XML 38 R22.htm IDEA: XBRL DOCUMENT
v3.21.2

Income Taxes | 12 Months Ended
--- | ---
Aug. 31, 2021
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes Provision for Income Taxes Income (loss) before income tax expense is summarized below (in millions):
| Fiscal Year Ended August 31,
| 2021 |  | 2020 |  | 2019
Domestic(1) | $ | (271) |  |  | $ | (452) |  |  | $ | (416) |
Foreign(1) | 1,215 |  |  | 713 |  |  | 867 |
Total | $ | 944 |  |  | $ | 261 |  |  | $ | 451 |
(1)Includes the elimination of intercompany foreign dividends paid to the U.S. Income tax expense (benefit) is summarized below (in millions):
| Fiscal Year Ended August 31,
| 2021 |  | 2020 |  | 2019
Current: |  |  |  |  |
Domestic - federal | $ | 7 |  |  | $ | (3) |  |  | $ | (24) |
Domestic - state | 3 |  |  | 1 |  |  | 1 |
Foreign | 252 |  |  | 180 |  |  | 177 |
Total current | 262 |  |  | 178 |  |  | 154 |
Deferred: |  |  |  |  |
Domestic - federal | 2 |  |  | (10) |  |  | (8) |
Domestic - state | — |  |  | — |  |  | (2) |
Foreign | (18) |  |  | 36 |  |  | 18 |
Total deferred | (16) |  |  | 26 |  |  | 8 |
Total income tax expense | $ | 246 |  |  | $ | 204 |  |  | $ | 162 |
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,
| 2021 |  | 2020 |  | 2019
U.S. federal statutory income tax rate | 21.0 | % |  | 21.0 | % |  | 21.0 | %
State income taxes, net of federal tax benefit | 0.2 |  |  | (2.6) |  |  | (1.7) |
Impact of foreign tax rates(1)(2) | (4.6) |  |  | (0.9) |  |  | (9.9) |
Permanent differences | (0.4) |  |  | 3.2 |  |  | 1.8 |
Income tax credits(1) | (0.4) |  |  | (2.5) |  |  | (3.1) |
Changes in tax rates on deferred tax assets and liabilities(3) | — |  |  | 10.3 |  |  | 0.2 |
One-time transition tax related to the Tax Act | — |  |  | — |  |  | (0.5) |
Indefinite reinvestment assertion impact | — |  |  | — |  |  | 0.9 |
Valuation allowance(4) | 1.3 |  |  | 16.8 |  |  | 1.3 |
Non-deductible equity compensation | 0.6 |  |  | 2.2 |  |  | 1.4 |
Impact of intercompany charges and dividends | 4.4 |  |  | 15.0 |  |  | 10.4 |
Global Intangible Low-Taxed Income | 3.0 |  |  | 13.7 |  |  | 10.4 |
Other, net | 0.9 |  |  | 2.0 |  |  | 3.6 |
Effective income tax rate | 26.0 | % |  | 78.2 | % |  | 35.8 | %
(1)The Company has been granted tax incentives for various subsidiaries in China, Malaysia, Singapore and Vietnam, which primarily 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 $51 million ($0.34 per basic share), $43 million ($0.28 per basic share) and $67 million ($0.43 per basic share) during the fiscal years ended August 31, 2021, 2020 and 2019, respectively. (2)For the fiscal year ended August 31, 2021, the increase in the impact of foreign tax rates was primarily related to increased income in low tax rate jurisdictions. 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 Cuts and Jobs Act of 2017 (“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 million. (4)The valuation allowance change for the fiscal years ended August 31, 2021 and 2020 was primarily due to the change in deferred tax assets for sites with existing valuation allowances. The valuation allowance change for the fiscal year ended August 31, 2019 was primarily due to utilization of domestic federal net operating losses and tax credits against the one-time transition tax. The increase for the fiscal year ended August 31, 2019 was partially offset by an income tax benefit of $18 million for the reversal of a U.S. valuation allowance due to an intangible asset reclassification from indefinite-life to finite-life. Deferred Tax Assets and Liabilities Significant components of the deferred tax assets and liabilities are summarized below (in millions):
| Fiscal Year Ended August 31,
| 2021 |  | 2020
Deferred tax assets: |  |  |
Net operating loss carryforwards | $ | 200 |  |  | $ | 198 |
Receivables | 8 |  |  | 8 |
Inventories | 14 |  |  | 11 |
Compensated absences | 13 |  |  | 12 |
Accrued expenses | 115 |  |  | 85 |
Property, plant and equipment | 71 |  |  | 42 |
Domestic tax credits | 11 |  |  | 29 |
Foreign jurisdiction tax credits | 10 |  |  | 15 |
Equity compensation | 10 |  |  | 11 |
Domestic interest carryforwards | 4 |  |  | 5 |
Cash flow hedges | 10 |  |  | 9 |
Capital loss carryforwards | 20 |  |  | 20 |
Revenue recognition | 36 |  |  | 43 |
