Income Taxes |
9 Months Ended |
|---|---|
Nov. 30, 2016 | |
| Income Tax Disclosure [Abstract] | |
| INCOME TAXES |
INCOME TAXES:
Our effective tax rate for the nine months ended November 30, 2016, and November 30, 2015, was 26.7% and 29.2%, respectively. Our effective tax rate for the three months ended November 30, 2016, and November 30, 2015, was 16.3% and 32.1%, respectively.
Our effective tax rates for the nine months and three months ended November 30, 2016, were lower than the federal statutory rate of 35% primarily due to a change in our assertion regarding our ability and intent to indefinitely reinvest undistributed earnings of certain foreign subsidiaries. Our effective tax rate for the nine months ended November 30, 2015, was lower than the federal statutory rate primarily due to decreases in uncertain tax positions and lower effective tax rates applicable to our foreign businesses. Our effective tax rate for the three months ended November 30, 2015, was lower than the federal statutory rate primarily due to lower effective tax rates applicable to our foreign businesses.
We have historically provided deferred income taxes for the repatriation to the U.S. of earnings from our foreign subsidiaries. In connection with the agreement to divest the Canadian wine business and the ongoing Beer capacity expansion activities in Mexico, including the agreement to acquire the Obregon Brewery (as defined in Note 15), we changed our assertion regarding our ability and intent to indefinitely reinvest undistributed earnings of certain foreign subsidiaries during the three months ended November 30, 2016. Approximately $380 million of our estimated earnings for the year ending February 28, 2017, and all future earnings for these foreign subsidiaries are expected to be indefinitely reinvested. Our current U.S. cash flow estimates, including proceeds from the Canadian Divestiture, and available borrowing capacity are expected to be sufficient to meet future domestic cash needs. Our intent to repatriate historical foreign earnings prior to our third quarter assertion remains unchanged and accordingly, we continue to provide for anticipated tax liabilities on amounts that are still expected to be repatriated to support our U.S. investments in the future.
Because of this assertion, we revised our estimated effective tax rate for the year ending February 28, 2017. Due to the reduction in the full year tax rate, the income tax expense for the three months ended November 30, 2016, includes the effect of this revised tax rate on our cumulative earnings through August 31, 2016. We did not provide income taxes on the indefinitely reinvested earnings. If at some future date these earnings cease to be indefinitely reinvested and are repatriated, we may be subject to additional U.S. income and other taxes on such amounts of approximately $100 million. We continue to provide deferred income taxes, as required, on the undistributed net earnings of those foreign subsidiaries that are not deemed to be indefinitely reinvested in operations outside the United States.
|