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INCOME TAX | 12 Months Ended
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Aug. 31, 2020
Income Tax Disclosure [Abstract] |
INCOME TAX | NOTE 14. INCOME TAX The components of earnings from continuing operations before income taxes were as follows:
|  | Year Ended August 31, |  |  |  |
(in thousands) |  | 2020 |  | 2019 |  | 2018
United States |  | $ | 334,170 |  |  | $ | 194,986 |  |  | $ | 86,731 |
Foreign |  | 36,608 |  |  | 73,474 |  |  | 78,653 |
Total |  | $ | 370,778 |  |  | $ | 268,460 |  |  | $ | 165,384 |
The income taxes (benefit) included in the consolidated statements of earnings were as follows:
|  | Year Ended August 31, |  |  |  |
(in thousands) |  | 2020 |  | 2019 |  | 2018
Current: |  |  |  |  |  |
United States |  | $ | 26,901 |  |  | $ | 621 |  |  | $ | 20,210 |
Foreign |  | 7,588 |  |  | 14,006 |  |  | 18,308 |
State and local |  | 7,133 |  |  | 2,892 |  |  | 2,263 |
Current taxes |  | 41,622 |  |  | 17,519 |  |  | 40,781 |
Deferred: |  |  |  |  |  |
United States |  | 45,771 |  |  | 46,922 |  |  | (11,501) |
Foreign |  | (43) |  |  | 490 |  |  | (169) |
State and local |  | 5,832 |  |  | 4,908 |  |  | 1,002 |
Deferred taxes |  | 51,560 |  |  | 52,320 |  |  | (10,668) |
Total income taxes on income |  | 93,182 |  |  | 69,839 |  |  | 30,113 |
Income taxes (benefit) on discontinued operations |  | 706 |  |  | 158 |  |  | (34) |
Income taxes on continuing operations |  | $ | 92,476 |  |  | $ | 69,681 |  |  | $ | 30,147 |
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) |  | 2020 |  | 2019 |  | 2018
Federal statutory rate |  | 21.0 | % |  | 21.0 | % |  | 25.7 | %
Income tax expense at statutory rate |  | $ | 77,863 |  |  | $ | 56,377 |  |  | $ | 42,471 |
State and local taxes |  | 9,895 |  |  | 6,085 |  |  | 2,317 |
Foreign tax impairment on valuation of subsidiaries (1) |  | 5,084 |  |  | (29,697) |  |  | 22,315 |
Foreign rate differential (2) |  | (1,346) |  |  | (1,466) |  |  | (5,973) |
Research and experimentation benefits |  | (1,085) |  |  | (580) |  |  | (4,707) |
Change in valuation allowance |  | 968 |  |  | 36,167 |  |  | (20,839) |
Nontaxable foreign interest (1) |  | 8 |  |  | (9,799) |  |  | (17,414) |
TCJA - Toll charge and related foreign tax credits |  | — |  |  | 7,410 |  |  | 29,466 |
TCJA - Remeasurement of deferred tax balances |  | — |  |  | (586) |  |  | (25,515) |
Audit settlement |  | — |  |  | 120 |  |  | (3,187) |
Gain on international restructure (1) |  | — |  |  | — |  |  | 18,926 |
Worthless stock deduction (3) |  | — |  |  | — |  |  | (6,084) |
Other |  | 1,089 |  |  | 5,650 |  |  | (1,629) |
Income tax expense on continuing operations |  | $ | 92,476 |  |  | $ | 69,681 |  |  | $ | 30,147 |
Effective income tax rate from continuing operations |  | 24.9 | % |  | 26.0 | % |  | 18.2 | %
__________________________________ (1) Fully offset by a valuation allowance. (2) 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%. (3) 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. Beginning in fiscal 2020, the Company plans to repatriate the current and future earnings from the Europe segment and recorded an immaterial amount of tax expense related to such future distributions. The Company considers all undistributed earnings of its non-U.S. subsidiaries prior to August 31, 2019 to be indefinitely reinvested and has not recorded deferred tax liabilities on such earnings. The income tax effects of significant temporary differences giving rise to deferred tax assets and liabilities were as follows:
|  | Year Ended August 31, |  |
(in thousands) |  | 2020 |  | 2019
Deferred tax assets: |  |  |  |
Net operating losses and credits |  | $ | 283,416 |  |  | $ | 295,241 |
Deferred compensation and employee benefits |  | 32,293 |  |  | 24,432 |
Reserves and other accrued expenses |  | 30,371 |  |  | 42,833 |
ROU operating lease liabilities |  | 29,619 |  |  | — |
Other |  | 3,315 |  |  | 19,526 |
Total deferred tax assets |  | 379,014 |  |  | 382,032 |
Valuation allowance for deferred tax assets |  | (281,849) |  |  | (283,560) |
Deferred tax assets, net |  | 97,165 |  |  | 98,472 |
Deferred tax liabilities: |  |  |  |
Property, plant and equipment |  | (185,595) |  |  | (168,701) |
ROU operating lease assets |  | (28,201) |  |  | — |
Other |  | (2,420) |  |  | (1,182) |
Total deferred tax liabilities |  | (216,216) |  |  | (169,883) |
Net deferred tax liabilities |  | $ | (119,051) |  |  | $ | (71,411) |
Net operating losses giving rise to deferred tax assets consist of $447.5 million of state net operating losses that expire during the tax years ending from 2021 to 2040 and foreign net operating losses of $816.9 million that expire in varying amounts beginning in 2021 (with certain amounts having indefinite carryforward periods). These assets will be reduced as income tax expense is recognized in future periods. The Company maintains a valuation allowance to reduce certain deferred tax assets to amounts that are more likely than not to be realized. The Company's valuation allowances primarily relate to net operating loss carryforwards in certain state and foreign jurisdictions and certain credit carryforwards for which utilization is uncertain. A reconciliation of the beginning and ending amounts of unrecognized income tax benefits is as follows:
|  | Year Ended August 31, |  |  |  |
(in thousands) |  | 2020 |  | 2019 |  | 2018
Balance at September 1, |  | $ | 8,652 |  |  | $ | 3,121 |  |  | $ | 9,283 |
Change for tax positions of prior years |  | — |  |  | 5,531 |  |  | 3,121 |
Reductions due to settlements with taxing authorities |  | — |  |  | — |  |  | (8,028) |
Reductions due to lapse of statute of limitations |  | — |  |  | — |  |  | (1,255) |
Balance at August 31, (1) |  | $ | 8,652 |  |  | $ | 8,652 |  |  | $ | 3,121 |
__________________________________ (1)The full balance of unrecognized income tax benefits in each year, if recognized, would have impacted the Company’s effective income tax rate at the end of each respective year. At August 31, 2020 and 2019, accrued interest and penalties related to uncertain tax positions was not material. During the twelve months ending August 31, 2021, we anticipate that the statute of limitations pertaining to positions of the Company in prior year income tax returns may lapse. As a result, it is reasonably possible that the amount of unrecognized tax benefits may decrease by $3.1 million. The Company files income tax returns in the U.S. and multiple foreign jurisdictions with varying statutes of limitations. In the normal course of business, the Company and its subsidiaries are subject to examination by various taxing authorities. The Company is currently under examination with certain state revenue authorities for fiscal years 2015 through 2018. The following is a summary of all tax years that are open to examination. U.S. Federal — 2016 and forward U.S. States — 2015 and forward Foreign — 2013 and forward

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- 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=84230637&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=116825942&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=84230637&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=116825942&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=84230637&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 + Details
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