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Income Taxes | 12 Months Ended
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Aug. 31, 2016
Income Taxes [Abstract] |
Income Taxes | ﻿ ﻿ 14.INCOME TAXES ﻿ Our provision for income taxes consisted of the following (in thousands):
﻿ |  |  |  |  |  |
﻿ |  |  |  |  |  |
﻿YEAR ENDED |  |  |  |  |  |
﻿AUGUST 31, |  | 2016 |  | 2015 |  | 2014
﻿Current: |  |  |  |  |  |
﻿Federal | $ | 380 | $ | 220 | $ | (237)
﻿State |  | 197 |  | 208 |  | 146
﻿Foreign |  | 2,553 |  | 2,691 |  | 2,557
﻿ |  | 3,130 |  | 3,119 |  | 2,466
﻿ |  |  |  |  |  |
﻿Deferred: |  |  |  |  |  |
﻿Federal |  | 1,584 |  | 3,239 |  | 1,217
﻿State |  | (70) |  | 138 |  | 277
﻿Foreign |  | (50) |  | (200) |  | (268)
﻿Valuation allowance |  | 301 |  | - |  | -
﻿ |  | 1,765 |  | 3,177 |  | 1,226
﻿ | $ | 4,895 | $ | 6,296 | $ | 3,692
﻿ The allocation of our total income tax provision is as follows (in thousands):
﻿ |  |  |  |  |  |
﻿ |  |  |  |  |  |
﻿YEAR ENDED |  |  |  |  |  |
﻿AUGUST 31, |  | 2016 |  | 2015 |  | 2014
﻿Net income | $ | 4,895 | $ | 6,296 | $ | 3,692
﻿Other comprehensive income |  | (115) |  | (52) |  | 24
﻿ | $ | 4,780 | $ | 6,244 | $ | 3,716
﻿ Income before income taxes consisted of the following (in thousands):
﻿ |  |  |  |  |  |
﻿ |  |  |  |  |  |
﻿YEAR ENDED |  |  |  |  |  |
﻿AUGUST 31, |  | 2016 |  | 2015 |  | 2014
﻿United States | $ | 9,328 | $ | 15,073 | $ | 19,256
﻿Foreign |  | 2,583 |  | 2,339 |  | 2,503
﻿ | $ | 11,911 | $ | 17,412 | $ | 21,759
﻿ The differences between income taxes at the statutory federal income tax rate and the consolidated income tax rate reported in our consolidated income statements were as follows: ﻿
﻿ |  |  |
YEAR ENDED AUGUST 31, | 2016 | 2015 | 2014
﻿Federal statutory income tax rate | 35.0% | 35.0% | 35.0%
﻿State income taxes, net of federal effect | 1.9 | 2.3 | 1.9
﻿Valuation allowance | 2.5 | - | -
﻿Foreign jurisdictions tax differential | (0.6) | 1.2 | (0.4)
﻿Tax differential on income subject to both U.S. and foreign taxes | 1.9 | 0.5 | 0.5
﻿Effect of claiming foreign tax credits instead of deductions for prior years | - | (3.2) | (19.3)
﻿Uncertain tax positions | (0.4) | (0.9) | (2.6)
﻿Non-deductible executive compensation | - | 0.2 | 0.9
﻿Non-deductible meals and entertainment | 1.6 | 1.1 | 0.8
﻿Other | (0.8) | - | 0.2
﻿ | 41.1% | 36.2% | 17.0%
﻿ In prior fiscal years, we elected to take deductions on our U.S. federal income tax returns for foreign income taxes paid, rather than claiming foreign tax credits. During those years we either generated or used net operating loss carryforwards and were therefore unable to utilize foreign tax credits. In fiscal 2011, we began claiming foreign tax credits on our U.S. federal income tax returns. Although we could not utilize the credits we claimed for fiscal 2012 and fiscal 2011 in those respective years, we concluded it was more likely than not that these foreign tax credits will be utilized in the future. ﻿ Our overall U.S. taxable income and foreign source income for fiscal 2014 and 2013 were sufficient to utilize all of the foreign tax credits generated during those fiscal years, plus additional credits generated in prior years. Accordingly, we amended our U.S. federal income tax returns from fiscal 2003 through fiscal 2010 to claim foreign tax credits instead of foreign tax deductions. The net tax benefit resulting from claiming these additional foreign tax credits, which was recorded in the period the decision was made to amend the related returns, totaled $4.2 million in fiscal 2014. In fiscal 2015, we finalized the calculations of the impact of amending previously filed