Operating and finance lease liabilities | 60 |  |  | 89 |
Other | 19 |  |  | 19 |
Total deferred tax assets before valuation allowances | 601 |  |  | 596 |
Less valuation allowances | (353) |  |  | (341) |
Net deferred tax assets | $ | 248 |  |  | $ | 255 |
Deferred tax liabilities: |  |  |
Unremitted earnings of foreign subsidiaries | 60 |  |  | 77 |
Intangible assets | 27 |  |  | 32 |
Operating lease assets | 92 |  |  | 83 |
Other | 4 |  |  | 13 |
Total deferred tax liabilities | $ | 183 |  |  | $ | 205 |
Net deferred tax assets | $ | 65 |  |  | $ | 50 |
Based on the Company’s historical operating income, projection of future taxable income, scheduled reversal of taxable temporary differences, and tax planning strategies, management believes it is more likely than not that the Company will realize the benefit of its deferred tax assets, net of valuation allowances recorded. As of August 31, 2021, the Company intends to indefinitely reinvest the remaining earnings from its foreign subsidiaries for which a deferred tax liability has not already been recorded. The accumulated earnings are the most significant component of the basis difference which is indefinitely reinvested. As of August 31, 2021, the indefinitely reinvested earnings in foreign subsidiaries upon which taxes had not been provided were approximately $2.4 billion. The estimated amount of the unrecognized deferred tax liability on these reinvested earnings was approximately $0.1 billion. Tax 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, 2021 are as follows:
(dollars in millions) | Last Fiscal Year of Expiration |  | Amount
Income tax net operating loss carryforwards:(1) |  |  |
Domestic - state | 2041 or indefinite |  | $ | 56 |
Foreign | 2031 or indefinite |  | $ | 646 |
Tax credit carryforwards:(1) |  |  |
Domestic - federal | 2031 |  | $ | 8 |
Domestic - state | 2027 or indefinite |  | $ | 3 |
Foreign(2) | 2027 or indefinite |  | $ | 10 |
Tax capital loss carryforwards:(3) |  |  |
Domestic - federal | 2026 |  | $ | 77 |
(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. Unrecognized Tax Benefits Reconciliation of the unrecognized tax benefits is summarized below (in millions):
| Fiscal Year Ended August 31,
| 2021 |  | 2020 |  | 2019
Beginning balance | $ | 190 |  |  | $ | 164 |  |  | $ | 257 |
Additions for tax positions of prior years | 15 |  |  | 10 |  |  | 20 |
Reductions for tax positions of prior years(1) | (3) |  |  | (9) |  |  | (106) |
Additions for tax positions related to current year(2) | 36 |  |  | 27 |  |  | 36 |
Cash settlements | — |  |  | (1) |  |  | — |
Reductions from lapses in statutes of limitations | (2) |  |  | (1) |  |  | (3) |
Reductions from non-cash settlements with taxing authorities(3) | — |  |  | (2) |  |  | (36) |
Foreign exchange rate adjustment | 5 |  |  | 2 |  |  | (4) |
Ending balance | $ | 241 |  |  | $ | 190 |  |  | $ | 164 |
Unrecognized tax benefits that would affect the effective tax rate (if recognized) | $ | 139 |  |  | $ | 109 |  |  | $ | 93 |
(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, 2021 and 2020 are primarily related to taxation of certain intercompany transactions. The additions for the fiscal year ended August 31, 2019 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. The Company recognizes interest and penalties related to unrecognized tax benefits in income tax expense. The Company’s accrued interest and penalties were approximately $30 million and $23 million as of August 31, 2021 and 2020, respectively. The Company recognized interest and penalties of approximately $7 million, $4 million and $(2) million during the fiscal years ended August 31, 2021, 2020 and 2019, respectively. It is reasonably possible that the August 31, 2021 unrecognized tax benefits could decrease during the next 12 months by $19 million, primarily related to a taxing authority agreement associated with intercompany transactions. The Company is no longer subject to U.S. federal tax examinations for fiscal years before August 31, 2015. In major non-U.S. and state jurisdictions, the Company is no longer subject to income tax examinations for fiscal years before August 31, 2011 and August 31, 2009, respectively.

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration