Income Taxes

12 Months Ended

Aug. 31, 2026

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Provision for Income Taxes

Income (loss) before income tax expense is summarized below (in millions):

	Fiscal Year Ended August 31,
	2026		2025		2024
Domestic	$	(18)	$	(255)	$	(366)
Foreign	1,426		1,147		2,117
Total	$	1,408	$	892	$	1,751

Income tax expense (benefit) is summarized below (in millions):

	Fiscal Year Ended August 31,
	2026		2025		2024
Current:
Federal	$	—	$	(16)	$	—
State	22		15		5
Foreign	365		356		442
Total current	387		355		447
Deferred:
Federal	(16)		(15)		12
State	3		(5)		(2)
Foreign	(6)		(100)		(94)
Total deferred	(19)		(120)		(84)
Total income tax expense	$	368	$	235	$	363

The Company adopted ASU 2023-09, Income Taxes (Topic 740), prospectively for the fiscal year ended August 31, 2026. A reconciliation of the U.S. federal statutory income tax rate to the Company's effective income tax rate, pursuant to the disclosure requirements of ASU 2023-09, is summarized below (in millions, except percentages):

	Fiscal Year Ended August 31, 2026
	Amount		Percent
U.S. federal statutory income tax rate	$	296	21.0	%
State and local income taxes, net of federal income tax effect(1)	20		1.4
Foreign tax effects
China
Statutory tax rate difference	19		1.3
Withholding taxes	40		2.9
Other	(8)		(0.6)
India	19		1.4
Malaysia
Tax incentives	(60)		(4.2)
Nondeductible interest	50		3.5
Other	5		0.3
Switzerland
Statutory tax rate difference	(21)		(1.5)
Other foreign jurisdictions	(21)		(1.5)
Effect of cross-border tax laws
Global Intangible Low-Taxed Income, net of foreign tax credits	38		2.7
Tax credits
Research and development tax credits	(68)		(4.8)
Changes in unrecognized tax benefits	47		3.4
Other adjustments	12		0.8
Effective income tax rate	$	368	26.1	%

(1)State taxes in California and Oregon made up the majority of the tax effect in this category.

A reconciliation of the U.S. federal statutory income tax rate to the Company’s effective income tax rate, prior to the adoption of ASU 2023-09, is summarized below:

	Fiscal Year Ended August 31,
	2025		2024
U.S. federal statutory income tax rate	21.0	%	21.0	%
State income taxes, net of federal tax benefit	0.6		(0.3)
Impact of foreign tax rates	(2.0)		0.1
Permanent differences	(0.3)		0.5
Income tax credits	(1.7)		(0.7)
Valuation allowance	1.0		3.5
Equity compensation	1.1		(0.4)
Impact of intercompany charges and dividends	1.9		(0.7)
Global Intangible Low-Taxed Income	1.4		1.9
Change in indefinite reinvestment assertion	0.3		0.4
Divestiture of businesses	2.3		(5.9)
Other, net	0.8		1.3
Effective income tax rate	26.4	%	20.7	%

The Company has been granted tax incentives for various subsidiaries in Malaysia, Singapore, Vietnam, Brazil, and Israel, which primarily expire at various dates through fiscal year 2030 and are subject to certain conditions with which the Company expects to comply. Tax incentives resulted in a tax benefit of approximately $77 million ($0.73 per basic weighted average shares of common stock outstanding), $75 million ($0.68 per basic weighted average shares of common stock outstanding) and $54 million ($0.44 per basic weighted average shares of common stock outstanding) during the fiscal years ended August 31, 2026, 2025, and 2024, respectively.

The divestiture of businesses change during the fiscal years ended August 31, 2025 and 2024, related primarily to the divestiture of the Company’s operations in Italy and the divestiture of the Mobility Business, respectively.

Income taxes paid, net of refunds received, pursuant to the disclosure requirements of ASU 2023-09, is summarized below (in millions):

	Fiscal Year Ended August 31, 2026
Federal	$	18
State	19
Foreign
China	156
India	40
Mexico	36
Other	82
Total income taxes paid, net of refunds received	$	351

The Company made income tax payments, net of refunds received, of $330 million and $502 million for the fiscal years ending August 31, 2025, and 2024, respectively.

Deferred Tax Assets and Liabilities

Significant components of the deferred tax assets and liabilities are summarized below (in millions):

	August 31, 2026		August 31, 2025
Deferred tax assets:
Net operating loss carryforwards	$	220	$	227
Inventories	48		28
Accrued expenses	162		147
Property, plant and equipment	79		34
Tax credits	82		27
Capital loss carryforwards	19		32
Revenue recognition	58		49
Operating and finance lease liabilities	13		35
Other	49		64
Total deferred tax assets before valuation allowances	730		643
Less valuation allowances	(402)		(400)
Net deferred tax assets	$	328	$	243
Deferred tax liabilities:
Unremitted earnings of foreign subsidiaries	$	67	$	38
Intangible assets	91		49
Operating lease assets	104		91
Other	32		4
Total deferred tax liabilities	$	294	$	182
Net deferred tax assets	$	34	$	61

Based on the Company’s historical operating income, projection of future taxable income, scheduled reversal of taxable temporary differences, and tax planning strategies, management believes it is more likely than not that the Company will realize the benefit of its deferred tax assets, net of valuation allowances recorded.

As of August 31, 2026, the Company intends to indefinitely reinvest the remaining earnings from its foreign subsidiaries for which a deferred tax liability has not already been recorded. The estimated amount of the unrecognized deferred tax liability on these reinvested earnings was approximately $0.1 billion.

Tax Carryforwards

The amount and expiration dates of income tax net operating loss carryforwards, tax credit carryforwards, and tax capital loss carryforwards, which are available to reduce future taxes, if any, as of August 31, 2026, are as follows (in millions):

	Last Fiscal Year of Expiration	Amount
Income tax net operating loss carryforwards:(1)
Federal	2037 or indefinite	$	156
State	2046 or indefinite	$	46
Foreign	2036 or indefinite	$	647
Tax credit carryforwards:(1)
Federal	2046	$	71
State	2041 or indefinite	$	7
Tax capital loss carryforwards:
Federal	2031	$	68

(1)Net of unrecognized tax benefits.

Unrecognized Tax Benefits

Reconciliation of the unrecognized tax benefits is summarized below (in millions):

	Fiscal Year Ended August 31,
	2026		2025		2024
Beginning balance	$	142	$	168	$	257
Additions for tax positions of prior years(1)	27		8		19
Reductions for tax positions of prior years	(1)		(4)		(21)
Additions for tax positions related to current year(2)	39		14		22
Additions related to acquired entities	9		5		—
Divestiture of businesses	—		—		(49)
Reductions from lapses in statutes of limitations(3)	(10)		(36)		(2)
Settlements(4)	—		(13)		(58)
Foreign exchange rate adjustment	5		—		—
Ending balance	$	211	$	142	$	168
Unrecognized tax benefits that would affect the effective tax rate (if recognized)	$	136	$	89	$	94

(1)The additions for the fiscal year ended August 31, 2026, primarily related to taxation of intercompany transactions and entitlement to tax credits.

(2)The additions for the fiscal years ended August 31, 2026, 2025 and 2024 primarily related to taxation of certain intercompany transactions.

(3)The reductions from lapses in statutes of limitations for the fiscal year ended August 31, 2025, primarily related to intercompany transactions and entitlement to tax credits.

(4)Settlements for the fiscal year ended August 31, 2024, primarily related to the settlement of a U.S. audit.

The Company recognizes interest and penalties related to unrecognized tax benefits in income tax expense. The Company’s accrued interest and penalties were approximately $35 million and $24 million as of August 31, 2026, and 2025, respectively. The Company recognized interest and penalties of approximately $8 million, $2 million and ($14 million) during the fiscal years ended August 31, 2026, 2025, and 2024, respectively.

The Company is no longer subject to U.S. federal tax examinations for fiscal years ended before August 31, 2022. In major non-U.S. and state jurisdictions, the Company is no longer subject to income tax examinations for fiscal years ended before August 31, 2016, and August 31, 2009, respectively.