federal income tax returns to realize foreign tax credits previously treated as expired under the tax positions taken in the original returns. The income tax benefit recognized from these foreign tax credits totaled $0.6 million in fiscal 2015. ﻿ We recognized tax benefits from deductions for stock-based compensation in excess of the corresponding expense recorded for financial statement purposes. Instead of reducing our income tax expense for these benefits, we recorded $0.1 million and $2.5 million for the fiscal years ending August 31, 2015 and 2014. Tax expense related to stock-based compensation recorded in a dditional paid-in capital for fiscal 2016 was insignificant. ﻿ The significant components of our deferred tax assets and liabilities were comprised of the following (in thousands):
﻿ |  |  |  |
﻿ |  |  |  |
﻿AUGUST 31, |  | 2016 |  | 2015
﻿Deferred income tax assets: |  |  |  |
﻿Sale and financing of corporate |  |  |  |
﻿headquarters | $ | 9,013 | $ | 9,531
﻿Foreign income tax credit |  |  |  |
﻿carryforward |  | 2,784 |  | 5,106
﻿Stock-based compensation |  | 2,674 |  | 1,671
﻿Inventory and bad debt reserves |  | 1,147 |  | 1,025
﻿Bonus and other accruals |  | 1,017 |  | 934
﻿Deferred revenue |  | 405 |  | 328
﻿Other |  | 617 |  | 810
﻿Total deferred income tax assets |  | 17,657 |  | 19,405
﻿Less: valuation allowance |  | (301) |  | -
﻿Net deferred income tax assets |  | 17,356 |  | 19,405
﻿ |  |  |  |
﻿Deferred income tax liabilities: |  |  |  |
﻿Intangibles step-ups – indefinite lived |  | (8,528) |  | (8,515)
﻿Intangibles step-ups – definite lived |  | (6,003) |  | (6,552)
﻿Intangible asset impairment and |  |  |  |
﻿amortization |  | (4,505) |  | (5,001)
﻿Property and equipment depreciation |  | (3,367) |  | (3,139)
﻿Unremitted earnings of foreign |  |  |  |
﻿subsidiaries |  | (574) |  | (546)
﻿Other |  | (399) |  | (77)
﻿Total deferred income tax liabilities |  | (23,376) |  | (23,830)
﻿Net deferred income taxes | $ | (6,020) | $ | (4,425)
﻿ Deferred income tax amounts are recorded as follows in our consolidated balance sheets (in thousands):
﻿ |  |  |  |
﻿ |  |  |  |
﻿AUGUST 31, |  | 2016 |  | 2015
﻿Current assets | $ | - | $ | 2,479
﻿Other long-term assets |  | 650 |  | 194
﻿Long-term liabilities |  | (6,670) |  | (7,098)
﻿Net deferred income tax liability | $ | (6,020) | $ | (4,425)
﻿ As of August 31, 2016, we have utilized all of our U.S. federal net operating loss carryforwards. The Company still has U.S. state net operating loss carryforwards generated in various jurisdictions that expire primarily between September 1, 2016 and August 31, 2029. ﻿ Our U.S. foreign income tax credit carryforwards were comprised of the following at August 31, 2016 (in thousands): ﻿
﻿ |  |  |  |  |  |  |  |  |  |
﻿ |  |  |  |  |  |  |  |  |  |
﻿Credit Generated in |  |  |  |  |  | Credits Used |  | Credits Used |  | Credits
﻿Fiscal Year Ended |  | Credit Expires |  | Credits |  | in Prior |  | in Fiscal |  | Carried
﻿August 31, |  | August 31, |  | Generated |  | Years |  | 2016 |  | Forward
﻿2010 |  | 2020 | $ | 2,907 | $ | (1,299) | $ | (1,608) | $ | -
﻿2011 |  | 2021 |  | 3,448 |  | - |  | (664) |  | 2,784
﻿2012 |  | 2022 |  | 2,563 |  | (2,563) |  | - |  | -
﻿2013 |  | 2023 |  | 2,815 |  | (2,815) |  | - |  | -
﻿2014 |  | 2024 |  | 1,378 |  | (1,378) |  | - |  | -
﻿2015 |  | 2025 |  | 1,422 |  | (1,422) |  | - |  | -
﻿2016 |  | 2026 |  | 1,648 |  | - |  | (1,648) |  | -
﻿ |  |  | $ | 16,181 | $ | (9,477) | $ | (3,920) | $ | 2,784
