Income Taxes (Tables)

12 Months Ended

May. 31, 2015

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,	2015		2014		2013
(In thousands)
United States	$	273,278	$	209,626	$	5,104
Foreign		179,975		214,861		171,787

Income Before Income Taxes	$	453,253	$	424,487	$	176,891

Provision (Benefit) for Income Tax

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


Year Ended May 31,	2015			2014			2013
(In thousands)
Current:
U.S. Federal	$	77,374		$	46,846		$	56,590
State and local		4,876			5,660			6,694
Foreign		45,173			59,425			44,747

Total Current		127,423			111,931			108,031

Deferred:
U.S. Federal		97,112			16,747			(31,987	)
State and local		1,494			1,292			(3,649	)
Foreign		(1,104	)		(11,467	)		(5,355	)

Total Deferred		97,502			6,572			(40,991	)

Provision for Income Taxes	$	224,925		$	118,503		$	67,040

Significant Components of Deferred Income Tax Assets and Liabilities

The significant components of deferred income tax assets and liabilities as of May 31, 2015 and 2014 were as follows:


	2015			2014
*(In thousands)*
Deferred income tax assets related to:
Inventories	$	8,530		$	6,944
Allowance for losses		8,575			6,410
Bankruptcy note liability		117,263
Accrued compensation and benefits		111,843			102,579
Accrued other expenses		15,932			10,256
Other long-term liabilities		21,911			22,146
Net operating loss and credit carryforwards		87,595			71,534
Net unrealized loss on securities		21,562			19,185

Total Deferred Income Tax Assets		393,211			239,054
Less: valuation allowances		(68,043	)		(85,719	)

Net Deferred Income Tax Assets		325,168			153,335

Deferred income tax (liabilities) related to:
Depreciation		(56,636	)		(47,639	)


Pension and other postretirement benefits		(16,256	)		(7,867	)
Amortization of intangibles		(198,872	)		(115,166	)
Unremitted foreign earnings		(108,508	)		(2,500	)

Total Deferred Income Tax (Liabilities)		(380,272	)		(173,172	)

Deferred Income Tax Assets (Liabilities), Net	$	(55,104	)	$	(19,837	)

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,	2015			2014			2013
(In thousands)
Income tax expense (benefit) at the U.S. statutory federal income tax rate	$	158,638		$	148,570		$	61,912
Impact of foreign operations		(32,706	)		(27,374	)		(11,552	)
State and local income taxes net of federal income tax benefit		4,140			4,519			1,979
Tax benefits from the domestic manufacturing deduction		—			(4,878	)		(4,489	)
Nondeductible fines and penalties		—			(2,002	)		4,802
Nondeductible business expense		1,782			1,508			1,269
Valuation allowance		(10,455	)		(2,998	)		14,729
Unremitted foreign earnings		106,227			2,500
Other		(2,701	)		(1,342	)		(1,610	)

Provision for Income Tax Expense	$	224,925		$	118,503		$	67,040

Effective Income Tax Rate		49.6	%		27.9	%		37.9	%

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)	2015			2014			2013
Balance at June 1	$	15.7		$	8.4		$	3.3
Additions based on tax positions related to current year		—			0.1			—
Additions for tax positions of prior years		0.9			8.9			6.0
Reductions for tax positions of prior years		(3.7	)		(1.7	)		(0.9	)

Balance at May 31	$	12.9		$	15.7		$	8.4