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Income Taxes (Tables) | 12 Months Ended
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Aug. 31, 2020
Income Tax Disclosure [Abstract] |
Income (Loss) Before Income Tax Expense | Income (loss) before income tax expense is summarized below (in thousands):
| Fiscal Year Ended August 31,
| 2020 |  | 2019 |  | 2018
Domestic(1) | $ | (452,233 | ) |  | $ | (415,707 | ) |  | $ | (426,897 | )
Foreign(1) | 712,971 |  |  | 866,411 |  |  | 800,298 |
| $ | 260,738 |  |  | $ | 450,704 |  |  | $ | 373,401 |
(1) Includes the elimination of intercompany foreign dividends paid to the U.S.
Income Tax Expense (Benefit) | Income tax expense (benefit) is summarized below (in thousands):
| Fiscal Year Ended August 31,
| 2020 |  | 2019 |  | 2018
Current: |  |  |  |  |
Domestic - federal | $ | (3,054 | ) |  | $ | (23,675 | ) |  | $ | 69,080 |
Domestic - state | 1,367 |  |  | 1,383 |  |  | 134 |
Foreign | 179,462 |  |  | 175,993 |  |  | 178,790 |
Total current | 177,775 |  |  | 153,701 |  |  | 248,004 |
Deferred: |  |  |  |  |
Domestic - federal | (9,692 | ) |  | (8,000 | ) |  | (24,342 | )
Domestic - state | 107 |  |  | (2,202 | ) |  | 93 |
Foreign | 35,769 |  |  | 17,731 |  |  | 62,105 |
Total deferred | 26,184 |  |  | 7,529 |  |  | 37,856 |
Total income tax expense | $ | 203,959 |  |  | $ | 161,230 |  |  | $ | 285,860 |
Reconciliations of Income Tax Expense at U.S. Federal Statutory Income Tax Rate Compared to Actual Income Tax Expense | Reconciliation of the U.S. federal statutory income tax rate to the Company’s effective income tax rate is summarized below:
| Fiscal Year Ended August 31,
| 2020 |  | 2019 |  | 2018
U.S. federal statutory income tax rate | 21.0 | % |  | 21.0 | % |  | 25.7 | %
State income taxes, net of federal tax benefit | (2.6 | ) |  | (1.7 | ) |  | (1.5 | )
Impact of foreign tax rates(1)(2) | (0.9 | ) |  | (9.9 | ) |  | (19.3 | )
Permanent impact of non-deductible cost | 3.2 |  |  | 1.8 |  |  | 5.9 |
Income tax credits(1) | (2.5 | ) |  | (3.1 | ) |  | (2.8 | )
Changes in tax rates on deferred tax assets and liabilities(3) | 10.3 |  |  | 0.2 |  |  | 4.0 |
One-time transition tax related to the Tax Act(4) | — |  |  | (0.5 | ) |  | 62.2 |
Indefinite reinvestment assertion impact(5) | — |  |  | 0.9 |  |  | 5.8 |
Valuation allowance(6) | 16.8 |  |  | 1.3 |  |  | (16.4 | )
Non-deductible equity compensation | 2.2 |  |  | 1.4 |  |  | 5.5 |
Impact of intercompany charges and dividends | 15.0 |  |  | 10.4 |  |  | 7.3 |
Reclassification of stranded tax effects in AOCI | — |  |  | — |  |  | (4.0 | )
Global Intangible Low-Taxed Income(7) | 13.7 |  |  | 10.4 |  |  | — |
Other, net | 2.0 |  |  | 3.6 |  |  | 4.2 |
Effective income tax rate | 78.2 | % |  | 35.8 | % |  | 76.6 | %
(1) | The Company has been granted tax incentives for various subsidiaries in Brazil, China, Malaysia, Singapore and Vietnam, which expire at various dates through fiscal year 2031 and are subject to certain conditions with which the Company expects to comply. These tax incentives resulted in a tax benefit of approximately $42.6 million ($0.28 per basic share), $67.3 million ($0.43 per basic share) and $52.1 million ($0.30 per basic share) during the fiscal years ended August 31, 2020, 2019 and 2018, respectively.
