| Income Taxes |
Note 12. Income Taxes
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. Comparative earnings (loss) before income taxes, income tax expense and effective income tax rates from continuing operations are as follows (in thousands):
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Three Months Ended |
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Six Months Ended |
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February 29, 2020 |
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February 28, 2019 |
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February 29, 2020 |
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February 28, 2019 |
Earnings (loss) from continuing operations before income tax expense |
$ |
4,724 |
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$ |
4,767 |
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|
$ |
12,046 |
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|
$ |
(11,589 |
) |
Income tax expense |
806 |
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|
4,002 |
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|
1,756 |
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|
4,068 |
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Effective income tax rate |
17.1 |
% |
|
84.0 |
% |
|
14.6 |
% |
|
(35.1 |
)% |
The Company’s earnings (loss) from continuing operations before income taxes includes earnings from foreign jurisdictions in excess of 70% of the consolidated total for the estimated full-year fiscal 2020 and 2019. Overall, the annual effective tax rate is not significantly impacted by differences in foreign tax rates now that the U.S. tax rate of 21% is in line with the Company's average foreign tax rate. Both the current and prior year effective income tax rates were impacted by impairment & divestiture charges as well as accelerated debt issuance costs. Results included impairment & divestiture benefits of $0.8 million ($0.5 million after tax) and $2.1 million ($1.6 million after tax) for the three and six months ended February 29, 2020, respectively, as well as accelerated debt issuance costs of $0.6 million ($0.5 million after tax) for the six months ended February 29, 2020. This compares to impairment & divestiture charges of $3.5 million ($3.5 million after tax) and $27.0 million ($27.0 million after tax) for the three and six months ended February 28, 2019, respectively. Excluding the impairment & divestiture charges and accelerated debt issuance costs, the effective tax rate was 14.6% and 48.2% for the three months ended February 29, 2020 and February 28, 2019, respectively, and 13.4% and 26.4% for the six months ended February 29, 2020 and February 28, 2019, respectively. The income tax expense without impairment & divestiture charges for the three and six months ended February 29, 2020 is impacted by valuation allowance releases related to operational improvements and the ability to use tax attributes before expiration.
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