Income Taxes (Tables)

12 Months Ended

May 31, 2019

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)	2019		2018		2017
United States based operations	$	173,200	$	177,088	$	266,222
Non – United States based operations		33,256		31,982		30,905
Earnings before income taxes		206,456		209,070		297,127
Less: Net earnings attributable to noncontrolling interests*		9,818		6,056		13,422
Earnings before income taxes attributable to controlling interest	$	196,638	$	203,014	$	283,705

* 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)	2019			2018			2017
Current
Federal	$	15,454		$	33,261		$	50,200
State and local		2,309			3,292			2,954
Foreign		7,985			9,904			7,593
		25,748			46,457			60,747
Deferred
Federal		18,195			(34,442	)		18,177
State and local		1,621			388			476
Foreign		(2,381	)		(4,183	)		(210	)
		17,435			(38,237	)		18,443
	$	43,183		$	8,220		$	79,190

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:

	2019			2018			2017
Federal statutory corporate income tax rate		21.0	%		29.2	%		35.0	%
State and local income taxes, net of federal tax benefit		2.1			2.3			1.5
Non-U.S. income taxes at other than federal statutory rate		0.2			(1.4	)		(1.4	)
Qualified production activities deduction		-			(2.3	)		(1.9	)
Impact of tax reform (1)		-			(15.4	)		-
Worthington Aritas write down		-			(4.8	)		-
Excess benefit related to share-based payment awards		(1.4	)		(2.0	)		(5.7	)
AMTROL acquisition		-			(1.9	)		-
Other		0.1			0.3			0.4
Effective tax rate attributable to controlling interest		22.0	%		4.0	%		27.9	%

(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, 2018	$	2,638
Decreases - tax positions taken in prior years		(96	)
Increases - tax positions taken in prior years		41
Increases - current tax positions		43
Settlements		(831	)
Lapse of statutes of limitations		(174	)
Balance at May 31, 2019	$	1,621

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 –2014 and forward

Austria – 2016 and forward

Canada –2015 and forward

Mexico – 2014 and forward

Portugal – 2015 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)	2019			2018
Deferred tax assets
Accounts receivable	$	1,516		$	1,455
Inventories		5,649			5,004
Accrued expenses		21,195			23,219
Net operating loss carry forwards		16,433			14,201
Stock-based compensation		10,989			10,588
Derivative contracts		2,054			-
Other		316			1,313
Total deferred tax assets		58,152			55,780
Valuation allowance for deferred tax assets		(14,619	)		(14,006	)
Net deferred tax assets		43,533			41,774
Deferred tax liabilities
Property, plant and equipment		(91,732	)		(74,512	)
Investment in affiliated companies, principally due    to undistributed earnings		(23,035	)		(22,918	)
Derivative contracts		-			(2,653	)
Other		(2,868	)		(1,879	)
Total deferred tax liability		(117,635	)		(101,962	)
Net deferred tax liability	$	(74,102	)	$	(60,188	)