Annual report pursuant to Section 13 and 15(d)

Income Taxes (Tables)

v3.3.0.814
Income Taxes (Tables)
 12 Months Ended
Aug. 31, 2015
Income Tax Disclosure [Abstract]  
Income Tax Expense from Continuing Operations
Income tax expense from continuing operations is summarized as follows (in thousands):
 
Year ended August 31,
 
2015
 
2014
 
2013
Currently payable:
 
 
 
 
 
Federal
$
(126
)
 
$
23,211

 
$
24,809

Foreign
21,200

 
9,059

 
13,335

State
(1,616
)
 
(657
)
 
902

 
19,458

 
31,613

 
39,046

Deferred:
 
 
 
 
 
Federal
(4,416
)
 
4,224

 
(13,514
)
Foreign
(9,199
)
 
(4,130
)
 
(9,942
)
State
(324
)
 
866

 
(218
)
 
(13,939
)
 
960

 
(23,674
)
 
$
5,519

 
$
32,573

 
$
15,372

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:        
 
Year ended August 31,
 
2015
 
2014
 
2013
Federal statutory rate
35.0
 %
 
35.0
 %
 
35.0
 %
State income taxes, net of federal effect
(0.2
)
 
0.8

 
0.9

Net effects of foreign tax rate differential and credits (1)
(58.4
)
 
(10.5
)
 
(8.8
)
Domestic manufacturing deduction
(5.1
)
 
(1.0
)
 
(1.0
)
Goodwill impairment (2)
78.6

 
—

 
—

Valuation allowance additions and releases (3)
15.5

 
(8.0
)
 
(3.1
)
Changes in liability for unrecognized tax benefits (4)
(42.1
)
 
3.2

 
(5.6
)
Change in income tax accounting method, net
—

 
(5.6
)
 
—

Business (RV) divestiture
—

 
3.0

 
—

Prior period correction (5)
—

 
—

 
(6.5
)
Other items
(1.6
)
 
1.8

 
(1.5
)
Effective income tax rate
21.7
 %
 
18.7
 %
 
9.4
 %

(1) During fiscal 2015, the Company generated significant foreign tax credits and approximately 68% of pre-tax earnings (excluding the impairment charge) were generated in foreign jurisdictions with tax rates lower than the U.S. federal income tax rate.
(2) Fiscal 2015 net earnings includes an $84.4 million impairment of goodwill and intangible assets, of which $6.3 million is deductible for income tax purposes.
(3) Additional valuation allowances of $5.7 million, were established in fiscal 2015 due to uncertainty regarding utilization of foreign operating loss carryforwards, which were partially offset by the reversal of $2.3 million of previously established reserves.
(4) The liability for unrecognized tax benefits decreased $9.5 million in fiscal 2015 primarily due to settlements and lapsing of tax audit statutes.
(5) During fiscal 2013, the Company recorded a $10.6 million adjustment to properly state deferred income tax balances associated with its equity compensation programs. The correction was not material to current or previously issued financial statements.        
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):
 
August 31,
 
2015
 
2014
Deferred income tax assets:
 
 
 
Operating loss and tax credit carryforwards
$
19,419

 
$
18,062

Compensation related liabilities
27,047

 
23,496

Postretirement benefits
5,462

 
5,082

Inventory
3,253

 
2,775

Book reserves and other items
11,976

 
12,214

Total deferred income tax assets
67,157

 
61,629

Valuation allowance
(8,053
)
 
(5,608
)
Net deferred income tax assets
59,104

 
56,021

Deferred income tax liabilities:
 
 
 
Depreciation and amortization
(109,447
)
 
(124,688
)
Other items
(4,539
)
 
(5,728
)
Deferred income tax liabilities
(113,986
)
 
(130,416
)
Net deferred income tax liability
$
(54,882
)
 
$
(74,395
)
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):
 
2015
 
2014
 
2013
Beginning balance
$
39,509

 
$
18,006

 
$
24,608

Increases based on tax positions related to the current year
2,183

 
28,053

 
3,601

Increase for tax positions taken in a prior period
8,935

 
—

 
—

Decrease for tax positions taken in a prior period
(633
)
 
—

 
(100
)
Decrease due to lapse of statute of limitations
(4,464
)
 
(7,030
)
 
(7,522
)
Decrease due to settlements
(14,180
)
 
—

 
(2,581
)
Changes in foreign currency exchange rates
(1,426
)
 
480

 
—

Ending balance
$
29,924

 
$
39,509

 
$
18,006

Earnings before Income Taxes, Including both Continuing and Discontinued Operations
Earnings before income taxes, for continuing operations, are summarized as follows (in thousands):
  
Year Ended August 31,
 
2015
 
2014
 
2013
Domestic
$
14,593

 
$
84,854

 
$
67,392

Foreign
10,798

 
89,172

 
95,557

 
$
25,391

 
$
174,026

 
$
162,949