(2) | For the fiscal year ended August 31, 2020, the decrease in the impact of foreign tax rates was primarily related to decreased income in low tax rate jurisdictions. For the fiscal year ended August 31, 2019, the decrease in the impact of foreign tax rates was primarily due to a decrease in the U.S. federal statutory income tax rate due to the Tax Act.
(3) | For the fiscal year ended August 31, 2020, the increase in the changes in tax rates on deferred tax assets and liabilities was primarily due to the re-measurement of deferred tax assets related to an extension of a non-U.S. tax incentive of $21.2 million. For the fiscal year ended August 31, 2018, the changes in tax rates on deferred tax assets and liabilities included changes related to the Tax Act, excluding the impact of the enacted rate change on the U.S. valuation allowance.
(4) | The one-time transition tax impact for the fiscal year ended August 31, 2018 was due to the comprehensive tax legislation enacted on December 22, 2017, commonly referred to as the Tax Cuts and Jobs Act of 2017 (“Tax Act”). The enacted changes included a mandatory income inclusion of the historically untaxed foreign earnings of a U.S. company’s foreign subsidiaries and effectively taxed such income at reduced tax rates (“transition tax”). The calculation of the one-time transition tax is based upon post-1986 earnings and profits, applicable foreign tax credits
and relevant limitations, utilization of U.S. federal net operating losses and tax credits and the amount of foreign earnings held in cash and non-cash assets.
(5) | As a result of the Tax Act, the Company made a change to the indefinite reinvestment assertion for the fiscal year ended August 31, 2018 resulting in foreign withholding taxes that would be incurred upon such future remittances of cash.
(6) | The valuation allowance change for the fiscal year ended August 31, 2020 was primarily due to the increase in deferred tax assets for sites with existing valuation allowances. The valuation allowance change for the fiscal years ended August 31, 2019 and 2018 was primarily due to utilization of domestic federal net operating losses and tax credits against the one-time transition tax and the change in enacted tax rate applied to U.S. deferred tax assets and liabilities for the fiscal year ended August 31, 2018. The increase for the fiscal year ended August 31, 2019 was partially offset by an income tax benefit of $17.5 million for the reversal of a U.S. valuation allowance due to an intangible asset reclassification from indefinite-life to finite-life.
(7) GILTI, a newly defined category of foreign subsidiary income which is taxable to U.S. shareholders each year, applied beginning in the fiscal year ended August 31, 2019 and primarily results in the utilization of current year U.S. federal operating losses. The Company records the effects of GILTI as a period cost.
Deferred Tax Assets and Liabilities | Significant components of the deferred tax assets and liabilities are summarized below (in thousands):
| Fiscal Year Ended August 31,
| 2020 |  | 2019
Deferred tax assets: |  |  |
Net operating loss carryforwards | $ | 197,516 |  |  | $ | 183,297 |
Receivables | 7,749 |  |  | 6,165 |
Inventories | 10,917 |  |  | 9,590 |
Compensated absences | 12,292 |  |  | 10,401 |
Accrued expenses | 85,363 |  |  | 81,731 |
Property, plant and equipment, principally due to differences in depreciation and amortization | 42,484 |  |  | 66,268 |
Domestic tax credits | 29,426 |  |  | 42,464 |
Foreign jurisdiction tax credits | 15,282 |  |  | 15,345 |
Equity compensation | 11,369 |  |  | 9,796 |
Domestic interest carryforwards | 4,846 |  |  | 5,853 |
Cash flow hedges | 9,064 |  |  | 9,878 |
Capital loss carryforwards | 20,087 |  |  | 7,799 |
Revenue recognition | 43,376 |  |  | 19,195 |
Operating lease liabilities | 89,424 |  |  | — |
Other | 18,120 |  |  | 21,907 |
Total deferred tax assets before valuation allowances | 597,315 |  |  | 489,689 |
Less valuation allowances | (341,200 | ) |  | (287,604 | )
Net deferred tax assets | $ | 256,115 |  |  | $ | 202,085 |
Deferred tax liabilities: |  |  |
Unremitted earnings of foreign subsidiaries | 76,711 |  |  | 75,387 |
Intangible assets | 32,262 |  |  | 39,242 |
Operating lease assets | 83,311 |  |  | — |
Other | 13,081 |  |  | 4,447 |
Total deferred tax liabilities | $ | 205,365 |  |  | $ | 119,076 |
Net deferred tax assets | $ | 50,750 |  |  | $ | 83,009 |
Summary of Tax Credit Carryforwards | The amount and expiration dates of income tax net operating loss carryforwards, tax credit carryforwards, and tax capital loss carryforwards, which are available to reduce future taxes, if any, as of August 31, 2020 are as follows:
(dollars in thousands) | Last Fiscal Year of Expiration |  | Amount
Income tax net operating loss carryforwards:(1) |  |  |
Domestic - state | 2040 or indefinite |  | $ | 57,131 |
Foreign | 2030 or indefinite |  | $ | 667,388 |
Tax credit carryforwards:(1) |  |  |
Domestic - federal | 2030 |  | $ | 26,315 |
Domestic - state | 2027 or indefinite |  | $ | 3,858 |
Foreign(2) | 2027 or indefinite |  | $ | 15,282 |
Tax capital loss carryforwards:(3) |  |  |
Domestic - federal | 2025 |  | $ | 78,700 |
(1) | Net of unrecognized tax benefits.
