Income Taxes

9 Months Ended

Aug. 01, 2021

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Applied’s provision for income taxes and effective tax rate are affected by the geographical composition of pre-tax income which includes jurisdictions with differing tax rates, conditional reduced tax rates and other income tax incentives. It is also affected by events that are not consistent from period to period, such as changes in income tax laws and the resolution of prior years’ income tax filings.

Applied’s effective tax rates for the third quarter of fiscal 2021 and 2020 were 13.3 percent and 19.1 percent, respectively. The effective tax rate for the third quarter of fiscal 2021 was lower than the same period in the prior fiscal year primarily due to the settlement of certain unrecognized tax benefits that resulted in an additional income tax expense of $44 million in the third quarter of fiscal 2020.

Applied’s effective tax rates for the first nine months of fiscal 2021 and 2020 were 12.4 percent and 14.9 percent, respectively. The effective tax rate for the first nine months of fiscal 2021 was lower than the same period in the prior fiscal year primarily due to a tax benefit related to severance and related charges recorded in the first quarter of fiscal 2021, and the settlement of certain unrecognized tax benefits that resulted in an additional income tax expense in the third quarter of fiscal 2020 noted above.