Income Taxes |
6 Months Ended |
|---|---|
Aug. 31, 2026 | |
| Income Tax Disclosure [Abstract] | |
| Income Taxes | Note 14 - Income Taxes We reorganized the Company in Bermuda in 1994, and many of our foreign subsidiaries are not directly or indirectly owned by a U.S. parent. As such, a significant portion of our foreign income is not subject to U.S. taxation on a permanent basis under current law. Additionally, our intangible assets are primarily owned by foreign affiliates, generally resulting in proportionally higher earnings in jurisdictions with statutory tax rates lower than the U.S. Taxable income in each jurisdiction, whether U.S. or foreign, is determined by the subsidiary’s operating results as well as applicable transfer pricing and tax regulations. For interim periods, our income tax expense and resulting effective tax rate are based on an estimated annual effective tax rate, adjusted for the impact of discrete items recognized in the period. Jurisdictions with year-to-date or forecasted losses for which a tax benefit cannot be recognized are excluded from the estimated annual effective tax rate calculation, which may increase the effective tax rate in interim periods. Discrete items are recognized in the period in which they occur and include changes in tax laws or rates, changes in estimates for uncertain tax positions, excess tax benefits or deficiencies from stock-based compensation, foreign currency remeasurement effects that cannot be reasonably estimated as part of the annual effective tax rate, and other infrequent or non-recurring items. Discrete items do not include the asset impairment charges described below and in Note 5. During the three and six months ended August 31, 2025, we recognized goodwill and other intangible asset impairment charges of $326.4 million and $740.8 million, respectively, which included $246.0 million and $511.0 million, respectively, of non-deductible goodwill that did not result in a tax benefit. The tax benefit on the impairment charge was recognized over the course of fiscal 2026 in relation to pre-tax book income, rather than as a discrete item in the periods in which the charges were incurred. The downward revisions to our internal forecasts utilized in our impairment testing during the first half of fiscal 2026 impacted our assessment of the future realizability of a related deferred tax asset, which led to the recording of discrete valuation allowances of $13.5 million and $30.0 million during the three and six months ended August 31, 2025, respectively. For the three months ended August 31, 2026, income tax expense was $9.2 million on pre-tax income of $13.8 million, compared to an income tax benefit of $21.0 million on a pre-tax loss of $329.7 million for the same period last year. The increase in income tax expense and effective tax rate was primarily due to an increase in jurisdictions with losses excluded from the estimated annual effective tax rate calculation in fiscal 2027, and was also affected by impairment charges and the timing of related tax effects and deferred tax asset valuation allowances recognized in the same period last year. For the six months ended August 31, 2026, income tax expense was $21.7 million on pre-tax income of $62.1 million, compared to income tax expense of $9.1 million on a pre-tax loss of $750.2 million for the same period last year. The increase in income tax expense and effective tax rate was primarily due to income tax expense recognized on the gain from the sale of our distribution facility in Southaven, Mississippi and an increase in jurisdictions with losses excluded from the estimated annual effective tax rate calculation in fiscal 2027, and was also affected by impairment charges and the timing of related tax effects and deferred tax asset valuation allowances recognized in the same period last year.
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