Income Taxes	9 Months Ended
Feb. 28, 2014
Income Taxes	NOTE 8 — INCOME TAXES The effective income tax expense rate was 32.9% for the three months ended February 28, 2014 compared to an effective income tax benefit rate of 32.8% for the three months ended February 28, 2013. The effective income tax expense rate was 28.8% for the nine months ended February 28, 2014 compared to an effective income tax expense rate of 48.0% for the same period a year ago. For the three and nine months ended February 28, 2014 and 2013, the effective tax rates reflect variances from the 35% federal statutory rate primarily due to lower effective tax rates of certain of our foreign subsidiaries, the favorable impact of certain foreign operations on our U.S. taxes, the research and development tax credit, the benefit from the domestic manufacturing deduction and for the three months ended February 28, 2014, due to reductions to our reserves for income tax contingencies, including interest thereon . These favorable variances from the statutory tax rate were offset by the net impact of valuation allowances associated with certain foreign net operating losses and foreign tax credit carryforwards, state and local income taxes, and non-deductible business operating expenses. Additionally, for the nine month period ended February 28, 2014, the effective tax rate includes a discrete benefit related to the recognition of a foreign deferred income tax asset resulting from the merger of certain foreign subsidiaries. This benefit was partially offset by the impact of the enactment of a Canadian tax law change, Canada Bill C-48, Technical Tax Amendments Act, 2012 (“Bill C-48”), which was effective as of June 26, 2013. Furthermore, for the three and nine month periods ended February 28, 2013, the effective tax rate differed from the federal statutory rate as a result of income tax benefits related to our strategic decision to reposition certain Brazilian business operations, the impact on our effective tax rate in certain foreign jurisdictions where income tax benefits associated with net operating losses incurred by those foreign businesses are not recognized, the tax effect of projected non-deductible costs associated with the DOJ and GSA accrual and due to net increases to our reserves for income tax contingencies, including interest thereon. Additionally, for the nine months ended February 28, 2013 the effective tax rate differed from the federal statutory rate as a result of increases in valuation allowances related to losses associated with our investments in Kemrock. As of February 28, 2014, we had unrecognized tax benefits of approximately $13.8 million, of which approximately $12.9 million would impact the effective tax rate, if recognized. We recognize interest and penalties related to unrecognized tax benefits in income tax expense. At February 28, 2014 the accrual for interest and penalties was $5.1 million. These amounts increased from the prior year balances primarily due to additions for prior year positions related to the retroactive impact of Bill C-48. Unrecognized tax benefits, including interest and penalties, have been classified as other long-term liabilities unless expected to be paid in one year. We do not anticipate any significant changes to the total unrecognized tax benefits within the next 12 months. We, or our subsidiaries, file income tax returns in the U.S. and in various state, local and foreign jurisdictions. During the year ended May 31, 2013 we settled U.S. federal examinations of fiscal years 2009 and 2010. During the first quarter of fiscal 2014 we settled a U.S. federal examination of fiscal year 2011. We have been notified by the Internal Revenue Service that they may perform a limited scope examination of fiscal years 2012 and 2013. In addition, with limited exceptions, we, or our subsidiaries, are generally subject to state and local or non-U.S. income tax examinations by tax authorities for the fiscal years 2007 through 2013. We are currently under examination, or have been notified of an upcoming tax examination, for various Non-U.S. and U.S. jurisdictions. Although it is possible that certain tax examinations could be resolved during the next 12 months, the timing and outcomes are uncertain. As of February 28, 2014, we have determined, based on the available evidence, that it is uncertain whether we will be able to recognize certain deferred tax assets. Therefore, we intend to maintain the tax valuation allowances recorded at February 28, 2014 for those deferred tax assets until sufficient positive evidence (for example, cumulative positive foreign earnings or additional foreign source income) exists to support their reversal. These valuation allowances relate to U.S. foreign tax credit carryforwards, capital loss carryforwards, unrealized losses on securities, certain foreign net operating losses and net foreign deferred tax assets.

