Income Taxes (Tables)

12 Months Ended

May 31, 2013

Income (Loss) before Income Taxes

Income (loss) before income taxes as shown in the Consolidated Statements of Income is summarized below for the periods indicated. Certain foreign operations are branches of RPM International Inc.’s subsidiaries and are therefore subject to income taxes in both the United States and the respective foreign jurisdictions. Accordingly, the provision (benefit) for income taxes by jurisdiction and the income (loss) before income taxes by jurisdiction may not be directly related.

Year Ended May 31,	2013		2012		2011
(In thousands)
United States	$	5,104	$	187,687	$	217,427
Foreign		171,787		140,602		77,626
Income Before Income Taxes	$	176,891	$	328,289	$	295,053

Provision (Benefit) for Income Tax

Provision (benefit) for income taxes consists of the following for the periods indicated:

Year Ended May 31,	2013			2012			2011
(In thousands)
Current:
U.S. Federal	$	56,590		$	45,547		$	37,871
State and local		6,694			6,836			4,764
Foreign		44,747			49,231			41,542
Total Current		108,031			101,614			84,177
Deferred:
U.S. Federal		(31,987	)		(787	)		8,186
State and local		(3,649	)		(572	)		2,200
Foreign		(5,355	)		(5,729	)		(2,678	)
Total Deferred		(40,991	)		(7,088	)		7,708
Provision for Income Taxes	$	67,040		$	94,526		$	91,885

Significant Components of Deferred Income Tax Assets and Liabilities

The significant components of deferred income tax assets and liabilities as of May 31, 2013 and 2012 were as follows:

	2013			2012
(In thousands)
Deferred income tax assets related to:
Inventories	$	6,795		$	5,810
Allowance for losses		7,584			8,935
Accrued compensation and benefits		113,394			113,934
Accrued other expenses		16,322			6,525
Other long-term liabilities		29,954			25,280
Net operating loss and credit carryforwards		70,208			76,740
Net unrealized loss on securities		21,727			1,478
Total Deferred Income Tax Assets		265,984			238,702
Less: valuation allowances		(89,909	)		(75,167	)
Net Deferred Income Tax Assets		176,075			163,535
Deferred income tax (liabilities) related to:
Depreciation		(48,491	)		(47,872	)
Pension and other postretirement benefits		(12,204	)		(15,824	)
Amortization of intangibles		(125,042	)		(109,206	)
Total Deferred Income Tax (Liabilities)		(185,737	)		(172,902	)
Deferred Income Tax Assets (Liabilities), Net	$	(9,662	)	$	(9,367	)

Reconciliation of Income Tax Expense (Benefit) Computed by Applying U.S. Statutory Federal Income Tax Rate against Income (Loss) before Income Taxes to Provision (Benefit) for Income Taxes

The following table reconciles income tax expense (benefit) computed by applying the U.S. statutory federal income tax rate against income (loss) before income taxes to the provision (benefit) for income taxes:

Year Ended May 31,	2013			2012			2011
(In thousands)
Income tax expense (benefit) at the U.S. statutory federal income tax rate	$	61,912		$	114,901		$	103,141
Impact of foreign operations		(11,552	)		(32,192	)		(39,932	)
State and local income taxes net of federal income tax benefit		1,979			4,073			4,527
Tax benefits from the domestic manufacturing deduction		(4,489	)		(3,744	)		(2,750	)
Nondeductible fines and penalties		4,802			—			—
Nondeductible business expense		1,269			1,304			1,404
Valuation allowance		14,729			9,353			24,994
Other		(1,610	)		831			501
Provision (Benefit) for Income Tax Expense	$	67,040		$	94,526		$	91,885
Effective Income Tax Rate		37.9	%		28.8	%		31.1	%

Activity Related to Unrecognized Tax Benefits

Uncertain income tax positions are accounted for in accordance with ASC 740. The following table summarizes the activity related to unrecognized tax benefits:

(In millions)	2013			2012			2011
Balance at June 1	$	3.3		$	6.4		$	2.7
Additions based on tax positions related to current year		—			—			0.3
Additions for tax positions of prior years		6.0			0.5			3.9
Reductions for tax positions of prior years		(0.9	)		(0.4	)		(0.5	)
Settlements		—			(3.2	)		—
Balance at May 31	$	8.4		$	3.3		$	6.4