Income Taxes (Tables)

12 Months Ended

May 31, 2019

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

Year Ended May 31,	2019		2018		2017
(In thousands)
United States	$	215,201	$	228,976	$	133,356
Foreign		124,644		188,072		110,977
Income Before Income Taxes	$	339,845	$	417,048	$	244,333

Provision (Benefit) for Income Tax

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

Year Ended May 31,	2019			2018			2017
(In thousands)
Current:
U.S. federal	$	20,388		$	27,206		$	3,024
State and local		8,623			8,617			5,115
Foreign		37,713			52,658			27,474
Total Current		66,724			88,481			35,613
Deferred:
U.S. federal		15,298			(8,054	)		15,553
State and local		1,414			4,832			1,928
Foreign		(11,278	)		(7,468	)		6,568
Total Deferred		5,434			(10,690	)		24,049
Provision for Income Taxes	$	72,158		$	77,791		$	59,662

Significant Components of Deferred Income Tax Assets and Liabilities

The significant components of deferred income tax assets and liabilities as of May 31, 2019 and 2018 were as follows:

	2019			2018
(In thousands)
Deferred income tax assets related to:
Inventories	$	8,970		$	12,491
Allowance for losses		7,524			5,349
Accrued compensation and benefits		14,364			14,812
Accrued other expenses		17,036			14,427
Other long-term liabilities		15,947			15,921
Credit and net operating and capital loss carryforwards		63,395			52,687
Net unrealized loss on securities		12,391			10,236
Pension and other postretirement benefits		42,991			39,863
Total Deferred Income Tax Assets		182,618			165,786
Less: valuation allowances		(55,274	)		(51,540	)
Net Deferred Income Tax Assets		127,344			114,246
Deferred income tax (liabilities) related to:
Depreciation		(72,387	)		(62,202	)
Amortization of intangibles		(116,097	)		(114,284	)
Unremitted foreign earnings		(18,795	)		(19,886	)
Total Deferred Income Tax (Liabilities)		(207,279	)		(196,372	)
Deferred Income Tax Assets (Liabilities), Net	$	(79,935	)	$	(82,126	)

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,	2019			2018			2017
(In thousands, except percentages)
Income tax expense at the U.S. statutory federal income tax rate	$	71,367		$	121,812		$	85,517
Impact of foreign operations		(1,571	)		(16,276	)		(20,156	)
State and local income taxes, net		7,224			9,520			4,734
Impact of global intangible low-taxed income		5,772
Domestic manufacturing deduction		-			(4,839	)		(2,537	)
Nondeductible business expense		2,259			2,473			2,394
Valuation allowance		7,021			(5,235	)		933
Deferred tax liability for unremitted foreign earnings		-			(77,970	)		(621	)
Changes in unrecognized tax benefits		(8,480	)
Other		1,195			737			1,476
Equity-based compensation		(4,496	)		(4,652	)		(12,078	)
Transition tax liability		(1,868	)		67,899			-
Remeasurement of U.S. deferred income taxes		(6,265	)		(15,678	)		-
Provision for Income Tax Expense	$	72,158		$	77,791		$	59,662
Effective Income Tax Rate		21.2	%		18.7	%		24.4	%

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)	2019			2018			2017
Balance at June 1	$	14.1		$	13.2		$	13.7
Additions based on tax positions related to current year		0.1			5.1			0.2
Additions for tax positions of prior years		2.0			-			2.9
Reductions for tax positions of prior years		(7.9	)		(4.5	)		(3.2	)
Foreign currency translation		(0.2	)		0.3			(0.4	)
Balance at May 31	$	8.1		$	14.1		$	13.2