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INCOME TAX (Tables)

12 Months Ended

Aug. 31, 2018

Income Tax Disclosure [Abstract]

Components of earnings from continuing operations before income taxes (benefit)

The components of earnings from continuing operations before income taxes were as follows:

		Year Ended August 31,
(in thousands)		2018				2017				2016
United States		$	86,731			$	25,506			$	55,829
Foreign		78,653				39,945				20,148
Total		$	165,384			$	65,451			$	75,977

Income taxes (benefit) included in the consolidated statements of operations

The income taxes (benefit) included in the consolidated statements of earnings were as follows:

		Year Ended August 31,
(in thousands)		2018				2017				2016
Current:
United States		$	20,210			$	11,345			$	5,224
Foreign		18,308				9,464				6,991
State and local		2,263				2,654				4,130
Current taxes		$	40,781			$	23,463			$	16,345
Deferred:
United States		$	(11,501	)		$	(13,548	)		$	(4,423	)
Foreign		(169		)		(917		)		254
State and local		1,002				281				303
Deferred taxes		$	(10,668	)		$	(14,184	)		$	(3,866	)
Total income taxes on income		$	30,113			$	9,279			$	12,479
Income taxes (benefit) on discontinued operations		(34		)		(5,997		)		(1,497		)
Income taxes on continuing operations		$	30,147			$	15,276			$	13,976

Reconciliation of the federal statutory rate to effective tax rate from continuing operations

A reconciliation of the federal statutory rate to the Company's effective income tax rate from continuing operations, including material items impacting the effective income tax rate is as follows:

		Year Ended August 31,
(in thousands)		2018				2017				2016
Federal statutory rate		25.7		%		35.0		%		35.0		%
Income tax expense at statutory rate		$	42,471			$	22,908			$	26,592
TCJA - Toll charge and related foreign tax credits		29,466				—				—
TCJA - Remeasurement of deferred tax balances		(25,515		)		—				—
Foreign tax impairment on valuation of subsidiaries (1)		22,315				(92,321		)		(60,204		)
Gain on international restructure (1)		18,926				—				—
Change in valuation allowance		(20,839		)		113,135				75,822
Nontaxable foreign interest (1)		(17,414		)		(19,259		)		(16,063		)
Worthless stock deduction (2)		(6,084		)		—				—
Foreign rate differential (3)		(5,973		)		(7,518		)		(1,719		)
Research and experimentation credits		(4,707		)		(1,034		)		(1,357		)
Audit settlement (4)		(3,187		)		(659		)		(10,264		)
State and local taxes		2,317				1,490				2,185
Deferred compensation (5)		(2,036		)		(2,101		)		(1,375		)
Section 199 manufacturing deduction		—				(1,407		)		(4,694		)
Other		407				2,042				5,053
Income tax expense on continuing operations		$	30,147			$	15,276			$	13,976
Effective income tax rate from continuing operations		18.2		%		23.3		%		18.4		%

_________________ 

(1) Fully offset by a valuation allowance.

(2) Permanent tax benefit related to a worthless stock deduction from the reorganization and exit of the Company's steel trading business headquartered in the United Kingdom.

(3) The impact of global income from operations in jurisdictions with lower statutory tax rates than the U.S., including Poland, which has a statutory income tax rate of 19.0%.

(4) Includes the release of certain unrecognized tax benefits for which the accruals were greater than the amount assessed.

(5) Nontaxable gain on assets related to the Company’s nonqualified BRP.

Tax effects of significant temporary differences giving rise to deferred tax assets and liabilities

The income tax effects of significant temporary differences giving rise to deferred tax assets and liabilities were as follows:

		August 31,
(in thousands)		2018				2017
Deferred tax assets:
Net operating losses and credits		$	285,847			$	273,549
Deferred compensation and employee benefits		21,333				46,898
Reserves and other accrued expenses		12,704				21,727
Allowance for doubtful accounts		2,258				3,223
Inventory		974				—
Intangibles		906				3,924
Other		469				2,314
Total deferred tax assets		324,491				351,635
Valuation allowance for deferred tax assets		(268,554		)		(273,991		)
Deferred tax assets, net		$	55,937			$	77,644
Deferred tax liabilities:
Fixed assets		$	83,879			$	101,707
Inventory		—				12,731
Other		1,053				2,455
Total deferred tax liabilities		$	84,932			$	116,893
Net deferred tax liabilities		$	(28,995	)		$	(39,249	)

Reconciliation of the beginning and ending amounts of unrecognized tax benefits

reconciliation of the beginning and ending amounts of unrecognized income tax benefits is as follows:

		August 31,
(in thousands)		2018				2017				2016
Balance at September 1		$	9,283			$	9,522			$	27,349
Change for tax positions of prior years		3,121				—				—
Reductions due to settlements with taxing authorities		(8,028		)		(239		)		(17,827		)
Reductions due to lapse of statute of limitations		(1,255		)		—				—
Balance at August 31 (1)		$	3,121			$	9,283			$	9,522

X

- Definition

Tabular disclosure of the components of income tax expense in the consolidated statements of operations for each year presented including, but not limited to: current tax expense (benefit), deferred tax expense (benefit), investment tax credits, government grants, the benefits of operating loss carryforwards, tax expense that results from allocating certain tax benefits either directly to contributed capital or to reduce goodwill or other noncurrent intangible assets of an acquired entity, adjustments of a deferred tax liability or asset for enacted changes in tax laws or rates or a change in the tax status of the entity, and adjustments of the beginning-of-the-year balances of a valuation allowance because of a change in circumstances that causes a change in judgment about the realizability of the related deferred tax asset in future years.

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Tabular disclosure of the components of net deferred tax asset or liability recognized in an entity's statement of financial position, including the following: the total of all deferred tax liabilities, the total of all deferred tax assets, the total valuation allowance recognized for deferred tax assets.

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Tabular disclosure of the reconciliation using percentage or dollar amounts of the reported amount of income tax expense attributable to continuing operations for the year to the amount of income tax expense that would result from applying domestic federal statutory tax rates to pretax income from continuing operations.

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Tabular disclosure of income before income tax between domestic and foreign jurisdictions.

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Tabular disclosure for tax positions taken in the tax returns filed or to be filed for which it is more likely than not that the tax position will not be sustained upon examination by taxing authorities and other income tax contingencies. Includes, but is not limited to, interest and penalties, reconciliation of unrecognized tax benefits, unrecognized tax benefits that would affect the effective tax rate, tax years that remain subject to examination by tax jurisdictions, and information about positions for which it is reasonably possible that amounts unrecognized will significantly change within 12 months.

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