefits |
5,224 |
|
|
5,995 |
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| Inventory |
1,715 |
|
|
2,780 |
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| Lease liabilities |
8,594 |
|
|
9,637 |
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| Research and development capitalization |
4,544 |
|
|
— |
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| Book reserves and other items |
6,548 |
|
|
9,873 |
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| Total deferred income tax assets |
104,930 |
|
|
113,004 |
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| Valuation allowance |
(61,432) |
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|
(61,630) |
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| Net deferred income tax assets |
43,498 |
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|
51,374 |
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| Deferred income tax liabilities: |
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| Depreciation and amortization |
(23,844) |
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|
(30,149) |
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| Lease assets |
(8,594) |
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|
(9,637) |
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| Other items |
(1,020) |
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|
(1,024) |
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| Deferred income tax liabilities |
(33,458) |
|
|
(40,810) |
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Net deferred income tax asset (1)
|
$ |
10,040 |
|
|
$ |
10,564 |
|
(1) The net deferred income tax asset is reflected on the balance sheet in two categories: an asset of $15.7 million and $17.9 million for fiscal 2023 and 2022, respectively, is included in "Other long-term assets" and a liability of $5.7 million and $7.3 million for fiscal 2023 and 2022, respectively, is included in "Deferred income taxes".
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| Changes in Gross Liability for Unrecognized Tax benefits, Excluding Interest and Penalties |
Changes in the Company’s gross liability for unrecognized tax benefits, excluding interest and penalties, are as follows (in thousands):
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2023 |
|
2022 |
|
2021 |
| Beginning balance |
$ |
15,380 |
|
|
$ |
15,658 |
|
|
$ |
23,205 |
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| Increases based on tax positions related to the current year |
279 |
|
|
433 |
|
|
381 |
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| Increase for tax positions taken in a prior period |
— |
|
|
1,084 |
|
|
7 |
|
| Decrease for tax positions taken in a prior period |
(56) |
|
|
(57) |
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|
— |
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| Decrease due to lapse of statute of limitations |
(951) |
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|
(1,271) |
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|
(7,931) |
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| Decrease due to settlements |
— |
|
|
(31) |
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|
— |
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| Changes in foreign currency exchange rates |
102 |
|
|
(436) |
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|
(4) |
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| Ending balance |
$ |
14,754 |
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|
$ |
15,380 |
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|
$ |
15,658 |
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