(2) | Calculated based on the deferral method and includes foreign investment tax credits.
(3) The tax capital loss carryforwards were primarily from an impairment of an investment that was deemed worthless for tax purposes.
Summary of Operating Loss Carryforwards | The amount and expiration dates of income tax net operating loss carryforwards, tax credit carryforwards, and tax capital loss carryforwards, which are available to reduce future taxes, if any, as of August 31, 2020 are as follows:
(dollars in thousands) | Last Fiscal Year of Expiration |  | Amount
Income tax net operating loss carryforwards:(1) |  |  |
Domestic - state | 2040 or indefinite |  | $ | 57,131 |
Foreign | 2030 or indefinite |  | $ | 667,388 |
Tax credit carryforwards:(1) |  |  |
Domestic - federal | 2030 |  | $ | 26,315 |
Domestic - state | 2027 or indefinite |  | $ | 3,858 |
Foreign(2) | 2027 or indefinite |  | $ | 15,282 |
Tax capital loss carryforwards:(3) |  |  |
Domestic - federal | 2025 |  | $ | 78,700 |
(1) | Net of unrecognized tax benefits.
(2) | Calculated based on the deferral method and includes foreign investment tax credits.
(3) The tax capital loss carryforwards were primarily from an impairment of an investment that was deemed worthless for tax purposes.
Reconciliations of Unrecognized Tax Benefits | Reconciliation of the unrecognized tax benefits is summarized below (in thousands):
| Fiscal Year Ended August 31,
| 2020 |  | 2019 |  | 2018
Beginning balance | $ | 164,383 |  |  | $ | 256,705 |  |  | $ | 201,355 |
Additions for tax positions of prior years | 9,841 |  |  | 20,158 |  |  | 14,465 |
Reductions for tax positions of prior years(1) | (9,346 | ) |  | (106,252 | ) |  | (21,045 | )
Additions for tax positions related to current year(2) | 26,360 |  |  | 35,769 |  |  | 81,866 |
Cash settlements | (510 | ) |  | — |  |  | (1,659 | )
Reductions from lapses in statutes of limitations | (1,054 | ) |  | (2,570 | ) |  | (7,496 | )
Reductions from non-cash settlements with taxing authorities(3) | (2,226 | ) |  | (35,582 | ) |  | (5,928 | )
Foreign exchange rate adjustment | 2,345 |  |  | (3,845 | ) |  | (4,853 | )
Ending balance | $ | 189,793 |  |  | $ | 164,383 |  |  | $ | 256,705 |
Unrecognized tax benefits that would affect the effective tax rate (if recognized) | $ | 108,551 |  |  | $ | 93,237 |  |  | $ | 117,455 |
(1) | The reductions for tax positions of prior years for the fiscal year ended August 31, 2019 are primarily related to a non-U.S. taxing authority ruling related to certain non-U.S. net operating loss carryforwards, offset with a valuation allowance and the impacts of the Tax Act.
(2) | The additions for the fiscal years ended August 31, 2020 are primarily related to taxation of certain intercompany transactions. The additions for the fiscal years ended August 31, 2019 and 2018 are primarily related to the impacts of the Tax Act and taxation of certain intercompany transactions.
(3) The reductions from settlements with taxing authorities for the fiscal year ended August 31, 2019 are primarily related to the settlement of a U.S. audit.

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