Income Taxes (Tables)

12 Months Ended

May 31, 2018

Income (loss) before income taxes as shown in the Consolidated Statements of Income is summarized below for the periods indicated.

Year Ended May 31,	2018		2017		2016
(In thousands)
United States	$	228,976	$	133,356	$	310,695
Foreign		188,072		110,977		172,771
Income Before Income Taxes	$	417,048	$	244,333	$	483,466

Provision (Benefit) for Income Tax

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

Year Ended May 31,	2018			2017		2016
(In thousands)
Current:
U.S. federal	$	27,206		$	3,024	$	75,200
State and local		8,617			5,115		6,230
Foreign		52,658			27,474		35,179
Total Current		88,481			35,613		116,609
Deferred:
U.S. federal		(8,054	)		15,553		17,625
State and local		4,832			1,928		1,907
Foreign		(7,468	)		6,568		(10,133	)
Total Deferred		(10,690	)		24,049		9,399
Provision for Income Taxes	$	77,791		$	59,662	$	126,008

Significant Components of Deferred Income Tax Assets and Liabilities

The significant components of deferred income tax assets and liabilities as of May 31, 2018 and 2017 were as follows:

	2018			2017
(In thousands)
Deferred income tax assets related to:
Inventories	$	12,491		$	14,207
Allowance for losses		5,349			9,148
Bankruptcy note liability		-			37,850
Accrued compensation and benefits		14,812			26,277
Accrued other expenses		14,427			21,935
Other long-term liabilities		15,921			19,947
Net operating loss and credit carryforwards		52,687			89,977
Net unrealized loss on securities		10,236			24,300
Pension and other postretirement benefits		39,863			68,352
Total Deferred Income Tax Assets		165,786			311,993
Less: valuation allowances		(51,540	)		(63,686	)
Net Deferred Income Tax Assets		114,246			248,307
Deferred income tax (liabilities) related to:
Depreciation		(62,202	)		(81,965	)
Amortization of intangibles		(114,284	)		(149,546	)
Unremitted foreign earnings		(19,886	)		(94,430	)
Total Deferred Income Tax (Liabilities)		(196,372	)		(325,941	)
Deferred Income Tax Assets (Liabilities), Net	$	(82,126	)	$	(77,634	)

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,	2018			2017			2016
(In thousands)
Income tax expense at the U.S. statutory federal income tax rate	$	121,812		$	85,517		$	169,213
Impact of foreign operations		(16,276	)		(20,156	)		(29,969	)
State and local income taxes, net		9,520			4,734			4,310
Domestic manufacturing deduction		(4,839	)		(2,537	)		(8,030	)
Nondeductible business expense		2,473			2,394			2,224
Valuation allowance		(5,235	)		933			(3,357	)
Deferred tax liability for unremitted foreign earnings		(77,970	)		(621	)		(3,712	)
Non-taxable gain from joint venture		-			-			(2,790	)
Other		737			1,476			(1,881	)
Equity-based compensation		(4,652	)		(12,078	)
Transition tax liability		67,899
Remeasurement of U.S. deferred income taxes		(15,678	)
Provision for Income Tax Expense	$	77,791		$	59,662		$	126,008
Effective Income Tax Rate		18.7	%		24.4	%		26.1	%

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)	2018			2017			2016
Balance at June 1	$	13.2		$	13.7		$	12.9
Additions based on tax positions related to current year		5.1			0.2			0.3
Additions for tax positions of prior years		-			2.9			2.6
Reductions for tax positions of prior years		(4.5	)		(3.2	)		(1.4	)
Foreign currency translation		0.3			(0.4	)		(0.7	)
Balance at May 31	$	14.1		$	13.2		$	13.7