NOTE 8 — INCOME TAXES

The effective income tax expense rate was 32.9% for the three months ended February 28, 2014 compared to an effective income tax benefit rate of 32.8% for the three months ended February 28, 2013. The effective income tax expense rate was 28.8% for the nine months ended February 28, 2014 compared to an effective income tax expense rate of 48.0% for the same period a year ago.

For the three and nine months ended February 28, 2014 and 2013, the effective tax rates reflect variances from the 35% federal statutory rate primarily due to lower effective tax rates of certain of our foreign subsidiaries, the favorable impact of certain foreign operations on our U.S. taxes, the research and development tax credit, the benefit from the domestic manufacturing deduction and for the three months ended February 28, 2014, due to reductions to our reserves for income tax contingencies, including interest thereon . These favorable variances from the statutory tax rate were offset by the net impact of valuation allowances associated with certain foreign net operating losses and foreign tax credit carryforwards, state and local income taxes, and non-deductible business operating expenses.

Additionally, for the nine month period ended February 28, 2014, the effective tax rate includes a discrete benefit related to the recognition of a foreign deferred income tax asset resulting from the merger of certain foreign subsidiaries. This benefit was partially offset by the impact of the enactment of a Canadian tax law change, Canada Bill C-48, Technical Tax Amendments Act, 2012 (“Bill C-48”), which was effective as of June 26, 2013.

Furthermore, for the three and nine month periods ended February 28, 2013, the effective tax rate differed from the federal statutory rate as a result of income tax benefits related to our strategic decision to reposition certain Brazilian business operations, the impact on our effective tax rate in certain foreign jurisdictions where income tax benefits associated with net operating losses incurred by those foreign businesses are not recognized, the tax effect of projected non-deductible costs associated with the DOJ and GSA accrual and due to net increases to our reserves for income tax contingencies, including interest thereon. Additionally, for the nine months ended February 28, 2013 the effective tax rate differed from the federal statutory rate as a result of increases in valuation allowances related to losses associated with our investments in Kemrock.

As of February 28, 2014, we had unrecognized tax benefits of approximately $13.8 million, of which approximately $12.9 million would impact the effective tax rate, if recognized. We recognize interest and penalties related to unrecognized tax benefits in income tax expense. At February 28, 2014 the accrual for interest and penalties was $5.1 million. These amounts increased from the prior year balances primarily due to additions for prior year positions related to the retroactive impact of Bill C-48. Unrecognized tax benefits, including interest and penalties, have been classified as other long-term liabilities unless expected to be paid in one year. We do not anticipate any significant changes to the total unrecognized tax benefits within the next 12 months.

We, or our subsidiaries, file income tax returns in the U.S. and in various state, local and foreign jurisdictions. During the year ended May 31, 2013 we settled U.S. federal examinations of fiscal years 2009 and 2010. During the first quarter of fiscal 2014 we settled a U.S. federal examination of fiscal year 2011. We have been notified by the Internal Revenue Service that they may perform a limited scope examination of fiscal years 2012 and 2013. In addition, with limited exceptions, we, or our subsidiaries, are generally subject to state and local or non-U.S. income tax examinations by tax authorities for the fiscal years 2007 through 2013.

We are currently under examination, or have been notified of an upcoming tax examination, for various Non-U.S. and U.S. jurisdictions. Although it is possible that certain tax examinations could be resolved during the next 12 months, the timing and outcomes are uncertain.

As of February 28, 2014, we have determined, based on the available evidence, that it is uncertain whether we will be able to recognize certain deferred tax assets. Therefore, we intend to maintain the tax valuation allowances recorded at February 28, 2014 for those deferred tax assets until sufficient positive evidence (for example, cumulative positive foreign earnings or additional foreign source income) exists to support their reversal. These valuation allowances relate to U.S. foreign tax credit carryforwards, capital loss carryforwards, unrealized losses on securities, certain foreign net operating losses and net foreign deferred tax assets.