﻿ We amended our U.S. federal income tax returns from fiscal 2003 through fiscal 2010 to claim foreign tax credits instead of the foreign tax deductions that were previously claimed. The additional taxable income from claiming these foreign tax credits results in the complete utilization of our remaining net operating loss carryforwards in fiscal 2012, as well as the ability to utilize all of the foreign tax credit generated in fiscal 2012. ﻿ During the year ended August 31, 2016, we determined it was more likely than not that deferred tax assets of a foreign subsidiary would not be realized. Accordingly, we recorded a $0.3 million valuation allowance against these deferred tax assets. ﻿ We have determined that projected future taxable income is adequate to allow for realization of all deferred tax assets, except for the assets subject to the valuation allowance. We considered sources of taxable income, including future reversals of taxable temporary differences, future taxable income exclusive of reversing temporary differences and carryforwards, and reasonable, practical tax-planning strategies to generate additional taxable income. Based on the factors described above, we concluded that realization of our deferred tax assets, except those subject to the valuation allowance, is more likely than not at August 31, 2016. ﻿ A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows (in thousands):
﻿ |  |  |  |  |  |
﻿ |  |  |  |  |  |
﻿YEAR ENDED |  |  |  |  |  |
﻿AUGUST 31, |  | 2016 |  | 2015 |  | 2014
﻿Beginning balance | $ | 3,115 | $ | 3,491 | $ | 4,129
﻿Additions based on tax positions |  |  |  |  |  |
﻿related to the current year |  | 199 |  | 244 |  | 157
﻿Additions for tax positions in |  |  |  |  |  |
﻿prior years |  | 3 |  | 144 |  | 60
﻿Reductions for tax positions of prior |  |  |  |  |  |
﻿years resulting from the lapse of |  |  |  |  |  |
﻿applicable statute of limitations |  | (212) |  | (339) |  | (663)
﻿Other reductions for tax positions of |  |  |  |  |  |
﻿prior years |  | (81) |  | (425) |  | (192)
﻿Ending balance | $ | 3,024 | $ | 3,115 | $ | 3,491
﻿ The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate is $2.1 million at August 31, 2016 and $2.2 million at August 31, 2015. Included in the ending balance of gross unrecognized tax benefits at August 31, 2016 is $2.7 million related to individual states’ net operating loss carryforwards. Interest and penalties related to uncertain tax positions are recognized as components of income tax expense. The net accruals and reversals of interest and penalties increased income tax expense by an insignificant amount in each of fiscal 2016, fiscal 2015 and fiscal 2014. The balance of interest and penalties included on our consolidated balance sheets at August 31, 2016 and 201 5 was $0.3 million each year. ﻿ During the next 12 months we expect a decrease in unrecognized tax benefits totaling $0.3 million related to foreign tax credits upon the lapse of the applicable statute of limitations. We also expect a decrease of $0.2 million in unrecognized tax benefits relating to state net operating loss deductions upon the lapse of the applicable statute of limitations. ﻿ We file United States federal income tax returns as well as income tax returns in various states and foreign jurisdictions. The tax years that remain subject to examinations for our major tax jurisdictions are shown below. ﻿
﻿ 2009-2016 | Canada
2009-2016 | Australia
2011-2016 | Japan, United Kingdom
2012-2016 | United States – state and local income tax
2013-2016 | United States – federal income tax
﻿

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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/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319 + Details
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