Income Taxes (Tables)

12 Months Ended

May 31, 2018

Income Tax Disclosure [Abstract]

Earnings before Income Taxes

Earnings before income taxes for the three fiscal years ended May 31 include the following components:

(in thousands)	2018		2017		2016
United States based operations	$	177,088	$	266,222	$	180,467
Non – United States based operations		31,982		30,905		36,148
Earnings before income taxes		209,070		297,127		216,615
Less: Net earnings attributable to noncontrolling    interests*		6,056		13,422		13,913
Earnings before income taxes attributable to    controlling interest	$	203,014	$	283,705	$	202,702

* Net earnings attributable to noncontrolling interests are not taxable to Worthington.

Components of Income Tax Expense (Benefit)

Significant components of income tax expense (benefit) for the fiscal years ended May 31 were as follows:

(in thousands)	2018			2017			2016
Current
Federal	$	33,261		$	50,200		$	42,837
State and local		3,292			2,954			2,157
Foreign		9,904			7,593			6,639
		46,457			60,747			51,633
Deferred
Federal		(34,442	)		18,177			7,584
State and local		388			476			934
Foreign		(4,183	)		(210	)		(1,164	)
		(38,237	)		18,443			7,354
	$	8,220		$	79,190		$	58,987

Reconciliation of Federal Statutory Corporate Income Tax Rate to Total Tax Provision

A reconciliation of the federal statutory corporate income tax rate to total tax provision follows:

	2018			2017			2016
Federal statutory corporate income tax rate		29.2	%		35.0	%		35.0	%
State and local income taxes, net of federal tax benefit		2.3			1.5			1.5
Non-U.S. income taxes at other than federal statutory rate		(1.4	)		(1.4	)		(3.0	)
Qualified production activities deduction		(2.3	)		(1.9	)		(2.2	)
Impact of tax reform (1)		(15.4	)		-			-
Worthington Aritas write down		(4.8	)		-			-
Excess benefit related to share-based payment awards		(2.0	)		(5.7	)		(1.6	)
AMTROL acquisition		(1.9	)		-			-
Other		0.3			0.4			(0.6	)
Effective tax rate attributable to controlling interest		4.0	%		27.9	%		29.1	%

(1) Amount reflects the impact of the re-measurement of the Company’s deferred tax balances at the lower federal statutory corporate income tax rate, net of the mandatory deemed repatriation tax on unremitted foreign earnings.

Reconciliation of Unrecognized Tax Benefits

A tabular reconciliation of unrecognized tax benefits follows:

(In thousands)
Balance at May 31, 2017	$	2,975
Decreases - tax positions taken in prior years		(107	)
Increases - tax positions taken in prior years		81
Increases - current tax positions		12
Settlements		(184	)
Lapse of statutes of limitations		(139	)
Balance at May 31, 2018	$	2,638

Summary of Tax Years Open to Examination by Major Tax Jurisdiction

The following is a summary of the tax years open to examination by major tax jurisdiction:

U.S. Federal –2015 and forward

U.S. State and Local –2013 and forward

Austria – 2013 and forward

Canada –2014 and forward

Mexico – 2013 and forward

Portugal – 2014 and forward

Deferred Tax Assets and Liabilities

The components of our deferred tax assets and liabilities as of May 31 were as follows:

(in thousands)	2018			2017
Deferred tax assets
Accounts receivable	$	1,455		$	2,157
Inventories		5,004			6,624
Accrued expenses		23,219			30,065
Net operating loss carry forwards		14,201			13,256
Tax credit carry forwards		811			3,206
Stock-based compensation		10,588			17,668
Other		502			205
Total deferred tax assets		55,780			73,181
Valuation allowance for deferred tax assets		(14,006	)		(12,987	)
Net deferred tax assets		41,774			60,194
Deferred tax liabilities
Property, plant and equipment		(74,512	)		(42,599	)
Investment in affiliated companies, principally due to undistributed earnings		(22,918	)		(46,001	)
Derivative contracts		(2,653	)		(1,745	)
Other		(1,879	)		(4,149	)
Total deferred tax liability		(101,962	)		(94,494	)
Net deferred tax liability	$	(60,188	)	$	(34,300	)